ADGM: FSRA updates regulatory framework to facilitate funding of private enterprises
The Abu Dhabi Global Market ('ADGM') announced, on 8 February 2022, that the Financial Services Regulatory Authority ('FSRA') of the ADGM has updated its regulatory framework to support the development of private capital markets. In particular, the ADGM noted that the updated framework aims to enable and foster greater participation by investors and private enterprises seeking funding, a market which has struggles with illiquidity.
In this regard, the ADGM noted that the investments in private markets have been largely limited to professional investors which is exacerbated by the absence of an organised market for such investments, resulting in illiquidity in the past. However, the ADGM stated that with innovative financial technology, such as digital assets and tokenised securities, private capital markets are increasingly accessible to investors of all types and more efficient for private enterprises that seek to raise capital, introducing more liquidity to the market. Further, the ADGM noted that the updated framework promotes broader participation of private market stakeholders through technology platforms that allow:
- private enterprises to raise capital from professional investors alongside a limited number of non-professional investors, the latter group being required to have relevant investment knowledge and experience, without the need to 'go public' and issue a prospectus; and
- securities issued through the framework to trade on technology platforms amongst professional investors and qualifying non-professional investors.