Capital Raising in the UAE: Prospectus Liability, Private Placements, and the 2026 CMA Regime

The SCA no longer exists and the prospectus rules have changed

On 1 January 2026, the Capital Market Authority (CMA) replaced the Securities and Commodities Authority as the UAE's federal capital markets regulator. Two new laws took effect simultaneously: Federal Decree-Law No. 32 of 2025, which establishes the CMA, and Federal Decree-Law No. 33 of 2025, which sets out the substantive framework for capital markets regulation, including a statutory prospectus liability regime that did not previously exist in codified form. Any company that issued securities, raised capital, or structured an offering under the old SCA Rulebook is now operating under a materially different legal framework.

• Public offerings of securities in the UAE require prior CMA approval and a prospectus that complies with the new Capital Markets Law. The CMA has broad powers to suspend an issuance if it considers the offer would breach the law.
• Article 29 of the Capital Markets Law imposes explicit statutory liability for the prospectus on the issuer's board of directors, executive management, and advisers, each within the scope of their respective competencies.
• Administrative penalties under the new regime reach up to AED 200 million or ten times the profit achieved or loss avoided, a substantial increase from the prior framework.
• The law applies to foreign issuers, including entities incorporated in the DIFC or ADGM, when they offer or trade securities in the UAE mainland. It also applies to any person targeting clients in the UAE, even when operating from outside the country or from a financial free zone.
• Existing SCA decisions and regulations remain in force to the extent they do not conflict with the new laws. All entities subject to the Capital Markets Law must regularise their status by 1 January 2027.

Who this applies to

The new framework is relevant to any company planning an IPO on the ADX or DFM, issuers of debt securities or Sukuk on the UAE mainland, private companies raising capital through private placements under the amended Commercial Companies Law, investment banks, underwriters, and financial advisers who participate in offerings, and foreign companies or free zone entities directing offerings at UAE-based investors.

For legal support from financial services lawyers in the UAE, including capital raising, prospectus review, and CMA regulatory compliance, our team advises issuers, underwriters, and institutional investors across the DIFC, ADGM, and UAE mainland.

Companies that do not intend to make a public offering but are raising capital from a limited group of investors also fall within scope. The Capital Markets Law's definition of regulated financial activities is broad enough to capture certain private placements and cross-border solicitation that were previously treated as outside the SCA's perimeter.

What changed from the SCA regime to the CMA regime

The transition from the SCA to the CMA is not a rebranding exercise. The new laws introduce several provisions that either did not exist under the old framework or that codify what was previously derived from practice, guidance, or market convention.

Statutory prospectus liability. Under the prior regime, prospectus liability was addressed through a combination of SCA regulations, general civil law principles, and contractual arrangements. Article 29 of the Capital Markets Law now creates a unified statutory basis. Liability is imposed on the board of directors for the accuracy and completeness of the prospectus, executive management for information within their operational responsibility, and advisers (including legal counsel, auditors, and financial advisers) for information falling within their professional competence. This codification raises the due diligence standard. Underwriters and advisers should ensure that verification records and diligence materials are sufficiently documented to support available defences.

Price stabilisation safe harbour. Article 37(2) codifies a statutory safe harbour for price stabilisation activities conducted in accordance with CMA rules. Under the previous regime, stabilisation was governed by exchange-level rules, creating theoretical exposure to market manipulation charges. The elevation to federal statute resolves this ambiguity and aligns UAE practice with established international norms.

Enhanced enforcement powers. The CMA can impose fines of up to AED 200 million or ten times illicit gains, suspend trading accounts for up to three years, revoke licences, and refer matters for criminal prosecution. Criminal penalties for serious market misconduct offences (insider trading, market manipulation, misleading statements) have also been increased. The penalty framework is now materially more severe than what was available to the SCA.

Extraterritorial reach. The Capital Markets Law explicitly applies to any person targeting clients in the UAE with regulated activities, even when operating from outside the UAE or from a financial free zone. This codifies an expansive jurisdictional approach that has implications for foreign fund managers, offshore placement agents, and cross-border marketing arrangements. Companies directing offerings at UAE investors from offshore locations should review whether their activities now fall within the CMA's perimeter.

Virtual assets. The Capital Markets Law brings virtual assets within the CMA's regulatory scope. Virtual asset service providers must register with the CMA and operate through approved platforms. For companies in the tokenisation space, our article on tokenising economic rights via an SPV in the UAE addresses the structuring considerations that now intersect with the CMA's expanded mandate.

How a public offering works under the new framework

A public offering of securities on the UAE mainland (ADX or DFM) requires CMA approval, a prospectus that meets the disclosure requirements set out in the Capital Markets Law and implementing regulations, and compliance with the listing rules of the relevant exchange. The process involves several stages that issuers and their advisers must coordinate.

The prospectus must contain all information necessary for an investor to make an informed investment decision. This includes the issuer's financial position, business operations, risk factors, use of proceeds, governance structure, and any material contracts. The CMA reviews the prospectus for compliance and has the power to require amendments, impose conditions, or reject the application.

The issuer's board of directors must approve the prospectus and, under Article 29, each board member assumes personal statutory liability for its contents within the scope of their competence. This is a higher standard than the prior regime, where board liability was primarily contractual or derived from general civil law principles. Executive management and named advisers (legal, financial, audit) similarly bear liability for information they contributed or verified.

For IPOs specifically, the principal regulation governing the process remains SCA Chairman of the Board Resolution No. 11/R.M of 2016 on the Regulations for Issuing and Offering Shares of Public Joint Stock Companies (as amended), which continues in force to the extent it does not conflict with the new laws. This operates alongside the Commercial Companies Law (Federal Decree-Law No. 32 of 2021, as amended by Federal Decree-Law No. 20 of 2025), which sets corporate governance and structural requirements for public joint stock companies.

For companies considering an IPO, the due diligence process mirrors international best practices. Our article on due diligence in UAE M&A transactions covers the legal, financial, and operational review framework that applies equally to pre-IPO preparation.

Private placements on the UAE mainland

Private joint stock companies may now raise capital through private placements within UAE financial markets, following the amendments introduced by Federal Decree-Law No. 20 of 2025 to the Commercial Companies Law. This closes a historical gap that previously forced many issuers to rely on offshore structures or parallel vehicles for private capital raising.

A private placement allows a company to sell shares or other securities directly to a limited group of investors, typically institutional investors or high-net-worth individuals, without the full prospectus requirements that apply to a public offering. However, the implementing regulations from the CMA that will define the specific procedures, investor eligibility criteria, and disclosure requirements for mainland private placements have not yet been issued as of March 2026.

Under the prior SCA regime, the SCA Rulebook defined categories of exempt offers and qualified investors. The "Professional Investor" exemption permitted certain transactions to proceed without full public offering requirements, though the scope and application of this exemption was narrowed by SCA amendments in 2023, particularly for the marketing of foreign funds. The CMA is expected to issue implementing regulations clarifying whether existing exemptions are preserved, modified, or replaced.

Until the implementing regulations are issued, companies planning a private placement on the UAE mainland should proceed with caution. The Capital Markets Law is in force, but the detailed rules that determine how private placements are structured, documented, and reported are still being developed. The one-year transition period (until 1 January 2027) provides some runway, but companies should not assume that pre-2026 practices will be carried forward unchanged.

How the DIFC exempt offer regime works

The DIFC operates its own securities regulation through the Dubai Financial Services Authority (DFSA), which is independent of the CMA. Securities offered exclusively within the DIFC are governed by DIFC law, not the Capital Markets Law. However, where a DIFC-incorporated issuer offers securities to investors on the UAE mainland, the Capital Markets Law applies to that offering.

Within the DIFC, the DFSA's Markets Rules provide several exempt offer categories that allow securities to be offered without a full prospectus registered with the DFSA. The most commonly used exemptions are offers directed at fewer than 50 persons in any 12-month period (excluding professional clients that are not natural persons), offers where the minimum consideration per investor is at least USD 100,000, offers where the total aggregate consideration is less than USD 100,000 over 12 months, and offers made exclusively to professional clients.

For investment funds, the DIFC offers three categories with progressively lighter regulation. Public Funds require full DFSA registration and a prospectus. Exempt Funds may only be offered by private placement to professional clients, with a minimum subscription of USD 50,000 and a maximum of 100 investors. Qualified Investor Funds (QIFs) are the least regulated, requiring only DFSA notification (typically acknowledged within two to four business days), with a minimum subscription of USD 500,000 and no cap on investor numbers beyond the professional client requirement.

The DFSA's definition of "Professional Client" includes deemed professional clients (regulated entities, government bodies, large undertakings), assessed professional clients (individuals with net assets of at least USD 1 million and relevant financial experience), and service-based professional clients. The categorisation determines which products can be offered and what level of disclosure is required.

For companies establishing operations in the DIFC, our article on DIFC business setup covers the licensing process. For those considering an SPV or holding structure, our article on holding company setup in Dubai addresses the comparison between DIFC, ADGM, and mainland options.

How the ADGM exempt offer regime works

The ADGM, regulated by the Financial Services Regulatory Authority (FSRA), offers a parallel framework. Its Markets Rules provide exempt offer categories broadly similar to the DIFC's, including offers to professional clients, offers below minimum consideration thresholds, and offers to fewer than 50 persons.

The ADGM's framework is modelled on common law principles and draws from UK regulatory precedents. For issuers considering where to list or structure an offering, the choice between the DIFC and ADGM depends on the target investor base, the type of security, and the governing law preference. Both free zones are excluded from the CMA's direct jurisdiction, provided the offering activity occurs exclusively within the free zone. The moment the offering targets investors outside the free zone and into the UAE mainland, the Capital Markets Law applies.

Prospectus liability under Article 29

The statutory prospectus liability regime under Article 29 of the Capital Markets Law is the single most significant change for issuers, directors, and advisers. Under the prior SCA framework, liability for prospectus misstatements was derived from general civil law principles (primarily tort and contract under the UAE Civil Code), the SCA's administrative enforcement powers, and contractual indemnification arrangements between the issuer and its advisers. There was no unified statutory provision that explicitly allocated liability.

Article 29 changes this. Statutory liability is now imposed directly on the issuer's board of directors for any failure to provide required information or for providing misleading or inaccurate information in the prospectus. Executive management bears the same liability for information within their operational scope. Advisers, including legal counsel, auditors, and financial advisers, are liable for information they prepared, verified, or contributed within their professional competence.

The practical implications are threefold. First, board members can no longer rely on general comfort that prospectus liability is primarily a corporate obligation; it is now personal and statutory. Second, advisers must ensure their engagement letters clearly define the scope of their responsibility, because Article 29 allocates liability "within the scope of their respective competencies." Third, the verification process for UAE offerings must be at least as rigorous as what is expected in jurisdictions with mature prospectus liability regimes (the UK, the US, and the EU). Underwriters who previously relied on contractual indemnities from the issuer as the primary protection should review whether those arrangements remain adequate under a framework where their own statutory exposure is codified.

What the transition period means

The Capital Markets Law entered into force on 1 January 2026. Entities subject to the law must regularise their status within one year, by 1 January 2027, though the CMA may extend this period. During the transition, existing SCA decisions, regulations, and implementing resolutions remain in force to the extent they do not conflict with the new laws.

This creates a period of regulatory uncertainty. The SCA Rulebook (SCA Decision No. 13/RM/2021) has not been formally repealed or replaced, but its provisions are now subordinate to the Capital Markets Law wherever they conflict. The CMA has not yet issued comprehensive implementing regulations, which means that certain procedures, such as the detailed requirements for private placements, the scope of exempt offers, and the mechanics of CMA prospectus review, remain governed by a combination of existing SCA rules and the new statutory framework.

For companies with offerings in progress or planned for 2026, the practical approach is to comply with both the Capital Markets Law and the surviving SCA Rulebook provisions, applying the higher standard where they diverge. Companies should also monitor CMA announcements closely, as implementing regulations are expected to be issued progressively during 2026.

What companies should do next

For issuers planning a public offering on the ADX or DFM, the immediate priority is to ensure that the prospectus preparation process accounts for Article 29 statutory liability. This means board-level engagement in the prospectus review process (not delegation to management alone), clear allocation of responsibility between the issuer, its legal counsel, and its financial advisers, and a documented verification process that can demonstrate due diligence if a claim arises.

For companies considering a private placement on the UAE mainland, the key question is whether the CMA's forthcoming implementing regulations will preserve the professional investor and exempt offer categories that existed under the SCA Rulebook. Until those regulations are issued, companies should structure private placements conservatively, document investor eligibility carefully, and seek legal advice on whether their proposed transaction falls within a surviving exemption.

For companies raising capital through the DIFC or ADGM, the existing exempt offer regimes continue to operate within those jurisdictions. However, any marketing or solicitation directed at investors on the UAE mainland will trigger the Capital Markets Law's requirements. The passporting arrangement between the CMA, DFSA, and FSRA provides a pathway for cross-jurisdictional offerings, but its scope and conditions should be confirmed against the new framework.

The 2026 regulatory changes affecting UAE companies are among the most extensive in the country's corporate and financial law history. The Capital Markets Law is one part of a broader legislative programme that includes amendments to the Commercial Companies Law, the new CBUAE Law, and the new Civil Transactions Law. Companies operating across multiple regulatory perimeters should assess the combined effect of these reforms on their capital structure, governance arrangements, and fundraising plans.

Legal advice may be required to assess how the new prospectus liability regime applies to your specific offering structure and to determine whether an exemption from full prospectus requirements is available for your proposed transaction.

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