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  • Part I – Company Structure

    • Introduction

      Parts I-III of this Company Rulebook govern the way a VASP structures and manages its company, Board, Senior Management and Staff and the ongoing maintenance of satisfactory internal control and management systems. Rules in Parts I-III of this Company Rulebook set out requirements regarding:
       
        • company structure and Board structure;
        • responsibilities of the Board and Senior Management;
        • induction and training for the Board and Staff; and
        • when individuals will be deemed to be Fit and Proper Persons.
       
      The corporate governance needs of a VASP may vary from one to another depending upon a thorough analysis of its particular structure and business operations. The Board and the Senior Management are ultimately responsible for the adequacy and effectiveness of the internal control system implemented for that VASP.
       

    • A. Company Ownership Structure

      1. General requirement. VASPs shall maintain a company structure which is clear and transparent for the purposes of effective oversight by VARA and that ensures a sound and effective operation of the business of the VASP, including its VA Activities, which is conducive to the fair and orderly functioning of any market involving Virtual Assets.
      2. Legal entity in the Emirate. VASPs shall have and maintain a legal entity in the Emirate in one of the legal forms approved by a commercial licensing authority in the Emirate.
      3. Ownership. VASPs shall maintain a company structure with a clear chain of ownership, delegated authority and all associated voting powers such that VARA can clearly identify any Controlling Entity[ies] and the Ultimate Beneficial Owners [UBOs].
      4. Governance. If a VASP adopts a complex company structure including but not limited to trusts and nominee arrangements, and/or structures involving Decentralised Autonomous Organisations [DAOs] or other organisational forms with decentralised governance, then it is required to furnish information to VARA relating to the following, during the licensing process and at any time on request from VARA, for the purpose of VARA assessing the VASP’s compliance with Rule I.A.1 of this Company Rulebook—
       
        a. the reason[s] for the adoption of such complex company structure and/or decentralised governance;
        b. the relationship between the VASP and relevant DAOs and/or Entities with decentralised governance;
        c. whether the inclusion of DAOs and/or Entities with decentralised governance in the Group or the VASP’s affiliation with such Entities may adversely impact the VASP’s ability to ensure compliance with Regulations, Rules and Directives [including what procedures are in place to ensure effective compliance decisions can be made by way of decentralised governance or voting mechanisms]; and
        d. whether the relevant DAOs and/or Entities with decentralised governance are registered or otherwise legally recognised as, or have within its structure, an Entity in any jurisdictions other than the Emirate.
       
      5. VASPs shall obtain VARA’s written approval prior to any material change to their company structure [including Controlling Entity[ies] and UBOs] and/or adopting decentralised governance in respect of their operations relating to VA Activities. In respect of any such changes to its shareholding structure and/or governance model, a VASP shall—
       
        a. provide the types of information as set out in Rule I.A.4 of this Company Rulebook [if applicable];
        b. provide any additional due diligence information about new Controlling Entity[ies], Group Entities and UBOs as may be requested by VARA; and
        c. comply with any additional conditions or restrictions that VARA may impose to ensure its ability to comply with all applicable laws and regulatory requirements is not impaired, including but not limited to the filing of declarations that any new Controlling Entity[ies] and UBOs are not Politically Exposed Persons or individuals who are subject to any form of economic sanctions.
       

    • B. The Board

      1. Board structure.
       
        a. VASPs shall ensure the Board comprises suitably qualified individuals with the requisite skills, knowledge and expertise taking into consideration the scope of their responsibilities and the VA Activities carried out by the VASP. Each member of the Board must be assessed by the VASP and approved by VARA as being a Fit and Proper Person according to the criteria set out in Part III of this Company Rulebook.
        b. VASPs shall—
       
          i. adopt a clear and effective procedure for—
       
            1. selecting and appointing members to the Board, including the filling of any vacancies on the Board;
            2. removal of members of the Board; and
       
          ii. ensure that all procedures relevant to this Rule I.B.1.b of this Company Rulebook are included in the VASP’s constitutional documents.
       
        c. The Board shall assess and confirm each member of the Board is a Fit and Proper Person at least annually. If a VASP has reason to believe a member of the Board no longer remains a Fit and Proper Person at any time, the Board shall promptly assess such member. If such member of the Board no longer remains a Fit and Proper Person, the Board shall remove such member with written notice and appoint a successor in accordance with Rule I.B.1.b of this Company Rulebook.
        d. VASPs shall ensure that any changes to the constitution of the Board comply with Rules I.B.1.a and I.B.1.b of this Company Rulebook.
        e. The Board shall establish a process to elect a chairman. The chairman shall have the authority to oversee and be responsible for the overall effective functioning of the Board, and any committees it has established, in accordance with Rule I.B of this Company Rulebook.
        f. The Board shall carry out annual assessments, alone or with the assistance of external experts, of the Board as a whole, its committees and individual members to review relevant performances.
       
      2. Responsibilities of the Board.
       
        a. The Board shall establish and regularly update the VASP’s procedural rules and other constitutional documents setting out its organisation, responsibilities and procedures.
        b. The Board and each of its members shall assume full responsibility for—
       
          i. the operation, business and affairs of the VASP, such that these are conducted in a manner which is conducive to the fair and orderly functioning of any market involving Virtual Assets;
          ii. the VASP’s compliance with all applicable laws and regulatory requirements [including but not limited to Regulations, Rules and Directives]; and
          iii. implementing a professional compliance culture within the VASP.
       
        c. The Board shall engage in regular and effective communication with relevant committees, Senior Management, Staff, any other individuals within the VASP and Group Entities to ensure that it is continually and timely apprised of the status of the business, operations and financial position of the VASP.
        d. The Board shall establish and maintain detailed and clear policies and procedures—
       
          i. to set out the process of authorisations within the Senior Management and its subordinates;
          ii. to identify the authority of each member of the Senior Management; and
          iii. to identify reporting lines of the Senior Management and its subordinates.
       
        e. In performing its duties in official capacity, the Board may delegate its authority to relevant committees and Senior Management. In doing so, the Board shall supervise its delegated authority and remain primarily responsible for its duties. The Board shall establish and maintain effective systems and procedures to supervise the Staff who act under the authority delegated by the Board.
        f. The Board shall, at least annually, review the performance of the VASP, the practical and professional experience and suitability of its members and the Senior Management in the context of the latest industry standards in the global Virtual Asset sector.
        g. The Board shall ensure that all Entities performing functions on behalf of the VASP and contractors hired by the VASP have access to, and understand adequate up-to-date information regarding, the applicable policies and procedures implemented within the VASP in acting in their official capacities.
        h. The Board shall—
       
          i. define clear reporting requirements to ensure that internal and external reports can be prepared in a timely manner; and
          ii. establish and maintain effective record retention policies to comply with all applicable laws and regulations and to enable the VASP, its auditors and other interested Entities such as VARA to carry out routine and ad hoc reviews or investigations.
       
      3. Board training.
       
        a. VASPs shall ensure new Board members receive training programme[s] on their company structure, corporate governance, business and other subjects that would assist them in performing their duties, with a particular focus on—
       
          i. the background, strategy and objectives of the VASP;
          ii. the financial and operational aspects of the VASP’s business, including its VA Activities;
          iii. the obligations, duties, liabilities and rights of the members of the Board;
          iv. the functions and obligations of any Board committees; and
          v. key risks relating to the global Virtual Asset sector.
       
        b. The Board shall—
       
          i. review the scope of the training programme and the accuracy of its contents annually; and
          ii. revise the training programme if necessary.
       
        c. VASPs shall provide regular, timely and up-to-date training courses to all members of the Board in matters directly related to the interests of the VASP and Virtual Asset markets as a whole, including but not limited to matters set out in Rule I.B.3.a of this Company Rulebook.
       

    • C. Responsible Individuals

      1. VASPs shall appoint two [2] individuals of sufficient seniority who shall be responsible for the VASP’s compliance with all legal and regulatory obligations [Responsible Individuals].
      2. Each Responsible Individual shall be—
       
        a. a full-time employee of the VASP;
        b. a Fit and Proper Person;
        c. a resident of the UAE or a holder of a UAE passport; and
        d. notified to, and approved by, VARA during the licensing process.
       
      3. VASPs shall ensure that its Responsible Individuals continue to meet the requirements in Rule I.C.2 of this Company Rulebook at all times, and shall validate and maintain a record of such validation on an annual basis.
      4. VASPs must notify and seek approval from VARA prior to any change in their Responsible Individuals, except in the event of reasonably unforeseen circumstances, in such instances the VASPs must notify VARA immediately and provide information on how they will continue to meet the requirements with regard to Responsible Individuals.
       

    • D. Senior Management

      1. VASPs shall establish, document and maintain a management structure which clearly sets out the roles, responsibilities, authority and accountability of the Senior Management.
      2. VASPs shall ensure its Senior Management comprises suitably qualified individuals with the requisite skills, knowledge and expertise as may be reasonably expected in the global Virtual Asset sector.
      3. The Board shall—
       
        a. adopt a clear process and procedure for selecting and appointing members to the Senior Management; and
        b. ensure that such process and procedure are included in the VASP’s constitutional documents.
       
      4. The Senior Management shall—
       
        a. act under the direction and oversight of the Board; and
        b. carry out and manage day-to-day activities of the VASP in a manner which—
       
          i. complies with all applicable laws and regulatory requirements; and
          ii. aligns with the business objectives and policies approved by the Board.
       
      5. A member of the Senior Management may—
       
        a. except in the case of the Compliance Officer [CO] and/or the head of any internal audit functions, hold a position on the Board;
        b. subject to prior written approval of the Board and screening of conflicts of interest conducted by the Board, hold a position on the board of Entities other than the VASP; and
        c. not hold an employee position in any other Entities except with the prior written consent of the Board.
       
      6. If a member of the Senior Management has been serving on the board of another Entity prior to joining the VASP, such member may continue to serve on the board of that Entity provided that the Board is satisfied that, after conducting relevant screening, no conflicts of interest would arise from the VASP’s appointment of such member.
      7. The Senior Management shall furnish all necessary information that the Board may require to supervise and assess the performance of the Senior Management, which assessment shall be carried out by the Board at least annually.
       

    • E. Company Secretary

      1. Notwithstanding any applicable requirements in the constitutional documents of the VASP, the Board must appoint a company secretary independent of the Senior Management, who reports directly to the Board [Company Secretary]. The authorities and remuneration of the Company Secretary shall be determined under a Board resolution, unless the constitutional documents of the VASP provide otherwise.
      2. The Company Secretary shall—
       
        a. document the Board meetings and prepare their minutes, which shall include the discussions and deliberations that took place during these meetings, the place and start and end time of these meetings, registering the Board resolutions and voting results, and keeping them in a special and organised record, including the names of attendees and any expressed reservations. These minutes shall be signed by all attending members;
        b. keep all reports submitted to the Board and those prepared thereby;
        c. provide Board members with the Board meeting agenda of the meeting and the related papers, documents, and information and any additional information related to subjects contained in clauses of the agenda requested by any Board member;
        d. make sure that Board members comply with actions approved by the Board;
        e. notify Board members of the Board meetings dates well in advance of the meeting date;
        f. submit drafts of the minutes to Board members to express their opinion thereon before signing it;
        g. make sure that the Board members, completely and immediately, receive a full copy of the minutes of the Board meetings, information and documents related to each meeting;
        h. keep the minutes of meetings of the Board and its committees;
        i. inform Staff, including Senior Management, about resolutions of the Board and its committees relevant to their function or roles and report on their implementation and application;
        j. support the Board in any activities or processes requested by the Board;
        k. coordinate between Board members and Senior Management; and
        l. regulate the disclosure record of the Board in accordance with applicable requirements in the Market Conduct Rulebook and provide assistance and advice to the Board members.
       
      3. The Board may appoint an external Entity as Company Secretary provided that such appointment will be considered as an Outsourcing and must comply with Part IV of this Company Rulebook.