Registration fee waiver for firms listing green bond, sukuk in local market: SCA

The board of directors of the UAE’s Securities and Commodities Authority (SCA) has approved a proposal to exempt companies aiming to list their green or sustainability-linked bond or sukuk in the local market from registration fees for 2023, according to a statement released by the authority.

Mohamed Ali Al Shorafa, who chairs the board said the decision was in line with the declaration of President Sheikh Mohamed bin Zayed Al Nahyan, declaring 2023 as the ‘Year of Sustainability‘.

“It supports the SCA efforts to encourage companies to move towards issuing green and sustainability-related bonds and sukuk to finance sustainable projects related to the environment and climate, and encourages investors and companies to adopt environmentally friendly investment opportunities,” he added.

Dr Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and COP28 President-Designate, said, “The SCA initiative for green and sustainability-linked bonds and sukuk is an excellent initiative that aligns perfectly with the broader COP28 agenda with regards to climate finance. The world as a whole needs to do more to advance sustainability in the financial space that in parallel also helps to contribute to sustainable long term economic growth.”

Exempting companies wishing to list their green or sustainability-linked bonds or sukuk in a local market from registration fees for 2023https://t.co/Tr2jKSZU3q pic.twitter.com/NDQ8zRaN0P

— SCA UAE (@sca_uae) June 6, 2023

Temporary waiver issued by SCA

The registration fee for bonds and sukuk for the purpose of listing, which the board agreed to waive temporarily, is determined by the chairman of the SCA’s board of directors’ Decision No (32 / R M) of 2018 regarding the due technical service fees at a rate of 0.01 per cent of the value of the issue subject to a maximum of Dhs30,000.

In February 2023, the SCA issued Decision No (21 / R M) of 2023 regarding the regulation of sustainability-linked green bonds and sukuk, as this decision allowed public shareholding companies to issue “green” bonds and sukuk whose entire subscription proceeds are used to finance or refinance eco-friendly sustainable projects. These include renewable energy projects, energy efficiency projects, pollution prevention and control projects, environmentally sustainable management projects for natural resources and land use, projects for preserving terrestrial and aquatic environmental diversity, clean transport projects, and sustainable management of water and wastewater projects.

It also covers companies’ issuance of sustainability-related bonds and sukuk, through which the sustainability goals specified by the issuing company are achieved within a predetermined period to contribute to the achievement of key performance indicators, and to bear structural and/or financial features and characteristics depending on the issuing company’s achievement of sustainability goals.

Responding to the SCA announcement, Fitch Ratings’ global head of Islamic Finance, Bashar Al-Natoor, said: “This announcement is another step in supporting the Debt Capital Market (DCM) and the broader sustainability and COP28 agenda in the UAE. It follows the decision in February by the SCA to allow public shareholding companies to issue green bonds and sukuk whose entire subscription proceeds are used to finance or refinance environmentally friendly sustainable projects.

“By addressing key limitations in the market, such as sustainability regulations and cost optimisations or incentives, capital markets are becoming more efficient, meaning sukuk and bonds could become a more attractive alternative of investment and funding.

“The UAE’s hosting of COP28 later this year is boosting the awareness of sustainable and green topics in the UAE across multiple sectors in the country, including the DCM. Of the outstanding green and sustainable issues in the UAE, 45 per cent are now in the sukuk format, and this latest announcement will support further developments in both the local sukuk and bond markets.”