Amanat follows a similar decision by shareholders of Dubai developer
EME asked Rima the following:
Why should publicly-listed companies consider 100% foreign ownership schemes?
"Prominent real estate developer
"According to the proposed resolution, "there is no minimum shareholding requirement for
"Apart from that, the company's board has also recommended another special resolution to approve the increase of the share capital of the company to Dhs8.8387bn by issuing 659,050,967 fully paid-up shares at a nominal value of Dhs1 per share. Both special resolutions clearly represent the new vision of the company to increase foreign ownership and appeal to international investors.
What are the benefits of 100% ownership schemes for publicly-listed companies?
"Foreign ownership limitations restrict the amount a foreign company or individual can invest in a business/company in another country through buying its shares. As for the reasons usually presented in favor of foreign ownership restrictions, such limitations are used by national governments to increase economic rents and/or to maintain local control of resources."
"On the other hand, there are some undoubtedly significant benefits for listed companies having no limitation on foreign ownership. First of all, such companies are fully open to the international trade markets which allow their stocks to become widely tradable. Opening towards international investors and international trade markets results in new investment opportunities, reinforces the trading/investing environment as much as it increases the appetite of already involved foreign shareholders."
"In general, the possibility of full foreign ownership also makes the listed company more appealing in the eyes of both foreign and domestic investors. The stocks of the company will be more visible to any potential investor which will eventually lead to higher performance and competitiveness."
"Last but not least, being exposed to new international markets will subsequently contribute to international trade standards being implemented. The above-mentioned apply with no difference to
What are the potential risks of such a move?
Every action has its reaction and that applies twice as much when it comes to international stock markets. As far as there is probably no reason to expect any inherent danger associated with being fully open to foreign ownership, there are several risks that the company will eventually need to deal with including more volatility and more tendency to be affected by the international market trends and general international market conditions.
Conclusion
To conclude, in the GCC region, the possibility of full foreign ownership of publicly listed companies is still not that common. For example, within the
Originally Published by Economy Middle East
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