- NEWSLETTER, GLOBAL
- September 13, 2023
The term “digital transformation” has become a buzzword in boardrooms and industry discussions. Think of any industry vertical, and companies are channelling investing significant resources to embrace new technologies. This proactive stance goes a long way in helping them gain a competitive edge and explore the complexities that digital transformation presents.
However, CEOs and business leaders often overlook the fact that digital transformation is more about people than the technological frenzy itself. No wonder sophistication in technology significantly streamlines business processes. However, the success of any digital transformation initiative pivots on a shift in the mindset and behavior within the organization. Therefore, technology is a means to an end, not the end itself.
Here, we have justified why it’s crucial to nurture a digital intelligence mindset within your teams. We are going to explore why the key to leveraging the true potential of digital transformation lies in focusing on the behavior and attitude of your staff.
The Shift in Perspective
Regardless of the industry or the problem under question, it’s crucial to cultivate a mindset of digital intelligence. Business leaders should realize, and very rightly, that technology is a tool, not the ultimate solution. Therefore, innovation is driven when you recognize people, not technology.
As businesses strive for succeed in the digital era, they need to nurture a shift in their mindset that challenges the traditional way of thought.
The Right Questions to Begin With
Before embarking on any digital transformation, organizations evaluate these essential aspects:
- The business challenges that these changes are capable of solving
- How the digital transformation can help establishing their identity in the market
- The expected outcomes of digital transformation
- Whether or not a shift in mindset is critical for success
- The behaviors, thought patterns, and processes that need to be revamped
The Role of Leadership
In this context, it’s imperative to recognize the role of leaders in guiding their teams toward success. Here are certain strategies they should consider:
- The long-term impact of selected technology
- Strategies to take the team to success
- Providing adequate training to the teams
- The positive impact on the company and its employees
- How the change enhances business operations and customer experiences
Nurturing Behavior Change for Cultural Realignment
Digital transformation isn’t just about technology. It involves bringing about a change in thought patterns and behaviors. Therefore, organizations need to embrace a collaborative ambience and encourage seamless communication.
Leaders should make sure that their team understands the ‘why’ behind changes in technologies. When you transform the mentalities of your employees, they are more likely to incorporate new solutions.
Leverage Existing Digital Intelligence to The Full Potential
Many employees, in their personal lives, exhibit a digital intelligence mindset. For leaders, this is a viable opportunity to tap into this, as they encourage employees to transform work through their innovative mentality.
Remember, in the digital era, it’s not just about the technology you implement. Rather, it’s about the transformation happening within your teams. Forward-thinking organizations count on established advisors like the IMC Group for digital transformation services.
- NEWSLETTER, GLOBAL
- September 13, 2023
The realm of GRC (Enterprise Governance, Risk, and Compliance) is witnessing a rapid shift in paradigm in the digitized business ecosystem. Industry insights reveal that it is well poised to transform the way global businesses explore and manage risks. There’s no denying that the regulatory landscape is ever-evolving. This puts enterprises on a relentless quest for sustainable excellence, driven by regulatory mandates as well as their priority to maintain organizational integrity.
With the GRC market projected to surge US$ 62.39 Billion by 2033, soaring impressively from US$ 15.23 Billion in 2022, the stakes have never been higher. The dynamic convergence of the GRC elements looks promising, as it would be shaping the future of corporate resilience, cybersecurity, and success in business.
Interestingly, forward-thinking enterprises are looking for governance risk and compliance advice, collaborating with established professionals in the industry.
Market Spotlight: Shaping the Future of Enterprise GRC
The Enterprise Governance, Risk, and Compliance landscape is witnessing an unprecedented evolution. As we look towards 2033, organizations are visibly gearing up to explore the regulatory landscape to excel in their sustainable endeavors.
Estimates suggest that the Enterprise GRC Market is set to reach US$ 17.1 Billion in 2023 alone, with a projected compound annual growth rate (CAGR) of 12.8% from 2023 to 2033.
A Symbiotic Relationship Between Cybersecurity and GRC
In today’s digital age, GRC encapsulates an effective strategy for managing corporate cybersecurity risk. These systems prove to be indispensable as they empower global organizations to fix their cybersecurity posture without disrupting business operations.
Enterprise GRC involves a systematic approach used by organizations for managing their operations while ensuring strict compliance with regulations, internal policies, and laws. The approach is comprehensive, that integrates compliance activities, risk management, and governance. Thus, organizations get a holistic solution to mitigate risk.
Driving Factors Behind the Growth of GRC
The Enterprise GRC market has witnessed significant expansion because of high regulatory pressure. Besides, the need for effective risk management is paramount with escalating threats. No wonder, why global enterprises count on enterprise risk management solutions. These firms are extensively deploying advanced technologies like risk-management software, governance management software, and compliance management software.
Leading Players in the Enterprise GRC Arena
- NEWSLETTER, GLOBAL
- September 13, 2023
The dynamic world of sustainable and impact investing in family offices has been garnering global attention. With an increasing number of successful brands looking for private client and family advisory services, it’s imperative to delve into sustainable and impact investing strategies.
These perspectives elucidate how family offices can capitalize on their financial assets to drive positive change in the world as they stride ahead to their financial goals.
1. The Guiding Light of Family Values Rather Than Terminology
It’s crucial to consider the scope of aligning investment strategies with the respective family values. The wide array of terms and options can be overwhelming in the ever-evolving environment of impact and sustainability investing.
Head of Sustainable and Impact Investing at Barclays, Damian Payiatakis, focused on the need to explain the intentions behind both financial returns and societal impact. The path to ethically sound investments becomes clearer when you start with the shared values of your family.
This approach calls for organizing workshops and facilitated conversations. During these discussions, the shared priorities can be identified. This largely establishes the foundation on which family offices make crucial investment decisions.
2. Integrating ESGs Into The Mainstream
There’s no denying that the investment paradigm has undergone a significant seismic shift. Currently, environmental, social, and governance (ESG) considerations are no longer optional. Rather, they have evolved as fundamental aspects of investment decisions.
Notably, traditional investors are recognizing the true value of incorporating ESG aspects into their investment strategies. Statistics reveal that a sizable 72% of these offices consider these priorities.
Besides, single family office in Dubai and other global cities count on professional advice from experts. Thus, these offices are actively looking for investment opportunities to mitigate global sustainability challenges. They have not only recognized the ethical value but also the potential of embracing long-term growth.
3. The Power of Measurability
Impact investing is a complex concept in itself. Well, in the world of impact investing, clear and standardized metrics largely define success. However, single family offices must recognize that the absence of uniform metrics has been hindering capital flow into investments that should be tackling some of the most pressing challenges of the world.
Thus, it’s imperative to advocate for standardized definitions to overcome this hurdle. This ensures that credible data will be disseminated. Standardization goes beyond greenwashing scandals, but also lays the foundation for impact capital. Thus, these initiatives from family offices can live up to their ambitions.
Reliable information holds the key to transparency. This can help family offices compare investments fairly and propel themselves to the growth trajectory.
4. Family Unity Through Impact Investing
Impact investing presents a unique opportunity for family offices, where members across generations can nurture the essence of unity. Involving family members in investment decisions deeply rooted in their shared values promotes collaboration. Besides, this goes a long way in strengthening family bonds.
Therefore, families need to leverage this approach to channel their investments towards noble causes. Besides, this should deepen their understanding of shared values and differences.
This approach transforms impact investment into a journey shared by the family. Rather than eyeing mere financial gains, it nurtures better unity among the family.
5. The Long Road Ahead
No doubt, family offices are enthusiastic about impact investing. However, there’s a long road ahead to embracing a widespread approach to this type of investment. Currently, just a small proportion of family office investments are made for impact solutions.
Experts reveal that substantial investments are necessary to drive energy and climate transition and other crucial changes. Presently, family offices have barely scratched the surface, reaching a mere 1.1% of this ambitious goal.
Thankfully, family offices are ideally positioned to spearhead this transformative journey. Gradually, the momentum is building. A robust support system is already in place that should guide family offices to define, measure, and achieve their goals.
As the change takes over how family offices perceive impact investing, the need of the hour is to align investments with their cherished family values. Besides, other secrets to successful impact investing lie in embracing ESG considerations, nurturing familial unity, and remaining committed to a greater global impact. The IMC Group continues to be a catalyst for single family office in Singapore to embrace these changes through professional guidance and advice.
- NEWSLETTER, GLOBAL
- September 13, 2023
Global financial services continue to navigate turbulent waters in 2023. Across the world, this has a significant impact on M&A activities. Even though the ongoing uncertainties loom heavily on financial organizations, M&A continues to be a critical tool for transformation in the industry.
This mid-year update on the ever-evolving M&A landscape in the financial services sector brings you a comprehensive insight into global trends. This edition delves into the key dynamics shaping the financial services industry during the first half of 2023.
Navigating Choppy Waters: A Turbulent Start to 2023
The financial services sector has been struggling amidst a challenging start to the year. Central banks around the world, including the Bank of England, the European Central Bank, and the US Federal Reserve, spiked interest rates in an effort to combat soaring inflation. A series of bank failures added to the woes, intensifying the disturbed waters in the market. These events had their implications beyond the banking sector, affecting the financial services industry as a whole.
Naturally, organizations in the financial services domain find themselves at a crossroads, encountering a plethora of challenges in the macroeconomic environment. In the first half of 2023, they seemed to grapple with stringent regulatory pressures.
Besides, there were mounting concerns about environmental, social, and governance (ESG) factors. Then the disruptive forces in the fintech domain, including embedded finance continued to be a concern. Generative AI further introduced several new use cases, further complicating the scenario.
Amidst such a situation, the urgency of these companies to transform their ESG, digitization, and portfolio optimization has never been more pressing.
M&A Serves as a Catalyst for Transformation
As global businesses in the financial services sector brace up for a transformation, mergers and acquisitions continue to act as a catalyst. The heavily regulated nature of the financial service sector presents organizations with unique challenges. Even successful efforts for transformation turn out to be demanding.
This justifies why companies in this vertical look forward to leveraging smaller acquisitions to bolster their capabilities. This way, they can find themselves on the growth trajectory once again. Considering the current economic environment, their organic growth faces formidable hurdles.
Naturally, companies are seeking M&A transaction advisory services to streamline their operations and get their business models recalibrated.
Banking and Capital Markets in Focus
Prioritizing M&A in the banking and capital markets sector, recent developments in the industry have some far-reaching implications in the US and other countries. The broader macroeconomic challenges that accompany the failures of three banks in the US further mount pressure on small and medium-sized banks. This brings about the scope for further consolidation in the coming months.
While spikes in interest rates fetch them more income through interest, they remain exposed to the risk of valuation loss. This justifies the pressing need for banks to continually evaluate their liquidity and adjust the interest rate to manage risks.
The overall resilience of the banking sector comes under question with low liquidity levels, mismatches in the balance sheet, loss of confidence among consumers, and capital vulnerabilities.
With regulatory measures intensifying about risk management, further consolidation is on the cards. This is particularly applicable for regional banks looking forward to scaling up and manages operational risks.
A New Era of Due Diligence
Expect More Restructurings
Banks have been prompted by the current market environment to check their lending volumes. This can ease the financial challenges they have been facing. Commercial real estate and other sectors are already under stress. This has been adversely affecting the credit quality on the balance sheets of financial institutions.
As a response, we anticipate that banks will explore portfolio transactions to divest non-performing loans and non-core assets. This can go a long way in strengthening their balance sheets and improving capital ratios.
- NEWSLETTER, GLOBAL
- September 13, 2023
In today’s dynamic economic landscape, middle-market buyers and sellers in the tech sector are proactively seeking new avenues for growth and innovation. The past year has seen some fluctuations in M&A activity. However, it’s essential to focus on the promising opportunities that lie ahead.
The tech industry, like any other vertical, has experienced changes. Prominent tech giants such as Google, Amazon, Microsoft, and Zoom have adjusted their strategies, reflecting the adaptability of the industry. Factors like inflation and rising interest rates have brought new dimensions to the market, encouraging businesses to explore creative solutions.
We will explore how middle-market tech players are embracing change. By leveraging their strengths, they can strategize a positive course forward.
The Roller-Coaster Ride for Middle-Market Tech Sectors
The middle-market tech sector has not been immune to the ongoing challenges. The number of tech deals has significantly dropped between January 2022 and 2023. In January 2023, there were only 11 middle-market tech deals, a stark contrast to the 48 deals as of January 2022. While some signs of recovery are emerging, it’s unlikely that the sector will return to the same levels as of 2021 and early 2022.
Despite the challenges, strategic investors are leaving no stone unturned in reviving M&A activity. They are leveraging their cash reserves to finance deals without relying heavily on debt financing as it is currently more challenging to secure the same. Besides, strategic buyers are adopting a long-term perspective. Forward-thinking players are also partnering with established organizations for Mergers & Acquisitions Advisory Services. They are relying on bets that extend 10 to 25 years into the future.
Private Equity Investors Focus on Add-Ons
Due Diligence and Risk Mitigation
While global organizations operate in a riskier environment, due diligence proves to be paramount. Investors are stepping on their cybersecurity stance to strengthen the line of defense for their sales pipelines and organizational structures.
Considering the rising instances of cyber threats and the associated costs resulting from these breaches, evaluating the organization’s security stance is crucial. Successful organizations are seeking due diligence services from established players to strengthen their cybersecurity posture.
Investors are also delving into organizational charts to understand the dynamics of employees. Thus, they are evaluating the viability of sales projections.
Valuation Expectations in Flux
Looking Ahead: Opportunities in Select Sectors
While domestic and international players are still cautious of their move, selected sectors present opportunities to businesses performing well in high-growth tech-oriented industries. For instance, sectors such as pharma services, digital transformation services, and CFO software tend to hold steady valuations.
Although the tech sector is encountering a multiplicity of challenges, it continues to be an integral part of the global economy. To mitigate these woes, investors are focussing on driving profitability within their existing portfolio companies as they continue to explore fresh opportunities to navigate the evolving landscape.
It’s evident that the tech sector in the middle market has demonstrated signs of resilience and adaptability amidst uncertainty looming around. Professional experts at the IMC Group continue to assist global organizations with M&A advisory and due diligence services to sail through the disturbed waters.
- Article, Global
- September 8, 2023
Having an impeccable payroll process to uphold compliance standards happens to be an aspiration for successful organizations. However, how do you plan to streamline your payroll management process? The answer lies in embracing global payroll management solutions with customized features.
Let’s delve into this enlightening blog, where we have recommended the best payroll management practices to adopt in 2023. With the right approach, your enterprise can enhance your payroll operations efficiently.
Implementing Powerful Payroll Management Practices
1. Formulate Comprehensive Payroll Policies and Procedures
At the core of any well-structured payroll management process lies the formulation of meticulous policies and procedures. Establish a holistic framework outlining the essential components of payment schedules, payment methods, payroll, deductions, and benefits. This way, business owners can ensure that their payroll department respects uniform standards and operates seamlessly.
While structuring your payroll policies, make sure to include:
- Payroll components
- Payment methods
- Payroll deductions
- Payment schedule
- Employee benefits
- Other relevant aspects
Under your payroll procedures, make sure to include the following:
- Payment processes
- Protocols for record-keeping
- Data entry processes
- Report handling standards
- Pre-payroll preparations
- Calculation processes
- Post-payroll reporting processes
2. Proactively Schedule Crucial Payroll Processing Dates and Deadlines
Essential dates and deadlines that businesses need to mark on their calendar include:
- Paydays based on the respective frequency
- Local bank closures
- Employee Benefits Enrolment Periods
- Expatriate Tax Deadlines
- Payment Cut-Off Times
3. Automate Notifications for Timely Reminders
Forward-thinking businesses use smart payroll management solutions to automate notifications to get timely reminders for tax payments. Strategically setting up these reminders will help you remain on top of your payroll schedule.
Use a suitable payroll management tool to consider your preferences and automate these notifications. Businesses also use Google Calendar and invite their payroll management team members for the corresponding events throughout the year.
4. Classify Your Employees Accurately
To ensure a seamless administration of your payroll, it’s crucial to segregate your employees tactically. For instance, you must differentiate between full-time employees and independent contractors. Besides, there should be a difference in payroll processing for exempt and non-exempt employees.
Use a robust payroll management tool to classify your employees and file the appropriate forms. This ensures proper remuneration to your staff without missing the legally-mandated benefits they deserve.
5. Streamline and Automate Your Payroll Management System
With the automation of payroll processing, digitized solutions can significantly alleviate the workload of your payroll department. Embracing one of these sophisticated systems would simplify payroll tax filing. These automated solutions encompass a wide array of tasks, which include:
- Timekeeping
- Calculating salary increments, bonuses, and overtime
- Calculating taxes and deductions accurately
- Generating cost breakdowns of payroll reports
- Streamlined tax filing processes
6. Bank on the Power of Real-time Data Tracking and Analysis
7. Implement a Payroll Approval Process
There’s no denying that your payroll approval process turns out to be a time-intensive ordeal. This calls for a synchronized coordination between professionals working in different hierarchies in your organization. The secret to simplifying this process lies in integrating a strict payroll approval mechanism.
Firstly, take care of your scheduling parameters, budgetary constraints, payment cycles, and other constraints. Accordingly, establish guidelines that necessitate acquiring prior approval for any promotions, staffing agencies, or personal changes.
8. Offer Enhanced Payment Options for Accessibility
9. Embrace Mobile Self-Service Capabilities in Payroll Software
Adopt a payroll platform loaded with self-service functionalities. This would empower your employees to perform simple tasks such as submitting timekeeping information, accessing and reviewing past and current pay stubs, and submitting tax-related information autonomously. This way, they can focus on their core competencies rather than wasting time on repetitive tasks.
Get a solution that supports global mobility services so that your payroll professionals can operate the system from any location.
10. Formulate Robust Data Protection Policies
Whether you use a payroll solution, store data online, or outsource payroll services, securing payroll data is of paramount importance. Payroll teams handle sensitive employee data, including banking information and personnel records. Thus, it’s imperative to adopt precautionary measures to secure this vital information.
Usually, cloud-based solutions offer the highest level of security. If you decide to outsource your payroll management, sign a comprehensive data processing agreement (DPA) to ensure regulatory compliance and data security.
Embrace global payroll management solutions to streamline your operations
Regardless of the industry you operate in or the size of your business, it’s time to embrace a global payroll management solution. We, at the IMC Group, specialize in developing global payroll management solutions for our clients. Managing your payroll and taxes would be easier than ever before with IMC Group. This way, you can ensure compliance for your global workforce in 2023 and beyond.
- Article, Global
- September 4, 2023
Walking in the shoes of a CEO or company head, have you considered the potential of AI for integrated risk management and resilience of your organization? AI is backed by computer science and largely mimics human thought processes. Forward-thinking organizations are proactively integrating AI into their enterprise risk management solutions. This evolving domain aims to create smart systems capable of perceiving, reasoning, learning, and autonomously making decisions. ML, a subset of AI, is based on statistical models and algorithms that empower information systems to learn from data without explicit programming processes.
AI holds tremendous potential to secure business resilience. Thanks to advanced analytics, automation, and intelligent decision-making, AI goes a long way in ensuring integrated risk management.
Here are a few instances that demonstrate the potential of AI in risk management solutions.
1. Noble Intelligence: Noble Intelligence, an initiative by McKinsey & Company, has leveraged the strength of AI to come up with a computer-vision algorithm. It can quickly evaluate the extent of damage in buildings after disasters using satellite images. The algorithm is capable of classifying buildings into four groups from ‘intact’ to ‘destroyed’ using satellite data. Thus, it provides almost real-time analysis without human intervention. With these intelligent inputs, relief workers can allocate their resources judiciously as they carry out rescue operations.
2. Interpreting social media feeds: After calamities, AI is being used to interpret social media feeds. This is an innovative approach that provides real-time insights into aid distribution and infrastructural damage. AI can pinpoint images from shelters where people remain stranded and lack essentials. Thus, it provides valuable ground information to rescuers.
3. Predicting vulnerable areas: Beyond immediate crisis response, AI models can help in predicting high-risk zones. These models use satellite and assorted data to geo-tag damaged sites. Thus, relief teams can quickly identify vulnerable regions and make necessary decisions to rescue people. Besides allocating resources optimally, AI devices the best routes based on damage assessment maps which pacify the aid-delivery process to disaster zones.
While strengthening your organizational resilience, integrating AI outputs into Integrated Risk Management (IRM) automation can be beneficial. Here’s how AI can help your organization in enhancing its risk management capabilities:
Enhancing Risk Assessment and Management
Strengthening Data Analytics and Predictive Insights
Automating Response to Incidents
Revolutionizing Business Continuity Planning
Optimizing Supply Chain Management
Enabling Continuous Monitoring and Auditing
AI facilitates continuous monitoring and auditing within IRM processes. The smart algorithms carry out real-time analysis, evaluating the effectiveness of controls. Thus, they pinpoint possible breaches in compliance in the system. Integrating these AI-backed features into your IRM solutions would automate the ongoing auditing and surveillance processes. This can reduce periodic assessments, and manual sampling which tend to be time-intensive.
Integrating AI into your IRM automation platform empowers you with fresh insights to make informed decisions. However, this integration calls for meticulous attention to data quality, model accuracy, and regulatory compliance. It is imperative for IT teams, IRM professionals, and AI experts to collaborate and establish a robust automation infrastructure. Besides, the process should involve limited human intervention to interpret results and draw actionable conclusions.
The IMC Group continues to be your trusted partner for governance risk and compliance services. With professionals on your side, you can seamlessly leverage AI to strengthen the integrated risk management and resilience of your organization.
- Article, Global
- August 21, 2023
An Insight into Family Offices
An insightful Credit Suisse study reveals that family offices are those with wealth over $100 million in their threshold. Globally, the number of family offices is estimated to be between 6,500 and 10,500. A 2019 Campden Research reveals a 40% increment in the number of family offices since 2017. Collectively, these offices manage a staggering $6 trillion.
Remarkably, a substantial number of family offices have emerged relatively recently. As much as 70% of these offices were established after 2000. Since 2010, there has been a striking 35% increase in the number of such establishments. This shift reflects that affluent families have realized that managing investments in-house proves to be cost-effective. The traditional investment approach involving conventional vehicles requires you to shell out management fees of 2% to 20%.
Data obtained through a UBS survey reveals that on average, family offices bear an annual fee of 1.157%. This is almost half of what traditional investment vehicles require.
Flexibility and Strategic Prowess of Family Offices
Family offices wield unique advantages, although they are smaller than sovereign wealth funds, hedge funds, or private equity. Their agility to engage in early-stage investment deals and the ability to make swift decisions make them successful. Along with this, family offices have robust capital, empowering them to underpin larger investment rounds ranging from $10-50 million. This is pivotal for spearheading such ventures to new heights.
Before the pandemic, family offices primarily used to channel their investments toward private equity and venture capital funds. Thus, they adopted a conventional stance across real estate, equities, and other fronts. However, family offices realized the potential in other domains like digital finance, sustainability, health tech, and AI. Thus, they are exploring these untapped opportunities, as pointed out by PWC. The researchers focussed on this transformation, explaining that family office deal volumes outpaced VC in 2021.
Dynamic Shifts and Investment Pioneers
As investment avenues undergo a transformation, family offices continue to capitalize on the potential in the tech sector. While 2022 witnessed a dip in family office investments, they still contributed to around 33% of global startup capital. Simultaneously, startups and growth companies are now looking forward to aligning with family offices, primarily drawn by their appetite for long-term strategies, hands-on involvement, and prompt decision-making.
In 2022, family office-backed deals constituted 10.1% of global startup investments. This encompasses 32.5% of startup capital stemming from these offices. In deal selections, North and Latin America took the center stage. The prioritized sectors include SaaS, Artificial intelligence, machine learning, media, technology, health, and telecoms. There’s also a palpable potential to invest in sustainable industries, fuelled by the intent of younger investors to focus on ESG principles.
Exploring the Horizon for Progress
Although US family offices are cautious about the short-term market, 2023 and 2024 look promising. Currently, family offices are gearing up to make more investments in green technology, healthcare technology, and AI.
A Campden Wealth report for 2023 shows that a significant number of North American family offices have already invested in Metaverse. Other family offices are consolidating their investments in Metaverse, Web 3.0, and NFTs.
These trends signify an accelerated growth trajectory in the broader technology sector, as the global economy strives to break free from interest rate pressures and inflation.
The IMC Group continues to be a pioneering consultancy firm for private client and family advisory services. Experienced professionals can put you on the right track as you explore the potential of family offices to empower your investment strategies.
- NEWSLETTER,U.A.E
- August 14, 2023
Legislation and Regulators
The relevant legislation for merger control in the UAE is Federal Law No. 4 of 2012, known as the Competition Law, along with its implementing regulations under Cabinet Resolution No. 37 of 2014. Responsibility for reviewing mergers and acquisitions lies with the Competition Department of the Ministry of Economy.
The Competition Law is still in its early stages, having come into force in 2013. While it is modelled after EU competition law, there remain some gaps that are likely to be clarified through future cabinet resolutions. At present, there is limited precedent on how the law will be interpreted and applied.
Scope of the Legislation
The Competition Law requires parties to notify the authorities of any transaction that results in direct or indirect control of one entity over another, where the merged entity would hold a market share of at least 40%.
Unlike some jurisdictions, the UAE regime does not provide for voluntary notification – if the thresholds are met, notification is mandatory. The law applies to both full and partial acquisitions of interests, though the definition of “control” is not precisely specified.
The notification requirement extends to joint ventures and to transactions taking place abroad that may affect competition in the UAE markets. However, certain sectors like financial services, pharmaceuticals and transport are currently excluded from the scope of the Competition Law.
Assessment Criteria
The Competition Law sets out two main criteria for determining whether a proposed M&A transaction requires approval:
- The merged entity must have a market share of at least 40% post-transaction.
- The transaction must not adversely impact competition, such as by creating or enhancing a dominant market position.
While the 40% threshold is straightforward, the second substantive test creates some uncertainty. It appears to require a competition assessment even at the initial stage of evaluating whether notification is mandatory. It remains to be seen how this will be applied in practice.
Foreign Investment Considerations
Foreign-to-foreign deals must still be notified if the merged entity has UAE operations or sales exceeding the 40% local market share threshold. Separate approvals from sectoral regulators may also be required for foreign entities operating through local branches.
Regulators can exercise discretion to reject transactions based on public policy or national security factors, separate from competition law.
Strategic Considerations
For companies pursuing M&A opportunities in the UAE, here are some tips:
- Assess at an early stage whether the 40% threshold will be exceeded to determine if notification is required.
- Engage advisors to evaluate if a substantive competition assessment may be warranted even below the thresholds.
- Be mindful of potential shareholding and foreign ownership restrictions in the relevant industry.
- Involve advisors to coordinate regulatory approvals and navigate discretionary powers of government authorities.
- Develop a timeline for the transaction that accounts for mandatory notification and approval periods.
- Be prepared for limited precedents and possible lack of clarity on merger control review processes.
With support from experienced advisors like IMC Group, companies can effectively navigate UAE’s merger control regime. IMC offers comprehensive due diligence services in Dubai to help investors evaluate opportunities, risks and approval requirements for successful M&A execution in the UAE.
- NEWSLETTER,SINGAPORE
- August 14, 2023
The Singapore government has introduced several changes to the country’s immigration and employment regulations that will impact organizations in 2023 and beyond.
A new points-based system will govern employment passes for foreign professionals starting September 2023. Applicants will need to meet salary thresholds and pass an assessment considering qualifications, diversity, skill shortages and other factors.
Meanwhile, enhanced workplace guidelines aim to promote fairness and prevent discrimination. Employers must make employment decisions based solely on job requirements and not pressure staff to join non-work activities.
New anti-discrimination legislation expected in 2024 will prohibit bias based on age, race, disability and other attributes during recruitment and employment. Penalties for non-compliant employers may include fines, corrective orders and compensation to victims.
On the benefits front, paternity and infant care leave will be increased from January 2024. The monthly salary ceiling for employer CPF contributions will also be raised in phases starting September 2023.
These changes warrant a review of hiring practices, workplace policies and benefits management to ensure compliance and minimize legal risks. Tapping external expertise can help organizations successfully adapt to the evolving regulations.
With extensive experience enabling Employment Passes in Singapore, IMC Group is well positioned to advise companies on immigration compliance. Contact IMC today to learn more about aligning your foreign workforce strategies with the new immigration rules.
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