Vijay Valecha, Special to Arabian Business June 16, 2022
In his capacity as the Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Prime Minister of the UAE, has issued Law No (12) of 2022 establishing road toll operator Salik as a public joint stock company (PJSC).
As a public joint stock company, the firm will have legal, financial, and administrative autonomy to carry out its activities and achieve its objectives.
According to the law, Salik Company PJSC will have a term of 99 years, starting from the date of its registration in the Trade Register. The term renews automatically for the same period as per the company’s articles of association.
The Dubai-headquartered company will also have the right to open branches and offices in Dubai and outside the emirate.
The law also states that the Roads and Transport Authority (RTA) in Dubai is authorised to outsource all or part of Salik’s functions related to the operation and management of toll gates, as per the concession contract signed between RTA and Salik.
The concession contract outlines the rights and obligations of each party, as well as the duration of the contract.
The CEO of Seven Capitals, Mohammed Shaheen, said: “Dubai is witnessing a huge leap in demand for Initial Public Offerings (IPOs), a reflection of the efforts in the country to strengthen its economy.
“This unprecedented demand for IPOs in the Dubai is fueled by investors’ confidence in the long-term economic growth, transformation plans, and shareholders’ appetite to attain listing gains.”
Impact on collection and use of road tolls in Dubai
Pursuant to the Law, proceeds from toll gates, including fees and fines, will be transferred to the company, as per the concession contract signed between RTA and Salik.
Existing toll gates in Dubai can be removed or modified subject to a Decree issued by the Chairman of The Executive Council of Dubai.
New toll gates can also be added subject to a Decree issued by the Chairman of The Executive Council of Dubai, and after RTA conducts a comprehensive traffic study in coordination with Salik.
Pursuant to the Law, Salik is exclusively authorised to operate, manage and develop the traffic toll system in Dubai.
It is also responsible for implementing legislation related to toll gates and the development, operation and management of traffic systems, as per contracts signed with competent authorities both in Dubai and outside the emirate.
The company also provides advisory services related to traffic regulations and the toll gate system and works with RTA to conduct studies for planning and identifying new locations for toll gates.
Considerations for a Salik IPO
According to the Law, Dubai Government owns all the shares of Salik Company PJSC.
The Executive Council of Dubai is authorised to determine the percentage of shares that can be offered for subscription either through an initial public offering (IPO) or private placement.
Shaheen added: “Ideally, companies that demonstrate solid financial performance and implied value, have a strong equity story and a clearly defined strategy, have a leading corporate governance, have a good sense of quality management.
“Thus, any ‘jewel’ asset coming to market (whether government or privately owned) will draw enough demand as long as the investors are clear on the asset’s equity story.”
Pursuant to the law, the company’s Board of Directors will consist of a chairman and vice chairman, in addition to board members.
The first board of directors of the company will be formed according to a decision issued by the chairman of the Executive Council of Dubai. The Board serves for a period of three years.
The new law permits the transfer of some staff from RTA to the new entity. The director-general and chairman of the Board of Executive Directors of RTA will issue a decision on the staff who can be transferred to the new company without any prejudice to their rights.
The law also authorises the director-general and chairman of the Board of Executive Directors of RTA, to nominate employees as judicial officers for recording violations of legislations the company is responsible for implementing.
The law also annuls any other legislation that may contradict it.Source: