Markets
United Arab Emirates: the علاوة إصدار (issue premium) on DFM and ADX is priced by the CMA's formula, not by the parties
A conversion price referenced to future market prices is not available to a company listed onshore on DFM or ADX. Issuing shares above nominal value needs a special resolution and the prior consent of the Capital Market Authority, and the CMA itself prescribes how the premium is calculated. What remains is a convertible priced at signing.
Key takeaways
- The regulator holds the pricing pen. Under the Commercial Companies Law a شركة مساهمة عامة (public joint stock company) may issue shares at a علاوة إصدار (issue premium) only by special resolution and with prior regulator consent, and the Capital Market Authority issues the resolution setting the method of calculating that premium.
- The instrument is not the problem. The law contemplates bonds and sukuk convertible into shares and permits the capital increase that conversion produces, subject to the special resolution approving their issue.
- Pre-emption is preserved, and even traded. حق الأولوية is the statutory default on a new issue, and the regulator is directed to regulate the conditions for selling those rights — an architecture built around keeping the right, not displacing it for one subscriber.
- Foreign ownership is not the blocker. Ownership rules were substantially liberalised from 2021. The obstacle is pricing and approval, which is a different problem and is not fixed by a licence.
- The UAE verdict is onshore only. Nasdaq Dubai (DIFC, DFSA) and the ADGM (FSRA) are separate legal regimes and were not screened. Do not read this page across to them.
Why regulator-set pricing and a refixing conversion price cannot coexist
The whole economics of a market-referenced convertible sit in a single sentence of the contract: at each conversion, the price is a stated relationship to a trading average measured over a window ending at or near that date. Everything else — the coupon, the tenor, the covenants — is secondary to who controls that sentence.
Onshore in the UAE, nobody in the room controls it. Federal Decree-Law No. 32 of 2021 on Commercial Companies, as amended by Federal Decree-Law No. 20 of 2025, requires a premium issue to clear a special resolution and obtain the prior consent of the federal securities regulator, and it hands the method of calculating the premium to a resolution of that regulator. Since 1 January 2026 that regulator is the Capital Market Authority: Federal Decree-Law No. 32 of 2025 reconstituted the Securities and Commodities Authority as the CMA and Federal Decree-Law No. 33 of 2025 replaced the capital-market regime of Federal Law No. 4 of 2000. The CMA succeeds to the SCA’s rights and obligations, and the pre-2026 SCA rulebook is read as carried over until the CMA issues its own. A formula written by the regulator and a formula written by the parties are not two versions of the same thing. The second one has no place to live.
That also disposes of the standby facility question without needing a separate rule. A drawdown facility requires an issuer to price and issue repeatedly without returning to the regulator and the general meeting each time. A capital increase here needs a special resolution, and the pre-emption rights of existing shareholders are the statutory default rather than something a board disapplies for a year at a time.
| Unavailable | Why | Available instead |
|---|---|---|
| Conversion at a discount to a future VWAP | The CMA prescribes the premium method and consents to the issue | A convertible bond or sukuk priced when the special resolution is passed |
| A drawdown subscription facility | Each increase needs a special resolution; pre-emption is the default | A rights issue to existing shareholders, with the rights themselves saleable |
| An unnamed investor with a standing right | Approval attaches to the issue, not to a programme | A discrete, approved capital increase for an identified purpose |
| Onshore CMA regime only, as at 12 August 2026. Not an offer, a quote, or a rate card. | ||
Resale is not where this market stops
It is worth being precise about which end of the transaction fails, because the UAE is often described as a hard market to exit and that is not the finding here. There is no onshore equivalent of the United States restricted-securities concept; shares validly approved and admitted are registered and trade on DFM or ADX like any other. Nothing here resembles the conditional analysis behind free-trading shares. The issuance is the blocker, and it blocks before a single share exists.
The mistake that costs the most time
“The UAE” is at least three securities regimes. DFM and ADX are onshore under the CMA. Nasdaq Dubai sits inside the Dubai International Financial Centre and is regulated by the DFSA. The ADGM in Abu Dhabi is regulated by the FSRA. They have different company laws, different offering rules and different answers. The verdict on this page is the onshore one, and it should never be quoted for a DIFC or ADGM issuer.
General information, not legal advice. No article number of the Commercial Companies Law is published on this page. The premium, consent and pre-emption provisions described here were read in professional summaries of the Decree-Law rather than in the Decree-Law itself, whose official host was unreachable during research, and they must be confirmed against the statute. The nominal-value rules and the DIFC and ADGM regimes were not established. Take advice from qualified UAE counsel.
If a UAE-linked group is looking at this structure, the productive question is usually which entity and which venue, not which terms. The eligibility test starts there. For the shape of the instrument where pricing is negotiated, read convertible notes for listed issuers; for the version that never gets built here, read private placements by a public company. Where the listing sits elsewhere in the region, that venue and its rulebook are what the answer turns on.
- All markets
- Saudi Arabia: a 15% ceiling
- Qatar: approval per offering
- Kuwait: a par floor
- China: pricing set by formula
Primary sources
- Ministry of Economy — Federal Decree-Law No. 32 of 2021 on Commercial Companies
- Capital Market Authority (successor to the SCA, 1 January 2026)
- Dubai Financial Market
- Abu Dhabi Securities Exchange
Financing a UAE-listed issuer: frequently asked questions
Why is a floating conversion price unavailable onshore in the UAE?
Because the pricing decision does not belong to the parties. A public joint stock company may issue shares at a premium only by special resolution and with the prior consent of the Capital Market Authority, and the method of calculating that premium is prescribed by a resolution of the CMA itself. A price the investor and the issuer agree at each conversion has nowhere to sit in that architecture.
Can a UAE public joint stock company issue convertible bonds or sukuk at all?
Yes. The Commercial Companies Law contemplates bonds or sukuk convertible into shares and allows the company to increase its capital by converting them, subject to the special resolution approving their issue and notwithstanding the pre-emption provisions that would otherwise apply. The instrument exists. What does not exist is freedom over how the conversion price is set.
Is foreign ownership the reason this market is closed?
No, and that is a common misreading. Foreign ownership of UAE companies was substantially liberalised from 2021 and is no longer the primary obstacle for an outside subscriber. The obstacle is the pricing and approval architecture: a special resolution, prior regulatory consent, and a premium calculated by a method the regulator sets.
Does the UAE screen verdict cover Nasdaq Dubai and ADGM?
No. It covers the onshore regime supervised by the Capital Market Authority, which is what governs the Dubai Financial Market and the Abu Dhabi Securities Exchange. Nasdaq Dubai sits in the DIFC under the Dubai Financial Services Authority and the ADGM sits under the Financial Services Regulatory Authority. Those are separate legal systems with their own rulebooks and were not screened here.
What is available instead
What remains onshore is a convertible priced at signing, carried by a special resolution with the Authority's prior consent. This verdict does not reach Nasdaq Dubai in the DIFC or the ADGM, which are separate regimes and were not screened. Saudi Arabia is the nearest onshore market with a published conversion ceiling.