Author - Truth Consultancy

December 2019

The unified clearinghouse supports the promotion of financial markets and enhances their efficiency

Reda Mosallam, partner and general manager of “Truth” Economic and Management Consultancy Company, stressed that establishing a unified clearing company will contribute greatly to the speed and accuracy of executing operations with high efficiency, in addition to transparency, which is very important for our local markets.

Mosallam added that this step, if implemented, would be an important step among the mechanisms required for promotion to developed markets, noting that the Emirates Securities and Commodities Authority is always working to implement best global practices, and will also apply best practices in the field of clearing in the world.

November 2019

10 advantages of the law of insolvency cases .. and the executive regulation soon

Reda Mosallam, partner and general manager of Truth Economic and Management Consultancy, said that the issuance of the law came at an important time to contribute to create a state of legislative integration to attract investments and to achieve a safe environment for capital.

He added that the law will apply to the natural person who does not engage in economic activity and is not considered in the merchant category, and thus will protect the debtor from any legal prosecution, and denies the criminal status of financial obligations of the insolvent person, and gives them an opportunity to work and productivity.

And regarding those who have been sentenced in cases of default, Muslim said that this order will depend on what will be stipulated in the executive regulations of the law, If issued retroactively, those who have been sentenced will be reconsidered, but he expected the law to be enforced as of January, with the majority of state courts postponing these cases and not adjudicating them until the law is officially passed.

«Truth» Rental values are a factor in lower commodity prices

Reda Musallam, general manager of Truth Economic & Management Consultancy, said that the decline in rental values for shops is an important factor in the decline in commodity prices as a major factor in operating costs.

He pointed out that the decline in the purchasing power of some individuals working in private companies has led traders to revitalize the market by offering discounts and reduce their profit margin to reasonable limits, through which they can entice consumers to increase sales.

He explained that the rate of 7.1%, according to the report of statistics, is on average, which indicates that the decline is greater than that.

He called for revitalizing the cycle of economic activity and reconsidering the cost of industrial activity services, especially land, water and electricity, as well as reducing the rental values of warehouses and warehouses, which helps reduce the cost of production.


7 Recommendations to overcome the challenges facing listed companies

A seminar organized by the Abu Dhabi Chamber of Commerce and Industry (ADCCI) yesterday issued 7 recommendations and solutions to overcome the challenges facing public and private shareholding companies in the capital markets, according to the circumstances of each company and the nature of its activities.

Reda Mosallam, Partner and General Manager of Truth Economic and Administrative Consultancy, said that the legislator singled out the listed joint stock companies with strict frameworks of the legal articles governing them and surrounded them with strict control systems to ensure and ensure that these companies are managed in accordance with the provisions of legislation and governing laws, where these companies are subject to legislative and regulatory bodies These include the Ministry of Economy, the Securities and Commodities Authority, the Department of Economic Development of Abu Dhabi & Dubai, the Abu Dhabi Markets & Dubai and the UAE Central Bank.

He pointed out that there are seven main recommendations, the first of which is to abide by the institutional discipline of the board of directors of the public shareholding companies and its executive management. Also, He pointed out that the Securities and Commodities Authority issued binding decisions during the past years to ensure that corporate departments do not deviate from corporate discipline and abide by the rules of professional conduct.

He drew that the second recommendation focuses on the need to activate the role of standing committees emanating from the Board of Directors, where the law obliged companies to form at least two committees of the Board of Directors, namely, the Audit Committee and the Nomination and Remuneration Committee, He pointed out the need for the Commission to develop a mechanism to follow up the work of those committees by requesting a detailed copy of its periodic meetings supported by supporting documents.

The Partner Manager of Truth Economic and Management Consultancy said that the third recommendation refers to the necessity of obliging public shareholding companies to find professional competencies in their management through the adoption of a draft resolution requiring the members of the General Assembly of the shareholding companies to be among the following expertise: Legal, economic, financial and technical consultant.

The fourth recommendation is to strictly select the executive management of public shareholding companies under the supervision of the Authority, Where the Department has a legal agency relationship with the Board of Directors of the company authorizes the management of the company according to the purposes set out in the statute and adhere to the objectives set out in the strategic work plan and follow-up annual performance and measure the comparative achievement of what is intended to be implemented for the year, provided that under the supervision and care of the Authority .

Mosallam called in the fifth recommendation to the need to increase the technical cadres to increase the effectiveness of periodic and sudden inspection by the Authority to follow up the work of public shareholding companies and identify closely about those problems and solutions developed by the administration to solve those problems, and then give an opinion on whether they will lead to the elimination of those And then ask the executive management to offer other solutions to solve those problems other than the previous one.

He pointed out that the sixth recommendation is to form a technical team of the Authority to be allocated to each company or some companies (depending on the size of each) and give him the necessary time to be exposed to the situations and problems facing them, which is supervised and monitored, and the team to make periodic visits to subsidiaries At least every four months, increase or decrease depending on the discipline of those companies and the compliance of their employees with the rules of professional conduct, The team also reports to the Board of Directors for information and holds it responsible for the good or whether the company’s executive management of its business.

Mosallam pointed out that the seventh and final recommendation is to activate the role of the representative of the Authority when attending the general assembly of the joint stock company.

October 2019

“Budget 2020” a strong boost for domestic and foreign investment

Financial expert, Reda Mosallam, partner and general manager of Truth Economic and Management Consultancy, said that the federal budget continues to grow year after year without deficit, which is an achievement and a sign of the strength of the national economy.

He added that the budget for next year without a deficit for the fourth consecutive year, which indicates the wisdom of economic management of the state despite the difficult economic conditions and circumstances at the global level.

20 suggestions to return the light to the financial markets

Financial expert Reda Mosallam, partner and general manager of Truth Economic and Management Consultancy, said that one of the most important aspects of the progress of countries is the level of readiness of their financial markets and their compatibility with what would allow them to intertwine front and back with the world markets at all levels, whether primary markets or Emerging or advanced, pointing out that the regulators in the country have succeeded in the past years in completing all the requirements to upgrade to advanced markets.

He pointed out that the financial markets of state are almost perfect, including the following official legislative and supervisory bodies: the Ministry of Economy (Legislation governing the laws issued on the management of financial and economic life), the Central Bank of the UAE, the Securities and Commodities Authority (the regulators and the regulator of financial markets). , The Abu Dhabi Securities Exchange, the Dubai Financial Market and the local economic departments.

He pointed out that the State has also completed all the legislation that represents the infrastructure of laws that allow the acceptance of financial and monetary instruments that do not currently exist, in accordance with international best practices, pointing out that the regulators in the country spare no effort in the sustainable development of financial markets.

He reviewed some of the tools and mechanisms that the markets may need to develop to attract more foreign investment and full openness to the world markets, to integrate with them, including the gradual transformation of government giants into public joint-stock companies for selected government companies in the petroleum, extractive and strategic industries, in order to increase the relative weight of value of the market capitalization of state markets compared to the market values of world markets, This contributes strongly to the promotion of state markets to be advanced.

He explained that it is possible to establish a private shareholding company for clearing to increase the effectiveness of the transfer of ownership of shares both locally and international investors, and facilitate the establishment of asset management companies and management of public and private investment funds, pointing out that it is possible to increase the free shares available for trading in the ownership of strategic companies and commercial banks, which Attracts more foreign investment.

He called for the need to encourage family and private groups to become a public shareholding and the inclusion of what this step is of great importance in the development of companies and ensure the smooth succession of generations in family groups, pointing to the significant role played by public offerings and inclusion in creating value for companies Seeking to implement growth and sustainability strategies.

List the largest bond program in the Abu Dhabi market

Reda Mosallam, partner and general manager of Truth Economic and Management Consultancy, said: “Abu Dhabi’s sovereign bonds have received strong interest and positive feedback from global investors, confirming Abu Dhabi’s strong credit standing. He pointed out that the increase in demand for the Abu Dhabi issuance of bonds, refers to the confidence of investors in the economy of Abu Dhabi in particular, and the UAE in general, pointing out that international investors specializing in this type of investment, always prefer Abu Dhabi issuances, with virtually zero risks, compared to other countries Their credit ratings fall, and therefore, risk ratios increase.

Half of the listed companies are not subject to Emiratisation obligations

Reda Mosallam, partner and general manager of Truth Economic and Management Consultancy, said that there is still no explicit obligation for listed companies, except banks and insurance companies, with specific rates for Emiratisation and that there was a marked decrease in the employment rates of citizens in those companies according to official data.
He explained that the Securities and Commodities Authority Law and the Commercial Companies Law did not explicitly stipulate that companies should be bound to certain rates of Emiratisation. Therefore, there is no provision to compel these companies to the rates of Emiratisation unless the amendment of the previous laws and the introduction of a binding text for companies.
And he saw, forcing companies to set specific Emiratisation rates at the moment would not be feasible and would not end the problem as many companies might resort to mock employment of citizens to show their commitment so that they do not bear high additional costs that ultimately affect their profitability.
He pointed out that the ideal solution is to study the situation of each sector individually and also to consider the performance of listed companies so as to show a full picture of the financial situation of each company and therefore may be issued a non-binding administrative decision for companies with strong financial performance to raise the rates of Emiratisation.
Another solution to the Emiratisation process is to establish a government fund financed by more than one hand, including listed companies to allocate 1 to 2% of their net income, depending on their financial position, to support the fund for only two or three years, until the fund’s capital reaches to 5 billion AED to be invested for Emiratisation assistance.

September 2019

“Truth”: 22 billion is the capital invested in listed industrial companies

A recent report by Truth Economic and Management Consultancy revealed that the industrial sector companies in Abu Dhabi and Dubai Securities Market constitute 31% of the GDP of the manufacturing sector in the UAE, pointing out that the total capital invested in the industrial sector of the listed industrial companies reached 22 billion “AED” by the end of the first half of this year.

The report added that the value of assets traded reached AED 8.4 billion at the end of the first half of this year, while the value of non-traded assets in the companies of industrial sector at AED 13.6 billion at the end of June, compared to AED 13.5 billion at the end of June 2018, an increase of AED 32.7 million.

The report explained That total shareholders’ equity of the industrial companies listed on the Abu Dhabi and Dubai Securities Exchange decreased by AED 1.3 billion by the end of the first half of this year which become AED 12.4 billion, compared to AED 13.6 billion at the end of the first half of the previous year.

The total capital of the industrial companies listed on the Abu Dhabi and Dubai Securities Market reached AED 7.3 billion at the end of June 2019, an increase of AED 47.2 million, where it was AED 7.2 billion at the end of June 2018.

The report pointed out that the value of current liabilities at the end of the first half of this year, rose by 906.6 million dirhams, compared with the high at the end of the first half of the previous year 2018, to reach 6.8 billion dirhams, which represents a 15% increase, due to the increase in the value of loans and facilities Creditors, as well as trade creditors. Non-current liabilities decreased by AED 410.7 million at the end of June 2019 to reach AED 4.4 billion where it was AED 4.8 billion at the end of June 2018.

Operating revenues (sales revenue from current corporate activity) amounted to AED 3.4 billion in the first half of this year. In contrast, direct costs on current business revenue were down 13% compared to the first half of 2018. Where it was AED 3 billion, down to AED 2.6 billion by the end of June 2019.

According to the report, as a result of the direct revenues decline by more than the decrease in direct costs, the gross profit line witnessed a decrease by AED 283.6 million compared to the first half of 2018, which was AED 1 billion, and decreased to AED 740.9 million at the end of June 2019. And the decline rate is 28%.

The report pointed out that the value of non-oil GDP during the first half of 2019, amounted to about 571.7 billion dirhams, compared to about 555.9 billion for the first half of 2018, an increase of about 15.8 billion dirhams, representing an increase by 3%.

Positive effects of low inflation on the economy and consumers

The Managing Partner of Truth Economic & Management Consultancy, Reda Mosallam, said that the continuous rise in the fees of a large number of schools increased the burden on consumers.

He added that despite the decline in housing prices and rental values, during the current year compared to last year in tangible proportions, the lack of lower prices of water, electricity and gas, reduced the impact of the decline in rents and housing prices, as well as the absence of a realistic decline in the prices of many means of transport, affected by the decline World oil prices.

He pointed out that the decline in inflation, during the first seven months of this year was not absolute, but came as a result compared to the same period last year.

He stressed the importance of lower prices for «Entertainment and Culture », which has seen the largest increase in prices this year, as well as the prices of restaurants and hotels, to be accessible to a larger population.