4.1.1. Appointment of sponsors

Where the AFSA chooses to exercise the power under section 85 of the Framework Regulations to require a Reporting Entity or a Person that intends to have Securities admitted to an Official List or admitted to trading on an Authorised Investment Exchange to appoint an Authorised Firm or Ancillary Services Provider to act as a sponsor, the AFSA will notify the relevant Person in writing.

Guidance The AFSA will not require a Person that intends to have Securities admitted to the Official list of Securities or admitted to trading on an Authorised Investment Exchange to appoint a sponsor unless the Person (a) does not have a proven track record or (b) has been in operation for less than 3 (three) years, but not including cases where such Person meets one of the following criteria:

1. (i) the Person falls within the definition of Exempt Offerors or Financial Institution; or
2. (ii) the Securities of the Person have been admitted to the Official List or admitted to trading on an Equivalent Regulated Exchange.

4.1.2. Procedures relating to appointment of sponsors

(a) A Person required to appoint a sponsor must, prior to appointing a sponsor:

1. (i) take reasonable steps to ensure that the proposed sponsor has the required knowledge, experience, qualifications and resources to carry out its obligations under MAR; and
2. (ii) notify the AFSA of the proposed sponsor’s name, its business address and an address in the AIFC for the service of documents.

(b) If requested by the AFSA, a Person appointing a sponsor must provide the AFSA with information about the knowledge, experience, qualifications and resources of the appointed or proposed sponsor.

4.1.3. Independence of sponsors and their employees

• (a) A Person must take reasonable steps to ensure that the relevant sponsor and Employees of the sponsor are independent and have appropriately managed any conflict of interest that may arise.
• (b) A Person must notify the AFSA if it becomes aware, or has reason to believe, that the sponsor or relevant Employees of the sponsor are no longer independent or have a conflict of interest which has not been appropriately managed.

4.1.4. AFSA’s power of direction

Where, in the opinion of the AFSA, a sponsor appointed by a Person is not suitable, or where a sponsor has not been appointed or has resigned, the AFSA may direct the Person to appoint or replace a sponsor.

4.1.5. Obligations of a sponsor

A sponsor appointed pursuant to MAR 4.1.1 must:

• (a) satisfy itself to the best of its knowledge and belief, having made due and careful enquiry that the Person who is seeking or intends to seek to have Securities admitted to trading on an Authorised Investment Exchange has satisfied all applicable conditions for offering Securities and other relevant requirements under the Framework Regulations and MAR; and
• (b) provide to the AFSA any information or explanation known to it in such form and within such time limit as the AFSA may reasonably require for the purpose of verifying whether the Person seeking to have Securities admitted to trading on an Authorised Investment Exchange complies or has complied, with the applicable requirements in the Framework Regulations and MAR; and
• (c) take other steps required in writing by the AFSA.

4.1.6. Sponsor’s obligation when aware of non-compliance

Where a sponsor becomes aware of a failure by the Person seeking to have Securities admitted to trading on an Authorised Investment Exchange to comply with its obligations under MAR and the Framework Regulations, the sponsor must without undue delay:

• (a) notify the Person seeking to have the Securities admitted of the failure and take reasonable steps to ensure it rectifies the failure within a reasonable time; and
• (b) if the Person does not or is unable to rectify the failure as soon as practicable notify the AFSA of that fact.

4.1.7. Duty of care of sponsors

A sponsor has a duty of care to the Person which has made its appointment.

4.1.8. Co-operation with sponsors

A Person who is required to appoint a sponsor in respect of the admission of Securities to trading on an Authorised Investment Exchange must take reasonable steps to ensure that it and its Employees:

• (a) provide such assistance as the sponsor reasonably requires to discharge its duties; and
• (b) give the sponsor right of access at all reasonable times to relevant records and information; and
• (c) do not interfere with the sponsor’s ability to discharge its duties; and
• (d) do not provide misleading or deceptive information to the sponsor; and
• (e) report to the sponsor any matter which may significantly affect the financial position of the Person issuing the Securities or the price or value of the Securities.

4.1.9. Notifying the AFSA of failure to co-operate

A sponsor must notify the AFSA of any non-co-operation by the Person seeking to have Securities admitted to trading on an Authorised Investment Exchange or by the Employees of that Person.

4.1.10. Termination of appointment

Where a Person who is required to appoint a sponsor dismisses the sponsor, the Person must advise the AFSA in writing without delay of the dismissal, giving details of any relevant facts and circumstances.

4.1.11. Resignation of sponsor

Where a sponsor resigns, it must advise the AFSA in writing without delay of the resignation, giving details of any relevant facts and circumstances.

4.2.1. Appointment of a compliance adviser

Where the AFSA chooses to exercise power under section 85 of the Framework Regulations to require a Person to appoint an Authorised Firm or Ancillary Services Provider to act as a compliance adviser, the AFSA will notify the relevant Person in writing. Guidance The AFSA may require the appointment of a compliance adviser where a Reporting Entity has been held to have breached the Acting Law of the AIFC and/or Authorised Market Institutions Rules.

4.2.2. Procedure for appointing a compliance adviser

A Reporting Entity required to appoint a compliance adviser must, prior to making the appointment:

• (a) take reasonable steps to ensure that the proposed compliance adviser has the required knowledge, experience, qualifications and resources to carry out its obligations under MAR; and
• (b) notify the AFSA of the proposed compliance adviser’s name and business address; and
• (c) take reasonable steps to ensure that the proposed compliance adviser and its relevant Employees are independent and that any conflicts of interest are appropriately managed.

4.2.3. Provision of information to the AFSA

If requested by the AFSA, a Reporting Entity appointing a compliance adviser must provide the AFSA with such information as it may require including information regarding knowledge, experience, qualifications and resources of the compliance adviser.

4.2.4. Conflicts of interest

A Reporting Entity must notify AFSA if it becomes aware, or has reason to believe, that the compliance adviser or its relevant Employees have a conflict of interest which has not been appropriately managed.

4.2.5. Appointment of a compliance adviser for a specified period

• (a) The AFSA may, by written notice, require a Reporting Entity to appoint a compliance adviser for a specified period to assist the Reporting Entity in meeting its continuing obligations under the Framework Regulations and MAR.
• (b) A Reporting Entity that is required to appoint a compliance adviser in accordance with the requirements in this section must ensure that a compliance adviser continues to fulfil the role of compliance adviser until such time as the AFSA advises the Reporting Entity in writing that a compliance adviser is no longer required.

4.2.6. Obligation of a Reporting Entity to rectify failure

Where a Reporting Entity is advised by its compliance adviser that it is failing or has failed to comply with its obligations under the Framework Regulations and MAR, the Reporting Entity must without undue delay:

• (a) take reasonable steps to rectify the failure as soon as practicable; and
• (b) if the Reporting Entity does not or is unable to rectify the failure as soon as practicable notify the AFSA of that fact.

4.2.7. Provision of information to the AFSA

A Reporting Entity must provide to the AFSA any information in such form and within such time as the AFSA may reasonably require regarding its compliance adviser or any advice the compliance adviser is providing, or has provided, to the Reporting Entity regarding its continuing obligations under the Framework Regulations and MAR.

4.2.8. Co-operation with the AFSA

A Reporting Entity must take reasonable steps to ensure its compliance adviser cooperates in any investigation conducted by the AFSA including answering promptly and openly any questions addressed to the compliance adviser, promptly producing the originals or copies of any relevant documents and attending before any meeting or hearing at which the compliance adviser is requested to appear.

4.2.9. Co-operation with compliance advisers

A Reporting Entity must take reasonable steps to ensure that it and its Employees:

• (a) provide such assistance as the compliance adviser reasonably requires to discharge its duties;
• (b) give the compliance adviser right of access at all reasonable times to relevant records and information;
• (c) do not hinder or interfere with the compliance adviser’s ability to discharge its duties; and
• (d) do not withhold information that would assist the compliance adviser advising the Reporting Entity of its duties;
• (e) do not provide misleading or deceptive information to the compliance adviser; and
• (f) report to the compliance adviser any matter which may significantly affect the financial position of the Reporting Entity or the price or value of the Securities.

4.2.10. Termination of appointment

Where a Reporting Entity dismisses its compliance adviser, the Reporting Entity must advise the AFSA in writing without delay of the dismissal, giving details of all relevant facts and circumstances.

4.2.11. Resignation of compliance adviser

Where a compliance adviser resigns, the Reporting Entity must without delay advise the AFSA in writing of the resignation, giving details of all relevant facts and circumstances.