UAE’s SCA Exempts Firms Listing Green Bonds and Sukuk from Registration Fees

The UAE’s Securities and Commodities Authority (SCA), has approved a proposal to exempt companies wishing to list their green or sustainability-related bonds or sukuk in a local market from registration fees for the year 2023.

The decision aims to shed light on highlighting the businesses that It is carried out by the state to achieve the goals of sustainable development on more than one level, especially about sustainable economic growth. The decision was taken by the SCA’s Board of Directors, who met under the chairmanship of Muhammad Ali Al-Shurafa.

Dr Sultan Ahmed Al-Jaber, Minister of Industry and Advanced Technology and President-designate of COP28, praised this initiative, said that green bonds and sukuk initiative launched by the SCA is an important positive step that contributes to the promotion of sustainability practices, and the objectives of this initiative are in line with the agenda The work of the COP28 conference in the field of climate finance.

“We look forward to all stakeholders around the world making more efforts to promote sustainability in the financial sector, especially as these initiatives contribute to achieving sustainable economic growth in the long term,” the Minister added.

Muhammad Ali Al-Shurafa said that the SCA’s decision is in line with the declaration of His Highness Sheikh Mohammed bin Zayed Al Nahyan, President of the UAE, declaring 2023 the ‘Year of Sustainability’, and supports the Authority’s efforts to encourage companies to move towards issuing bonds and sukuk.

“Green and sustainability-related financing for sustainable projects related to the environment and climate and encourages investors and companies towards adopting environmentally friendly investment opportunities,” he added.

It may be mentioned here that the registration fee for bonds and sukuk for the purpose of listing – which the SCA has agreed to temporarily exempt the companies as part of its follow-up to the Decision No. (32/RM) of 2018 regarding the due technical service fees at a rate of (0.01%) of the issue value and a maximum of $8,167.

The SCA has issued a Decision No. (21/RM) in February this year for 2023 regarding the regulation of green bonds and sukuk related to sustainability, as this decision allowed public shareholding companies to issue green bonds and sukuk.

Proceeds to Fund Green Projects

The entire subscription proceeds are used to finance or refinance environmentally friendly sustainable projects such as (renewable energy projects, energy efficiency projects, pollution prevention and control projects, environmentally sustainable management projects for living natural resources and land use, projects for preserving terrestrial and aquatic environmental diversity, and transportation projects clean water, and sustainable water and wastewater management projects), as well as companies issuing bonds and sukuk related to sustainability, through which the sustainability goals specified by the issuing company are achieved within a predetermined period of time to contribute to the achievement of key performance indicators, and bear structural and/or financial advantages and characteristics. Subject to change depending on the source achieving its sustainability goals.

According to the UAE Green Bond and Sukuk Programme Development: Situation Analysis Report, the total value of the domestic market for green sukuk, bonds, and loans has reached nearly $17 billion over the past years.

Some of the major green bond and sukuk issuers in the UAE include a $750 million debut sustainable sukuk from Dubai Islamic Bank (DIB), a $500 million green bond from Abu Dhabi Commercial Bank (ADCB) and First Abu Dhabi Bank, which has been one of the region’s leaders with three green bond issuances accounting for approximately $1.49 billion in 2022.