DFM-listed firms required to disclose losses, submit reform plan
Listed companies on the Dubai Financial Market (DFM) are required to disclose accumulated losses of 20 per cent and above of their issued capital to the DFM and the Securities and Commodities Authority (SCA), in compliance with the new measures introduced by the regulator.
The loss-making companies are also obligated to submit an explanation about the main causes of such losses and the measures they are taking to handle the situation, the DFM said on Monday. The new measures are being implemented to make investors aware of the financial conditions that the concerned company has to tackle.
In a statement, the DFM said that the disclosure of losses by listed firms should be based on the financial results of the third quarter of 2019.
"Similarly, listed companies are obliged to disclose to the regulator and the DFM about accrued losses of 50 per cent and above of the capital concurrently with their periodic or annual results announcements and submit an explanation of the main causes of the losses in addition to their detailed plans to handle the situation within a definite time frame," the DFM said. "The arrangements underline the joint efforts of the regulator, the DFM as well as the listed companies to boost operational efficiency of listed companies on one hand and make investors aware of the financial conditions that the concerned company has to tackle on the other."
As part of the new measures, loss-making companies will be classified and colour-labelled on the DFM's Market Watch webpage, which enables investors to easily pinpoint the financial position of each listed company and take it into consideration when making their investment decisions.
Companies with accrued losses are now classified into two categories as per the following: companies with losses between 20 per cent and less than 50 per cent, and companies with losses above 50 per cent of the capital. Accordingly, listed companies within the first category will be yellow-flagged on DFM's Market Watch webpage once the concerned company discloses its accumulated losses, while companies within the second category will be red-flagged.
Hassan Al Serkal, chief operating officer and head of Operations Division of DFM, said the exchange is committed to providing investors with a fair and transparent trading environment, enabling them to take well-informed investment decisions based on the highest levels of clarity about each company. "We have been collaborating with the SCA in order to further enhance this trading environment with the adoption of the new arrangements that we are pleased to implement after officially issuance from the Regulator. The DFM will host workshops for listed companies as well as brokers and investors as part of an extensive campaign to make them aware of the arrangements."
In August, the DFM said that its listed companies recorded a 96 per cent compliance regarding the disclosure of the second quarter-2019 results within the deadline of 45 days from the end of the period. The total number of UAE public and private joint-stock companies as well as the dually-listed companies on the DFM, which disclosed their second-quarter results, reached 64 companies out of 67 companies.