In the rapidly evolving business landscape of Abu Dhabi, a Public Joint Stock Company (PJSC) represents one of the most versatile and potentially lucrative forms of corporate entity. Offering the benefits of public ownership and raising capital through public shares, PJSCs play a critical role in the economic growth of the Emirate and the UAE as a whole. This article provides a detailed look at what PJSCs are, their features, advantages, regulatory landscape, and the process of setting one up in Abu Dhabi.
What is a Public Joint Stock Company?
A Public Joint Stock Company is a form of corporation that can offer its shares to the public. It can raise capital by issuing shares through the Abu Dhabi Securities Exchange (ADX) or any other approved securities exchange platform. This allows the company to tap into a broader range of capital resources compared to private companies.
Key Features of a PJSC
Ownership
A PJSC is open to public investment. Any person or entity, including foreign investors, can own shares.
Liability
Shareholders’ liability is limited to their shareholding in the company, thereby protecting personal assets.
Governance
PJSCs are subject to strict governance and regulatory compliance, which necessitates a higher level of disclosure and transparency.
Minimum Capital
A minimum share capital is generally required, and this amount varies depending on the sector and type of activities the PJSC will engage in.
Board of Directors
A PJSC must have a Board of Directors, usually comprising a minimum of three members, to oversee its operations.
Advantages
- Access to Capital: Easier to raise capital through public investment.
- Limited Liability: The financial risk is limited to the investment in shares.
- Transparency: Required to publish financial reports, thereby increasing credibility.
- Liquidity: Shares can be easily bought and sold on the stock exchange.
- Business Continuity: Less risk of business disruption due to changes in ownership.
Regulatory Landscape
Securities and Commodities Authority (SCA)
This federal agency regulates the capital markets and securities activities, including the issuance of shares by PJSCs.
Abu Dhabi Securities Exchange (ADX)
The local stock exchange where most Abu Dhabi-based PJSCs are listed.
Department of Economic Development (DED)
Responsible for issuing the commercial license and overseeing the business activities of PJSCs in Abu Dhabi.
Requirements for Setting up a PJSC
Feasibility Study
A detailed feasibility study is generally required, outlining the business model, market analysis, financial projections, and risk assessment.
Memorandum and Articles of Association
Legal documents that outline the company’s structure, objectives, and governance framework.
Approval from SCA
Prior approval for issuing shares and going public is required from the Securities and Commodities Authority.
Listing on ADX
The PJSC must comply with all requirements for listing shares on the Abu Dhabi Securities Exchange, which includes financial audits and regulatory filings.
Minimum Share Capital
A minimum amount of share capital must be deposited in a UAE-based bank. This amount varies based on the type of business activity.
Steps for Establishment
- Initial Approval: Secure initial approvals for the business name and activities from the DED.
- Documentation: Prepare all required legal and financial documents.
- SCA Approval: Obtain approval from the Securities and Commodities Authority for public listing.
- Bank Account: Open a corporate bank account and deposit the minimum share capital.
- ADX Listing: Fulfill all requirements and list the shares on the Abu Dhabi Securities Exchange.
- Final Licensing: Once all approvals are in place and the shares are successfully listed, the DED will issue the final commercial license.