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29 March 2024

Investors at heart of new governance code

Published
By Parag Deulgaonkar

If the Dubai Land Department (DLD) does make it mandatory for every developer - master developer or sub developer - to follow the code for corporate governance from 2013, then it will become mandatory for such entities to disclose recourse and alternatives available for prospective investors in case of a delay in completion and handover of their property.

According to the code of corporate governance, developed by Hawkamah, the Institute for corporate governance in conjunction with DLD, options such as swaps or refunds must be mentioned clearly by the company if the project is delayed.

Moreover, all developers will have to appoint a dedicated investor relations officer who will deal with enquiries of institutional and individual property investors.

It further suggests that all developers should ensure that the sales and purchase agreement for built-up and off-plan properties disclose complete information about the property, parking spaces, common areas, service charges and even mention the expected date of completion.

Property owners, or buyers should also be provided with a comprehensive document (owners’ manual) containing complete information about the purchased property, resident etiquettes, whom to approach in case of maintenance issues, developer’s warrantee, information about the owners association and the association manager along with the information on the community where the property is located.

In case of off-plan properties, developers should provide complete information about the property to the registered brokers or selling agents, or prospective buyers which includes project description, infrastructure information and utilities, with finishing details of the property.

The code recommends that developers selling off plan properties should be encouraged to obtain a credit rating from a rating agency to improve confidence level of investors.

On Tuesday, DLD announced the launch of the corporate governance charter, which will be implemented in three phases — first will be the educational and experimental phase, which will last for three months, starting October; second will be the training and coordination phase, which will continue throughout 2012, and the third will be “obligatory” implementation phases, effective from January 2013.

Fines will be imposed on developers who fail to implement the charter. However, companies can deviate from the provisions of the code only if they provide a “sound” explanation as to why they have chosen to do so.