Elegant Chapter 1 - Regulatory

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Elegant Chapter 1 - Regulatory - Part 2

Market Licensing, Resolutions & Trading Rules

Market Licensing – Legal Form

86. Which legal form is required for a securities market to obtain a license from the SCA?

1 point

Limited liability company or cooperative society

Public establishment or public joint-stock company

Private joint-stock company or partnership

Sole proprietorship or foreign branch only

Clear selection

Market License – Building Requirement

87. To qualify for licensing, a securities market must:

1 point

Occupy a suitable building

Operate in at least two Emirates

Hold majority government ownership

Maintain foreign clearing arrangements

Clear selection

Market License – Electronic Link

88. A licensed market must:

1 point

Maintain electronic linkage with other UAE markets

Link directly with international exchanges only

Provide offline settlement reports only

Allow brokers to self-certify data

Clear selection

Market License Application Documents

89. Which of the following must be included in a market license application?

1 point

List of Board members with declaration of non-membership in PJSC or brokerage

Evidence of dividend distribution

Forecast of 10-year profits

List of international market partners

Clear selection

Market License – Organizational Structure

90. As part of the licensing application, the market must provide:

1 point

Organizational structure and internal regulations

List of all foreign investors

Detailed employee payroll

Approval from Central Bank of UAE

Clear selection

SCA Review Timeline

91. Upon receiving a license application, the SCA must review and respond within:

1 point

7 days

15 days

30 days

45 days

Clear selection

Completion of Application Timeline

92. If a license application is incomplete, the SCA must notify the applicant, who must complete it within:

1 point

7 days

15 days

21 days

30 days

Clear selection

SCA Board Decision on License

93. The SCA Board must issue its decision on a license application within:

1 point

15 days of application

30 days of receiving the complete application

45 days of submission

60 days of notification

Clear selection

Notification of Decision

94. Once the SCA Board issues a decision on a license application, concerned parties must be notified within:

1 point

3 days

7 days

14 days

30 days

Clear selection

Re-submission of Rejected License

95. If the SCA rejects a license application:

1 point

The decision is final and binding

Applicant may re-submit once reasons for rejection no longer exist

Applicant must wait 5 years before reapplying

Appeal must go to the Central Bank

Clear selection

Investigations by SCA

96. During investigations into a market or broker, the SCA may order:

1 point

Party not to dispose of securities or withdraw funds

Immediate suspension of company dividends

The Central Bank to block all market accounts

Brokers to cancel all pending trades

Clear selection

Market Financial Statements Requirement

97. A licensed market must submit audited financial statements to the SCA:

1 point

Quarterly within 30 days of quarter-end

Annually within 1 month after financial year-end

Semi-annually within 90 days

Only upon request

Clear selection

Market Board Power – Suspension

98. The Board of a licensed market may temporarily halt trading in:

1 point

Entire securities market, shares of any company, or transactions in any securities

Only securities issued by foreign companies

Only government securities

Only commodities, not securities

Clear selection

Market Rules – Freezing

99. The market’s Board may:

1 point

Freeze, suspend, or reinstate market rules and regulations

Override SCA decisions on broker licenses

Declare new laws for securities settlement

Issue fiscal policy guidelines

Clear selection

Market Membership Requirement

100. Which entities are obligated to be members of a licensed market?

1 point

Licensed brokers, joint-stock companies with listed securities, and other listed entities

All investors with trading accounts

Only UAE citizens

Foreign institutional investors only

Clear selection

Membership Register Requirement

101. Each market must:

1 point

Prepare a membership register and notify SCA within 1 week of new members

Publish membership details quarterly in newspapers

Submit register annually to the Central Bank

Report only when membership exceeds 100

Clear selection

General Assembly of Market

102. The General Assembly of a market consists of:

1 point

All licensed brokers in UAE

Members who paid registration and renewal fees

Only market’s Board of Directors

All investors with accounts exceeding AED 1 million

Clear selection

Code of Professional Conduct

103. Markets are required to:

1 point

Lay down a code of professional conduct applicable to brokers

Set employment rules for listed companies

Establish audit standards for all UAE businesses

Define foreign ownership caps

Clear selection

Trading Hours Requirement

Option 1

Clear selection

104. Trading in securities in UAE markets must occur for:

1 point

At least 3 days per week, 2 hours daily

At least 5 working days per week, 2 hours daily

6 days a week, 3 hours daily

Flexible, as per broker preference

Clear selection

Settlement Cycle

105. What is the prescribed settlement cycle for securities transactions in UAE markets?

1 point

T+1 (one day after trade)

T+2 (two days after trade)

T+3 (three days after trade)

Real-time settlement only

Clear selection

Corporate Governance

Corporate Governance Definition

106. Corporate governance refers to:

1 point

The financial reporting standards for auditors

The set of regulations, criteria, and procedures ensuring disciplined management of companies

The dividend policies of listed companies

The appointment of SCA Board members

Clear selection

Governance for Public Joint-Stock Companies

107. Corporate governance rules in the UAE specifically apply to:

1 point

Private partnerships

Public joint-stock companies

Cooperatives

Sole proprietorships

Clear selection

Objective of the Corporate Governance Guide

108. Which of the following is NOT an objective of the Corporate Governance Guide?

1 point

Protect rights of stakeholders

Develop frameworks for risk management

Guarantee profit margins for shareholders

Enhance transparency and equity in markets

Clear selection

Pillar – Accountability

109. Accountability in the Corporate Governance Guide means:

1 point

Accountability only to majority shareholders

Accountability to all shareholders and stakeholders

Accountability solely to the SCA

Accountability limited to creditors

Clear selection

Pillar – Equity

Option 1

Clear selection

110. Equity under corporate governance requires:

1 point

Equal distribution of dividends

Fair treatment of all shareholders

Equal voting rights regardless of shareholding

Fair treatment of only institutional shareholders

Clear selection

Pillar – Transparency

Option 1

Clear selection

111. Transparency as a governance principle requires:

1 point

Immediate public disclosure of all board decisions

Timely disclosure of all material matters

Disclosure only to regulators, not shareholders

Disclosure only in annual reports

Clear selection

Pillar – Responsibility

Option 1

Clear selection

112. Responsibility under the guide refers to:

1 point

Recognizing the rights of stakeholders in line with laws and regulations

Guaranteeing share price appreciation

Transferring management powers to external auditors

Only ensuring internal HR policies

Clear selection

Recordkeeping Requirement

Option 1

Clear selection

113. Public joint-stock companies must keep books of accounts and records at headquarters for at least:

1 point

5 years

7 years

10 years

Indefinitely

Clear selection

Recordkeeping During Legal Proceedings

Option 1

Clear selection

114. If a company is involved in a lawsuit or investigation, its records must be kept:

1 point

For 3 years after case starts

Until the matter is fully resolved

Until SCA grants approval to destroy them

For 1 year beyond statutory period

Clear selection

Gifts to Board Members

Option 1

Clear selection

115. A PJSC board member may accept a gift or entertainment if:

1 point

Value ≤ AED 500 and not linked to company business

Value ≤ AED 5,000 with disclosure

Value ≤ AED 1,000 even if linked to transactions

Value unlimited if approved by Chairman

Clear selection

Conflict of Interest Disclosure

Option 1

Clear selection

116. When a PJSC board member has a conflict of interest in a transaction, he/she must:

1 point

Abstain from board meetings for one year

Inform the board, record in minutes, and not vote

Seek SCA’s prior written approval

Resign immediately

Clear selection

Insider Definition

Option 1

Clear selection

117. In UAE corporate governance, insiders include:

1 point

Only shareholders holding 10% or more

Board members and employees

Only executive management

Only auditors

Clear selection

Insiders Register – Requirement

Option 1

Clear selection

118. Each PJSC must maintain an insiders register containing:

1 point

Only transactions of permanent insiders

All insiders, including temporary, with access to inside information

Only the names of board members

Only employee shareholdings above 5%

Clear selection

Insiders Register – Information

Option 1

Clear selection

119. The insiders register must include:

1 point

All disclosures and reasons why the person is on the list

Only date and amount of share transactions

Broker confirmations only

Only annual summaries

Clear selection

Submission of Insiders Register

Option 1

Clear selection

120. An updated list of insiders must be submitted to the SCA:

1 point

At the beginning of each fiscal year

Every quarter

Every six months

Only upon request

Clear selection

Related Party – Definition

Option 1

Clear selection

121. Which of the following is considered a “related party” under corporate governance rules?

1 point

Chairman and board members

Only minority shareholders

External auditors

Central Bank officials

Clear selection

Related Party – Companies Included

Option 1

Clear selection

122. Related parties also include companies in which such persons hold:

1 point

10% of capital

20% of capital

30% or more of capital

More than 50% of capital

Clear selection

Related Party – Subsidiaries & Affiliates

Option 1

Clear selection

123. Which entities are considered related parties in addition to individuals?

1 point

Subsidiaries, sister companies, and affiliates

Only foreign-owned companies

Only government-linked companies

Joint ventures with over 75% government ownership

Clear selection

Related Party Transaction <5%

Option 1

Clear selection

124. If a related party transaction is valued at less than 5% of a company’s issued capital, it requires:

1 point

Approval by the Board of Directors

No approval at all

Approval by SCA directly

Approval by the shareholders

Clear selection

Related Party Transaction ≥5%

Option 1

Clear selection

125. If a related party transaction equals or exceeds 5% of issued capital, it requires:

1 point

Approval by the general assembly and evaluation by SCA

Approval only by the Board of Directors

Approval by Central Bank of UAE

Approval only by minority shareholders

Clear selection

Related Party Voting Restriction

Option 1

Clear selection

126. In related party transactions requiring approval, related parties:

1 point

May vote only if under 5% ownership

Are prohibited from voting

May vote if authorized by Chairman

Can vote if disclosed to auditors

Clear selection

Related Party Register

Option 1

Clear selection

127. Companies must maintain a register of related parties containing:

1 point

Names and details of all related party transactions

Only transactions above AED 10 million

Only transactions involving directors

Annual summaries without shareholder notification

Clear selection

Disclosure of Related Party Transactions

Option 1

Clear selection

128. Before entering into a related party transaction, the related party must:

1 point

Disclose in writing to the board the nature of the transaction

Seek approval from the Central Bank

Announce the transaction on social media

Notify shareholders directly without board involvement

Clear selection

Public Disclosure of Related Party Transactions

129. Details of related party transactions must be:

1 point

Published in the annual financial statements and on market/company website

Disclosed only to board members

Shared only with auditors

Filed with the Ministry of Finance

Clear selection

Shareholder Right of Access

Option 1

Clear selection

130. If a company enters into related party transactions, a shareholder owning how much or more may access the transaction?

1 point

10%

Clear selection

License Categories & Accounting System Controls

Option 1

Clear selection

Activities Requiring SCA License

Option 1

Clear selection

131. Which of the following financial activities require an SCA license?

1 point

Only trading in commodities

Dealing in securities, investment management, custody, credit rating, and advice

Only corporate governance consulting

Only banking and lending

Clear selection

License Requirement – Approved Jobs

Option 1

Clear selection

132. No main function or approved job can be undertaken without:

1 point

Approval by the company’s board

Prior approval of the SCA

Central Bank notification

Annual shareholder approval

Clear selection

Category 1 – Legal Form

Option 1

Clear selection

133. For “Dealing in Securities,” firms must be:

1 point

Incorporated in the UAE or branch of a foreign company

Sole proprietorships

Government agencies

Cooperatives only

Clear selection

Category 1 – Capital Requirement

Option 1

Clear selection

134. Minimum paid-up capital for Category 1 (Dealing in Securities) is:

1 point

AED 10 million

AED 20 million

AED 30 million

AED 50 million

Clear selection

Category 1 – Key Roles

Option 1

Clear selection

135. Which roles are mandatory under Category 1 licensing?

1 point

Category Manager, Compliance Officer, Risk Management Officer

Portfolio Manager, Auditor, Analyst

Board Member, Lawyer, Auditor

Central Bank Supervisor, Auditor, CFO

Clear selection

Category 2 – Legal Form

Option 1

Clear selection

136. For “Dealing in Investment,” firms must be:

1 point

Incorporated in the State or foreign branch

Only cooperatives

Sole proprietorships

Non-profit entities

Clear selection

Category 2 – Capital Requirement

Option 1

Clear selection

137. The minimum paid-up capital for Category 2 (Investment) is:

1 point

AED 20 million

AED 30 million

AED 50 million

AED 100 million

Clear selection

Category 2 – Investment Fund Requirement

Option 1

Clear selection

138. If managing investment funds, the firm must:

1 point

Be a PJSC established in the UAE

Be a sole proprietorship

Be licensed in a free zone only

Be 100% government owned

Clear selection

Category 2 – Key Roles

Option 1

Clear selection

139. In addition to Category Manager, Compliance Officer, and Risk Officer, which other role is mandatory in Category 2?

1 point

Investment Operations Manager

Auditor

Market Analyst

Lawyer

Clear selection

Category 3 – Custody & Clearing Legal Form

Option 1

Clear selection

140. For custody/clearing, firms must be:

1 point

Joint-stock companies or banks (domestic/foreign branches)

Sole proprietorships

Government entities

Cooperatives

Clear selection

Category 3 – Capital Requirement

Option 1

Clear selection

141. The minimum paid-up capital for Category 3 is:

1 point

AED 30 million

AED 40 million

AED 50 million

AED 100 million

Clear selection

Category 3 – Operations Manager Requirement

Option 1

Clear selection

142. Which role is NOT required if the firm acts only as registrar of private joint-stock companies?

1 point

Operations Manager

Compliance Officer

Risk Management Officer

Category Manager

Clear selection

Category 4 – Credit Rating Legal Form

Option 1

Clear selection

143. Credit rating agencies must be:

1 point

Legal persons in UAE, foreign branches, or licensed in a financial free zone

Sole proprietorships only

Government-owned only

Cooperatives

Clear selection

Category 4 – Capital Requirement

Option 1

Clear selection

144. Minimum paid-up capital for Category 4 (Credit Rating Agencies) is:

1 point

AED 1 million

AED 3 million

AED 5 million

AED 10 million

Clear selection

Category 4 – Regulatory Agreement

Option 1

Clear selection

145. If licensed in a free zone, the firm must:

1 point

Sign agreements ensuring SCA oversight

Operate without SCA involvement

Deal only in foreign securities

Be majority UAE-owned

Clear selection

Category 4 – Key Roles

Option 1

Clear selection

146. Which are mandatory professional roles in Category 4?

1 point

Category Manager, Compliance Officer, Credit Rating Analyst, Credit Rating Analysis Official

Portfolio Manager, Risk Officer, Fund Manager

Broker, Auditor, Trader

Analyst, Investor, Banker

Clear selection

Category 5 – Legal Form

Option 1

Clear selection

147. “Ranking and Advice” activities may be carried out by:

1 point

Licensed bodies in other categories, foreign branches, or banks

Only sole proprietorships

Only cooperatives

Only government-linked entities

Clear selection

Category 5 – Capital Requirement

Option 1

Clear selection

148. Minimum paid-up capital for Category 5 is:

1 point

AED 1 million

AED 5 million

None

AED 10 million

Clear selection

Category 5 – Key Roles

149. Mandatory roles for Category 5 include:

1 point

Category Manager, Compliance Officer, Risk Management Officer

Portfolio Manager, Auditor, Analyst

CFO, Lawyer, Auditor

CEO, Board Member, Auditor

Clear selection

Category 5 – Approved Jobs

Option 1

Clear selection

150. Which of the following jobs are linked to “Ranking and Advice”?

1 point

Financial Analyst, Financial Consultant, Listing Consultant, Promotion Manager

Portfolio Manager, Auditor, Trader

Broker, Custodian, Banker

Only Risk Managers

Clear selection

Accounting System Requirement

Option 1

Clear selection

151. Firms licensed under Category 1 must maintain:

1 point

A Unified Centralized Back Office System

Paper-based ledgers only

Any accounting method of their choice

Government’s federal accounting software

Clear selection

Accounting System – User Security

Option 1

Clear selection

152. The back-office system must include:

1 point

Passwords and user-specific powers

Universal login for all employees

Access only for auditors

Shared passwords for cost saving

Clear selection

Accounting System – Audit Trail

Option 1

Clear selection

153. The system must maintain an archive audit trail for:

1 point

Entries, powers, and traffic movements

Only financial statements

Dividends and profits

Investor complaints

Clear selection

Accounting System – Task Separation

Option 1

Clear selection

154. Which separation must be ensured in accounting systems?

1 point

Entry and posting tasks

Broker and investor accounts

Cash and securities accounts

Chairman and CEO roles

Clear selection

Accounting System – Time Settings

Option 1

Clear selection

155. Server device times for the back-office system must be set according to:

1 point

GMT

UAE local time

Market opening times

Central Bank timings

Clear selection

Backup Copies Requirement

Option 1

Clear selection

156. Backups of the back-office system must be kept:

1 point

Daily incremental and monthly full backups for 10 years

Weekly incremental only

Quarterly full backups only

Until system is updated

Clear selection

Auto Serial Numbering

Option 1

Clear selection

157. Each entry in the system must have:

1 point

An auto-generated serial number with date/time

A random number assigned by staff

A sequential manual ledger number

A yearly reset number

Clear selection

Reports Printing Capability

Option 1

Clear selection

158. The system must be able to print daily reports in formats including:

1 point

PDF and Excel

Word only

PowerPoint only

HTML only

Clear selection

End-of-Day Posting

159. At a minimum, the system must:

1 point

Post entries at end of day and prevent amendments

Allow unlimited amendments to past entries

Allow only weekly postings

Post only after SCA approval

Clear selection

Notification of Malfunction

Option 1

Clear selection

160. If an accounting system malfunctions, the licensed body must:

1 point

Notify the SCA immediately, with manufacturer’s explanation

Wait until problem is fixed internally

Inform shareholders only

Submit quarterly malfunction reports

Clear selection

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