Securitisation is not a typical financing technique in the United Arab Emirates (the “UAE”) market for various reasons, including the fact that the UAE legal framework did not previously provide sufficient legal certainty for investors with respect to sale of receivables, bankruptcy, security and enforcement of contracts (among other things).

In recent years the legal framework in the UAE has become significantly more robust for securitisation purposes through the introduction of the laws further detailed in our response to question 3. This, coupled with an increase in the requirements from new originators and the entry into the market of more experienced investors, has led to an uptick in interest in securitisation as a finance method in the UAE market.

The market is still in the early stages of development, but there has recently been activity across a variety of asset classes including consumer loans, auto loans, credit card receivables, ‘buy now, pay later’ receivables, trade receivables, SME loans, merchant loans and inventory. Historically, pilot transactions dealing with mortgage loans have also been attempted, but have had limited impact on the market.

At present, there are only examples of private securitisations with small numbers of club investors in the UAE market. There have been no public securitisations.

Certain types of receivables are excluded from the remit of the UAE Factoring Law (in this regard, please see our response to question 17) and there is no other legislation governing their transfer. However, there is no specific legal prohibition or restriction on the types of assets that can be securitised in the UAE, but the nature of the assets may be restricted by other ancillary factors such as financial regulation for services, restrictions on ownership of land, etc.

If the transaction is intended to be Shari’a compliant, then there may be Shari’a restrictions related to the nature of the assets being considered tangible, intangible or debt.

Asset classes that have previously been securitised in the UAE include consumer loans, auto loans, credit card receivables, ‘buy now, pay later’ receivables, trade receivables, SME loans, merchant loans and inventory. Historically, pilot transactions dealing with mortgage and auto loans have also been attempted.

There is no specific legislation governing securitisation in the UAE.

In 2023, the UAE Securities and Commodities Authority (the “SCA”) issued the Chairman of the Board of

Director’s Resolution No (22/RM) of 2023 on the regulation of securitisation operations (the “SCA Securitisation Regulation”). Whilst the SCA Securitisation Regulation provides market participants with some direction on how certain securitisations by publicly listed entities in the UAE should be carried out (and the related compliance requirements), the SCA Securitisation Regulation itself does not form a legal basis for the effective securitisation of assets. The SCA Securitisation Regulation is currently untested.

Notwithstanding the above, there does exist certain key legislation in the UAE which enables securitisation transactions and supports, among other things, the true sale and bankruptcy remoteness analysis, including:

• UAE federal law No.16 of 2021 in relation to factoring and the assignment of receivables (the “UAE Factoring Law”);
• Federal Decree Law No. 51 of 2023 Promulgating the Financial Reorganization and Bankruptcy Law (the “UAE Bankruptcy Law”); and
• UAE Federal Law No. 4 of 2020 on Guaranteeing Rights Related to Movables (the “UAE Movables Law”).

In the UAE, securitisations are most often structured as true-sale transactions. Transactions commonly use private ‘warehouse’ structures or private single issuance structures. Programmatic structures have not as yet been used in the UAE.

Typically, an originator sells receivables to an SPV and the SPV funds the purchase of the receivables through debt funding from investors, which often takes the form of either a conventional or Shari’a compliant loan facility or sukuk.

As at the start of 2025, there are no providers of third party servicing in the UAE market and so the originator is appointed by the SPV to act as servicer of the underlying assets.

A cash manager is typically appointed by the SPV to pay principal and profit/interest to investors as well as other costs and expenses of the SPV in accordance with the priority of payments detailed in the transaction documentation. After all such payments have been made, any remaining amounts are transferred back to the originator using profit extraction methods such as deferred consideration paid by the SPV to the originator for the receivables or payments under any junior funding provided by the originator to the SPV.

All assets of the SPV are usually secured in favour of a security agent for the benefit of the investors and other secured creditors.

To the extent a securitisation is being carried out by a public joint-stock company or private company listed on the market in the UAE which involves the offering of securities then the SCA Securitisation Regulation may apply and the SCA will be responsible for regulating such securitisation.

In 2024, the SCA issued the Chairman of the Board of Directors’ Resolution No (22/Chairman) of 2024 concerning the regulation of the private offering of debt securities, sukuks and securitized financial instruments (the “SCA Private Offering Regulation”). The SCA Private Offering Regulation requires issuers to obtain SCA approval for private offerings of securitised instruments where the issuer is established “onshore” in the UAE and the issuance is to investors “onshore” in the UAE. In addition, if the issuer is established “onshore” in the UAE, the SCA Private Offering Regulation requires notice to be given to the SCA of private offerings even if investors are located outside of the UAE or in a UAE financial free zone.

Otherwise, there is no express regulation published regulating securitisations in the UAE, however the UAE Central Bank has implemented Basel III in the UAE. Basel III rules do prescribe certain types of limits and procedures that would govern securitisation conducted by a regulated institution.  As of the start of January 2025, the UAE Central Bank had not yet published any such express regulation implementing Basel III rules in relation to securitisation.

If the underlying assets of the securitisation are regulated, then originators of those assets (and possibly the servicers) will be regulated. For example, in order to provide property financing in the UAE, the relevant bank, company or financial institution must be licensed and is regulated by the UAE Central Bank.

With respect to regulation of SPVs, please see our response to question 14.

Otherwise, there are no regulatory or other limitations in the UAE on the nature of entities that may participate in a securitisation (either on the sell side or the buy side).

If the securitisation falls within the limited scope of the SCA Securitisation Regulation, then there are additional requirements including:

• the entity owning the assets prior to the securitisation transaction taking place must be established in the UAE as a public joint-stock company or private company listed on the market and carry out its main business activities within the UAE; and
• the issuer of the securities must be established in accordance with SCA regulations and be regulated by the SCA.

The UAE does not have a concept of “simple, transparent and comparable” securitisation or similar.

Subject to the below, the UAE does not specifically distinguish between private and public securitisations. In the limited circumstances where the SCA Securitisation Regulation applies, the requirements set out therein appear to apply equally to public and private securitisations.

The SCA Private Offering Regulation applies to private securitisations only. In this regard, please see our response to question 5.

If a securitisation falls within the scope of the SCA Securitisation Regulation, the SCA needs to approve entry into the securitisation. In addition, if the originator is regulated by the UAE Central Bank, then it must obtain the approval of the UAE Central Bank for the securitisation. As noted in our response to question 3, the applicability of the SCA Securitisation Regulation is very narrow and it is currently untested.

If a securitisation falls within the scope of the SCA Private Offering Regulation, the SCA needs to either approve entry into the securitisation or receive notice of the securitisation (as detailed in our response to question 5).

Whilst not specific to securitisation, any transfer, collateralisation or security coverage of receivables pursuant to the UAE Factoring Law or the UAE Movables Law (as applicable) needs to be registered on the UAE Movables Security Register in order to be effective against third parties.

There are no disclosure requirements for securitisations other than those that fall within the limited scope of the SCA Securitisation Regulation and no reporting templates that are currently required to be used.

The SCA Securitisation Regulation provides detailed disclosure requirements for securitisations that fall within its scope. Disclosure requirements include the provision of quarterly reports to investors covering (among other things) information relating to the performance of the portfolio, the parties in the securitisation and a report from the Sharia Supervisory Committee confirming that the securities continue to comply with the principles of Shari’a. Additional reporting is also required upon the occurrence of certain events, such as replacement of certain parties and changes to credit rating or other events which materially affect the repayment or performance of the underlying assets. The reports must also be made available to the SCA.

There is no legislation in the UAE requiring securitising entities to retain risk. However, it is not unusual for securitisations in the UAE to fall within the remit of the EU, UK or US risk retention rules, depending on the location of investors and the jurisdiction of incorporation of the special purpose vehicle.

Whilst not a legal or regulatory requirement, originators are often contractually required to retain a portion of the exposures for credit enhancement purposes. This can be structured in many of the ways typically seen in other jurisdictions.

There is no securitisation-specific legal or regulatory requirement for UAE-based investors to conduct due diligence before investing. Investors would typically conduct due diligence on the underlying assets and the originator, however, this is an investor driven requirement rather than a legal or regulatory obligation.

If a securitisation falls within the scope of the SCA Securitisation Regulation or the SCA Private Offering Regulation, penalties for breaching the SCA Securitisation Regulation or the SCA Private Offering Regulation (as applicable) include fines and suspension or cancellation of the securitisation.

Under the UAE Federal law (which applies to companies established “onshore” in the UAE), restrictions on foreign shareholding have recently been lifted and the possibility to establish a special purpose vehicle has been introduced into Federal Law No. 32 of 2021 on Commercial Companies. These new provisions are largely untested, as is the use of “onshore” SPVs for securitisation in the UAE.

SPVs established in the Dubai International Financial Centre (the “DIFC”) in the form of “Prescribed Companies” may be used for securitisation structures. They do not require the establishment of operations in the DIFC and are exempted from the requirement to audit accounts/file accounts with the DIFC Registrar of Companies. However, there still remain significant administrative obligations associated with such an SPV. For example, such an SPV would require a commercial license, need to maintain accounts in accordance with the DIFC companies law and file confirmation statements with the DIFC. In addition, such SPVs usually require extensive tax analysis with regard to leakage.

SPVs established in the Abu Dhabi Global Market (the “ADGM”) equally may be used for securitisation structures. However, under ADGM law, no person may carry on a Regulated Activity by way of business in the ADGM, or purport to do so, unless they are an Authorised Person or an Exempt Person. A Regulated Activity is defined in such a way that may capture the holding of certain underlying assets.

In light of the issues raised in respect of both onshore and offshore (DIFC/ADGM) jurisdictions of the UAE, it may be more attractive for international investors to use an SPV established in another jurisdiction outside of the UAE. For other limited recourse transactions in the UAE involving orphan SPVs, the Cayman Islands or Ireland tend to be the most common choice, although tax analysis needs to be undertaking for any specific transaction to determine suitability of such jurisdictions.

Unlike in certain other civil law jurisdictions, the UAE does not have any legislative framework governing the bankruptcy remoteness of SPVs. Although it is possible to seek to achieve bankruptcy remoteness through structuring and contractual provisions (such as using a newly established SPV with no previous operating history and including limited recourse and non-petition provisions in the documentation), as noted in our response to question 14, the use of “onshore” SPVs for securitisation is untested and the success of employing these methods, in particular the enforceability of limited recourse and nonpetition provisions, is therefore uncertain.

It is possible to establish bankruptcy remote SPVs with a degree of certainty under the rules of the UAE’s two financial free-zones, the ADGM and the DIFC. However, please see certain practical restrictions in relation to such SPVs in our response to question 14. In each of these free-zones the basis of legal framework is English law and the common law concept of trust structures can be employed in connection with establishing an SPV within the relevant freezone’s legal and regulatory regime. Under the laws of each of ADGM and DIFC, SPVs are capable of being established as orphan entities and can enter into agreements, including agreements governed by English law.

In the absence of legislation providing for the bankruptcy remoteness of SPVs, it is not possible to say with certainty that an SPV established in a UAE jurisdiction would be completely bankruptcy remote. For example, in case of unexpected tax liabilities.

The types of credit support used in the UAE are the same as those used in other jurisdictions where securitisation is commonly used. This includes overcollateralisation and excess spread.

If the transaction is intended to be Shari’a compliant, consideration needs to be given to the type of credit support used. For example, subordinated tranching where all classes share exposure to common assets may be viewed by UAE Shari’a scholars as being non-compliant with Shari’a principles.

The concept of a true sale is not specifically codified under UAE law for the purpose of securitisation. However, the UAE Factoring Law provides the framework for the transfer of receivables and ancillary rights in the UAE, including future receivables.

The UAE Factoring Law applies to all receivables under any transaction carried out in the context of commercial or civil transactions. Certain transactions are excluded from the scope of the UAE Factoring Law such as, among others, transactions for personal and family purposes, foreign exchange transactions and financials contracts regulated by clearing agreements.

An assignment of receivables is considered valid between the assignor and the assignee, even if the debtor does not receive a notification of the assignment. However, an assignment of receivables does not affect the rights and obligations of the debtor (including the payment terms set out in the original contract) unless accepted by the debtor.

Any restriction on the assignor’s right to assign the receivables neither takes effect nor affects the validity or enforceability of the assignment. However, the debtor may still invoke any set-off rights or interests vis-à-vis the assignor.

An assignment of receivables under the UAE Factoring Law is not effective towards third parties unless it is registered on the UAE Movables Security Register. If the assigned receivables are paid to a third party with a lower ranking priority than the assignee (established through registration), the assignee has the right to receive the proceeds and property related to the assignment from this third party.

If the underlying assets in a securitisation are mortgage loans the transaction falls within the scope of the SCA Securitisation Regulation, then some additional requirements apply including the recording of the transfer of mortgages on a specified register and submitting a legal report to the SCA confirming that certain details relating to such mortgages are consistent with the contracts executed with debtors.

The UAE Bankruptcy Law provides that certain “dispositions” and interests are unenforceable if created within six months (or two years if the disposition is with a related party) prior to the date on which the debtor fails to pay any debt within 10 days of the due date. Such dispositions would include donations, onerous contracts, pre-payment of debts, granting security for pre-existing debts.

In addition, UAE courts have the power to rule not to enforce certain dispositions in addition to those listed in the UAE Bankruptcy Law (including, but not limited, to donations or transactions for no value, settlement of debts or payment of guarantees) if such disposition is detrimental to the creditors and the counterparties benefiting were aware – or should have been aware – at the time of such disposition that the debtor had ceased payments of its debt or was in a state of over-indebtedness. This power is substantially similar to bankruptcy claw-back powers in most other jurisdictions with a developed insolvency regime.

Although there is therefore some risk that UAE courts may deem an assignment to be unenforceable, such risk is not unusual and (as mentioned above) is fairly common in many insolvency regimes. In addition, such risk can be mitigated by the fact that the period of application is relatively limited and such powers of the court only apply in specific circumstances (i.e., transactions at an under value, one sided transactions, new guarantees to secure old debts, etc.). Nevertheless, given the UAE Bankruptcy Law is new and largely untested, and there is no judicial precedent (or indeed any relevant judicial decisions) that would assist in the interpretation of the relevant law or the assessment of the risks relating this issue, it is impossible to fully assess the probability of such risks materialising.

Federal Decree-Law No.45/2021 On the Protection of Personal Data (the “UAE Data Protection Law”) applies to the processing of all personal data by controllers and processors located in the UAE and outside the UAE who process personal data of data subjects located in the UAE. The UAE Data Protection Law does not apply to institutions located in the free-zones of the UAE which are subject to special legislation on data protection.  Therefore, the UAE Data Protection Law may apply to the SPV, the originator, the servicer, the back-up servicer and any other entity either located in the UAE and/or receiving personal data relating to obligors in the UAE.

DIFC Law No. 5/2020 Data Protection Law (the “DIFC Data Protection Law”) applies to the processing of personal data by a controller or processor incorporated in the DIFC, regardless of whether the processing takes place in the DIFC or not.  ADGM Data Protection Regulations 2021, as amended (the “ADGM Data Protection Law”) applies to the processing of personal data by a controller or processor incorporated in the ADGM, regardless of whether the processing takes place in the ADGM or not. The DIFC Data Protection Law or the ADGM Data Protection Law would therefore apply to the SPV if it were to be incorporated in either of those free-zones.

Yes, the conduct of credit rating agencies is regulated in the UAE.

In the UAE, credit rating agencies must be licensed and are regulated by the SCA to provide credit ratings to “onshore” entities listed in the UAE SCA-controlled stock exchanges. This includes those listed on the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX).

In the DIFC, operating a credit rating agency in or from the DIFC is a financial service and is regulated by the Dubai Financial Services Authority.

In the ADGM, operating a credit rating agency is a regulated activity and credit rating agencies are therefore regulated by the ADGM Financial Services Regulatory Authority.

The general VAT rate in the UAE is 5% and this applies to most goods and services, however, some goods and services are subject to a 0% rate or an exemption from VAT (subject to specific conditions being met). It is possible that servicing fees would be subject to the usual 5% VAT in the UAE.

The UAE does not currently levy withholding tax, although the tax framework does provide for this being levied in the future.

Corporation tax was recently introduced in the UAE, which applies to entities regardless of whether they are onshore or in free-zones.

The UAE does not currently levy stamp taxes. However, registration fees may be payable in certain instances such as mortgage registration fees and security registration fees, which can range from de minimis amounts to a notable percentage of the value of the underlying asset depending on the nature of the asset and where it is located in the jurisdiction.

There is no specific legal or regulatory framework which seeks to encourage global or cross-border transactions, however, there is a significant volume of cross-border transactions involving UAE originators (in securitisation as well as other related finance products). This is due in large part to the development of the UAE legal framework in recent years and the local currency being pegged to the United States dollar.

Securitisation transactions in the UAE do typically have a cross-border element. Cross-border elements may include international investors, SPVs incorporated in jurisdictions such as the Cayman Islands, Ireland or Luxembourg, international third party service providers and documentation governed by English law.

The UAE securitisation market and the majority of the laws and regulations which are relevant to it are both still in their development stage and in the case of a number of the laws, largely untested. There are therefore constant developments which tend to improve the ability to securitise in the UAE.

It would be beneficial to the domestic market to have a robust securitisation law which codifies and clarifies the key elements of securitisation, including bankruptcy remoteness of SPVs and true sale.

Whilst the SCA Securitisation Regulation is in place, it is notably secondary legislation which does not apply to most securitisations being carried out in the market at present.

Please see our response to question 17 with respect to registration of the UAE Movables Security Register.

If the securitisation falls within the limited scope of the SCA Securitisation Regulation, there are some additional requirements in order for the transfer of assets to constitute a true sale, including:

• all rights and obligations in relation to the relevant underlying assets must be transferred to the SPV;
• the underlying assets must be “kept away” from the originator of the assets and its creditors; and
• the SPV must have no right of recourse against the originator of the assets.

As noted in our responses to earlier questions, the SCA Securitisation Regulation is untested and the meaning of these requirements would need to be clarified if a securitisation using the SCA Securitisation Regulation were to be established.