Abu Dhabi - However, foreign shareholders would not be entitled to a voting right at its general meetings, according to the amendment.
Published: Wed 19 Aug 2015, 8:01 PM
Last updated: Thu 20 Aug 2015, 2:40 AM
Foreigners can now own up to 20 per cent of the telecom's shares. The amendment has also allowed UAE owned companies to own Etisalat's shares - before, only UAE individuals could own them.
The UAE Federal Law no one of 1991 has been amended to allow foreign investment in Etisalat's shares.
With a paid capital of Dh7.9 billion, Etisalat ranks 140th on Financial Times top 500 global companies.
However, foreign shareholders would not be entitled to a voting right at its general meetings, according to the amendment.
The new regime has changed telecom's legal name to Emirates Telecommunications Group Company PJSC, but continue to be known as Etisalat Group.
In accordance with the new law, the group will carry out the procedures required to implement and align its status with the provisions of the new law within one year from the date of its issue, the announcement said.
Eissa Al Suwaidi, chairman, Etisalat Group said the move "will have a positive impact for both Etisalat Group's shareholders and the Stock Exchange. It also sends out a strong signal that the UAE is open for business."
Salient features:
Etisalat has subsidaries and interests in 19 telecoms of Asia, MENA, where its subscriber base exceeds 168 million, as at June 30, 2015
On June 22 when this development was first announced price of Etisalat share was Dh11.40 a share which jumped to Dh13.80 in subsequent days, in anticipation of greater interest.
However, it came down in recent weeks due to lackluster trading due to regional situations to Dh13.45 on Wednesday, when 1.6 million shares valuing Dh220 million changed hands.
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Ahmad Julfar, Group Chief Executive Officer, Etisalat said the development will enable Etisalat to continue to invest in the innovative products and services.
The telecom earned a profit of Dh1.5 billion in the second quarter of the years, on revenues of Dh13.3 billion.
Commenting on the development, which was announced on June 23, Sabestian Henin, Head of asset management at Abu Dhabi-based investment bank The National Investor said: "This announcement will definitely benefit the stock market, Etisalat is the biggest market capitalization of the UAE and also one of the blue chips."
"This decision will bring new investors, it will authorize them to diversify more their portfolio, beyond financials," said Henin.
Commenting on how foreigners will benefit in a market where availability of telecom's share is scarce, Wael Abu Mheisan, general manager of Al Ansari Securities said it was a problem, as Etisalat's share is very dear to Emiratis, it gives them stable half-yearly income and keeps on growing every year with the issuance of bonus shares.
So options available are either government owned Emirate Investment Company, which owned majority 60 per cent shares ownership or individuals who own remaining 40 per cent bring some of their holdings on to the market, which is only possible when price they are offered are very attractive.
However, he said small quantities can be purchased.
One condition for its joining to the MCSI Index is availability of certain per centage of its shares in the market, another trader said.
The government owns 60 per cent shares through Emirates Investment Authority, which made it clear in June that it has no intention to reduce its shareholding in the company.
In addition to ordinary shares, a "Special Share" will be issued to the Federal Government of the UAE, pursuant to the approval of Etisalat Group's Board of Directors, says the announcement.
Etisalat Group will also be entitled to issue different classes of shares. Other than the issuance of the Special Share, Etisalat Group does not intend to issue any additional shares at this time.
Some of the other material changes, include the ability for Etisalat Group to establish a new operating company for the purpose of operating its telecommunications network business and providing telecommunication services in the UAE, subject to Special Shareholder approval; and establishing a share buyback program at any time in accordance with the conditions and procedures set out in the relevant law and subject to the prior approval of the Emirates Securities and Commodities Authority.
haseeb@khaleejtimes.com
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