DIFC Corporate Governance – A Reminder to Amend the Articles for your DIFC Company
Further to our alert of 10 March 2019, we wish to remind you that your DIFC company is required to amend its Articles of Association by 12 November 2019, in accordance with the New DIFC Regime issued in November 2018.
As you may recall, the enactment of the new Companies Law (DIFC Law No. 5 of 2018), Operating Law (DIFC Law No. 7 of 2018), Companies Regulations and Operating Regulations (“New DIFC Regime”) has imposed an obligation upon your DIFC business to comply with numerous requirements, one of which is the alignment of your DIFC company articles with the New DIFC Regime.
Based on our discussion with the DIFC, each DIFC company should revise its articles to align them with the New DIFC Regime.
Key Areas of Focus:
The following areas require particular attention when the articles are aligned with the New DIFC Regime:
- overall format and terminology used throughout;
- licensed activities references;
- extent of shareholder liability;
- share capital structure;
- share classes variety;
- lien over partly paid shares;
- calls on shares and forfeiture;
- number of directors (minimum one); and
- conflict of interest framework.
Under the New DIFC Regime, your DIFC company can:
- follow the new DIFC format Articles;
- adopt the new DIFC format Articles, with some business-specific modifications; or
- adopt an individually chosen set of articles, so long as those comply with the New DIFC Regime (“New Articles”).
Our experience indicates, the completion of the New Articles takes at least a month, on average.
Apart from the time required to prepare the documents and secure signatures, when assessing the time required to register the New Articles, you should take account of the fact the DIFC team require time to review and process each application, which impacts the timing of the process.
It is important to start the New Articles implementation process as soon as possible as failing to adopt the New Articles may result in the DIFC imposing a penalty of USD 15,000.
How Can We Assist You?
Our team of experts will be delighted to assist you by:
- identifying areas for revisions under the articles of your DIFC company;
- preparing a set of documents to adopt the New Articles;
- processing the DIFC portal submission of New Articles.