UAE’s Etisalat says no voting rights for foreign shareholders

Etisalat will not extend voting rights to foreign shareholders when the United Arab Emirates’ former telecom monopoly opens up its shares to non-UAE investors, it said on Wednesday.

Etisalat is the largest listed UAE company by market value and worth nearly double the second-biggest firm, but its shares can only be owned UAE nationals and all institutions are excluded.

In June, Etisalat said it would loosen these rules to permit foreign and institutional investors on to its share register.

On Wednesday it provided further details on these reforms after the UAE cabinet amended the firm’s articles of association and a related federal law.

This will likely lead to Etisalat’s inclusion in MSCI’s emerging market index.

Non-UAE investors will be allowed to own up to 20 percent of Etisalat’s shares, the company reiterated on Wednesday, but will not be granted voting rights, a statement to Abu Dhabi’s bourse said.

The UAE federal government, which owns a 60 percent of Etisalat through sovereign wealth fund Emirates Investment Authority, will be issued with a so-called “special share,” the statement said.

This will grant it veto rights over “key decisions” relating to Etisalat. These include changes to Etisalat’s share capital, rights attached to shares, approval of a merger with another company, participation of a strategic investor and allowing the government’s stake to fall below 51 percent, the statement said.

Etisalat will also convert to a public joint stock company from a corporation and its formal name will be amended to Emirates Telecommunications Group Co from Emirates Telecommunications Corp.

It operates under the brand name Etisalat, which means telecoms in Arabic.

The company said it has one year from the amendment of the federal law to implement the agreed changes. Etisalat did not specify when the law was amended.