The following terms and phrases shall have the definitions assigned to them for the purpose of this Regulation:

1. Affiliate: an entity that, directly or indirectly, is controlled by, or is under common control with another entity. The term control as used herein shall mean the holding, directly or indirectly, of voting rights in another entity, or of the power to direct or cause the direction of the management of another entity;
    
2. Aggregate Funding: the total amount of debt capital that a Finance Company borrows from external sources, including its Parent. This includes, but is not limited to, borrowings from other financial institutions, issuing of bonds and other Islamic Finance debt instruments;
    
3. Aggregate Liabilities: the total amount of on-balance sheet and off-balance sheet liabilities of a Finance Company;
    
4. Central Bank: the Central Bank of the United Arab Emirates established under Federal Law No. (10) of 1980;
    
5. Central Bank Law: Federal Law No (10) of 1980 concerning the Central Bank, the Monetary System and Organization of Banking and its amendments;
    
6. Commercial Companies Law: the Federal Law No. (2) of 2015 concerning Commercial Companies;
    
7. Confidential Data: account or other information relating to a Finance Company customer or employee, who is or can be identified, either from the confidential data or from the confidential data in conjunction with other information that is in, or is likely to come into, the possession of a person, organization, or process that is granted access to the confidential data;
    
8. Controlling Influence: the relationship between a parent company and a subsidiary, where the parent holds a minimum of 50% of the subsidiary’s share capital or has control over it via, for example, the composition of the board of directors, or via a similar relationship between any natural or Juridical Person or company;
    
9. Credit Exposure: the value of a funded and unfunded exposure and unused committed lines that are subject to any credit risks, such as default or credit rating downgrade;
    
10. Duty of care: the duty of a member of the board of directors to act on an informed and prudent basis in decisions with respect to the Finance Company;
     
11. Duty of loyalty: the duty of a member of the board of directors to act in the interest of the Finance Company;
     
12. Financing: permitted activities as referred to in Article 10 of this Regulation;
     
13. Finance Company: a conventional finance company and/or an Islamic Finance Company;
     
14. Fitness and Probity or Fit and Proper: professional requirements and personal integrity requirements addressed to the board of directors and Senior Management in this Regulation;
     
15. Foreign funding: any borrowing or acceptance of deposits from any corporate entity incorporated outside of the U.A.E. and its free zones;
     
16. Free Zone: all free zones in the UAE except the financial free zones;
     
17. Higher Sharia’a Authority: the Authority established by the Central Bank to ensure implementation of Islamic Sharia’a provisions at financial institutions carrying on their entire activities or part thereof in accordance with Islamic Sharia’a provisions;
     
18. Independent member of the board: a member of the board of directors who does not have any management responsibilities within the Finance Company and is not under any undue influence, internal or external, political or ownership, that would impede the board member’s exercise of objective judgment, including but not limited to a relationship with the Finance Company, any of its Senior Management, external auditor, significant shareholders, subsidiaries or affiliates that could lead to financial or other benefit, in addition to other conditions that the Central Bank may specify from time to time;
     
19. Islamic Finance Company: a Central Bank licensed company engaged in financing activities whose memorandum and articles of association include a commitment to apply Sharia'a provisions and to conduct its activities as per those provisions;
     
20. Juridical Person: a Juridical Person in accordance with Article 92 of Federal Law no. 5 of 1985 Concerning the Issuance of the Civil Transactions Law. For the purpose of this Regulation, this definition only refers to Juridical Persons in the U.A.E.;
     
21. License: authorization issued by the Central Bank to conduct the business of Finance Companies;
     
22. Licensee: a Juridical Person licensed by the Central Bank to conduct Financing activities per the provisions of this Regulation;
     
23. Material Business Activity: an activity of the Finance Company that has the potential, if disrupted, to have a significant impact on the Finance Company’s business operations or its ability to manage risks effectively;
     
24. Parent Company: an entity (the 'first entity') which:
    1. holds a majority of the voting rights in another entity (the 'second entity');
        
    2. is a shareholder of the second entity and has the right to appoint or remove a majority of the board of directors or managers of the second entity; or
        
    3. is a shareholder of the second entity and controls alone, pursuant to an agreement with other shareholders, a majority of the voting rights in the second entity.

       or;

    4. if the second entity is a subsidiary of another entity which is itself a subsidiary of the first entity.
        
25. Principal Shareholder: any shareholder of a Finance Company who owns, directly or indirectly, 5% or more of shareholdings of a Finance Company;
     
26. Related Entities: any of the following:
    1. Two or more natural or Juridical Persons who, unless shown otherwise, constitute a single risk because one of them, directly or indirectly, has control over the other or others, or can exercise a Controlling Influence over the other party in making financial and operating decisions; or
        
    2. Two or more natural or Juridical Persons between whom there is no relationship of control but who are to be regarded as constituting a single risk because they are so inter-related that, if one of them were to experience financial problems, the other or all of the others would be likely to encounter repayment difficulties;

1. aa. Senior Management: the executive management of the Finance Company responsible and accountable to the board of directors for the sound and prudent day-to-day management of the Finance Company, generally including, but not limited to, the chief executive officer, chief financial officer, chief risk officer and heads of the compliance and internal audit functions;
    
2. ab. Subsidiary: an entity (the 'first entity') is a subsidiary of a Finance Company (the 'second entity') if the second entity:
    
   1. holds a majority of the voting rights in the first entity;
       
   2. is a shareholder of the first entity and has the right to appoint or remove a majority of the board of directors or managers of the first entity; or
       
   3. is a shareholder of the first entity and controls alone, pursuant to an agreement with other shareholders, a majority of the voting rights in the first entity.

      or;

   4. if the second entity is a subsidiary of another entity which is itself a subsidiary of the second entity;
       
3. ac. U.A.E. Banks: all banks licensed by the Central Bank.