The United Arab Emirates' market regulator unveiled a major overhaul of stock ownership rules in the Gulf Arab state, in a bid to force more disclosure in takeover deals.
The new regulation drafted by the Securities and Commodities Authority requires buyers to inform the stock market if they intend to buy 30 percent or more of a listed company in the UAE.
"The board agreed during the meeting to make adjustments to the disclosure and transparency system in order to develop the legislation governing the functioning of financial markets," the SCA said in a statement posted on WAM.
The regulator can reject proposed transactions if it deems them to be against the interests of shareholders or the economy. The move comes a month after Abu Dhabi's state-owned firm Aabar Investments accumulated a 20.8 percent-stake in Dubai contractor Arabtec Holding from the market through different subsidiaries.
The new rules also require an investor pool together all holdings in a specific company - whether held by family members, companies and affiliates - and inform the regulator if the ownership is above the five percent mark.
"It's a positive initiative and something that the market really needs but we will have to wait and see how well these initiatives can be enforced upon," said Mohammed Ali Yasin, an Abu Dhabi based capital markets analyst.
Several regulations have been enacted in the UAE previously to boost local financial markets but enforcing these laws has been a challenge for the regulator.