UAE’s listed firms must follow new rules on ‘goodwill’ accounting, boosting transparency in M&A deals. The SCA also launches regulations for finfluencers and robo-advisers to align markets with global standards and protect investors.
Dubai: Publicly listed companies in the UAE will soon have to comply with new rules on how they account for ‘goodwill’, a move expected to bring more clarity and transparency in the financial statements of firms engaged in mergers and acquisitions (M&A).
The UAE Securities & Commodities Authority (SCA) has approved a new regulatory framework that formally recognizes ‘goodwill’ as an intangible asset. This step comes as part of wider efforts to align local regulations with international accounting standards.
In business, goodwill typically refers to the premium a company pays over and above the fair value of another firm’s net assets when acquiring it. This can include the target company’s brand reputation, customer loyalty, and market position.
Clear valuation rules for companies
The SCA said the new framework will establish clear valuation principles that must be followed by boards of directors, audit committees, and external auditors. “The framework aims to promote compliance with international accounting standards and enhance transparency and investor disclosure practices,” the authority said in a statement.
As an example, if a company buys another business for Dh5 million, and the acquired company's net assets (total assets minus liabilities) are valued at Dh4 million, the extra Dh1 million paid will be recorded as goodwill.
However, goodwill cannot be created internally; it only appears in a company’s balance sheet when it acquires another business for a price higher than the fair value of its net assets.
More mergers and acquisitions driving change
The UAE’s capital markets have seen rising M&A activity in recent months, particularly among listed companies. Gulf Navigation, listed on the Dubai Financial Market (DFM), has pursued several deals, while on the Abu Dhabi Securities Exchange (ADX), firms like Multiple Group and Emirates Driving Company have also announced acquisitions.
Industry experts say that clearer accounting standards around goodwill will help investors better evaluate the true worth of companies that grow through acquisitions.
Regulatory focus extends to digital finance
The SCA’s latest board meeting also reviewed other key regulatory initiatives. One of the major steps discussed was the launch of the region’s first-ever registration and authorization framework for financial influencers, also known as ‘finfluencers’.
Under this new framework, individuals or companies offering financial content on social media must be officially registered and follow specific rules designed to protect investors. “This groundbreaking initiative is designed to reinforce transparency and safeguard investors, aligning with the rapid evolution of the digital financial sector,” the SCA said.
As more people in the UAE turn to social media for financial advice and market updates, the SCA hopes these new measures will limit misinformation and reduce potential risks to retail investors.
Rules for robo-advisers introduced
The authority has also rolled out regulations to oversee investment funds that rely on robo-advisers — automated platforms that use algorithms to manage portfolios. With this step, the SCA aims to create a regulatory framework that keeps up with technological advances in asset management, while ensuring adequate protection for investors.
Commitment to investor confidence
Overall, the SCA’s recent measures are part of a broader effort to modernize the UAE’s financial markets. By setting clearer rules for goodwill accounting, monitoring the activities of finfluencers, and regulating the use of robo-advisers, the authority is working to improve corporate governance, financial reporting, and transparency.
Market watchers believe these updates will not only help investors get a clearer view of companies’ financial health but also boost the attractiveness of UAE’s markets to global investors seeking reliable and well-regulated environments.
As these new frameworks take effect, listed companies and financial content creators alike will need to adjust their practices to meet higher standards — a shift many experts say is necessary to support the UAE’s vision of becoming a regional hub for investment and innovation.
