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DIFC Introduces New Prescribed Company Regulations

Published: 04/11/2019

Watch Noff Al Khafaji’s video here.

On 31 October 2019, the Dubai International Financial Centre (“DIFC”) introduced Prescribed Company Regulations 2019 (“New Regulations”) that replace the Special Purpose Company regulations (“Old Regulations”).

The main objective of the New Regulations is to consolidate, replace and expand on the existing Special Purpose Company (“SPC”) and Intermediate Special Purpose Vehicle (“ISPV”) regimes.

The New Regulations provide a flexible, business friendly regime allowing a cost and time efficient way of doing business to Prescribed Companies in the DIFC aligned with international best practices.

What is a Prescribed Company?

A Prescribed company is a private company limited by shares that falls under the regime of Small Private Company as per Companies Law DIFC Law No 5 of 2018 (“Companies Law”).

A Small Private Company will be considered a Prescribed Company if:

Scenario 1 – Qualifying Applicant – It has been formed by:

  • Authorised Firm
  • Fund
  • Family Office
  • Fintech Entity
  • Foundation
  • Government Entity
  • Holding Company
  • Private Trust Company
  • proprietary Investment Company; or
  • person wholly owned by (1) or more of the above, provided that they will control the Prescribed Company; or

Scenario 2 – Qualified Purpose – It forms part of:

  • Aviation structure;
  • Crowdfunding Structure
  • Family Holding Structure; or
  • Structured Financing.

It is subject to the New Regulations as well as Operating Law DIFC Law No. 7 of 2018, Operating Regulations, the Ultimate Beneficial Ownership Regulations and the Companies Law.

 

What Happens to the Existing SPCs and ISPVs?

All existing SPCs and ISPVs shall automatically become a Prescribed Company upon the enactment of the New Regulations, and shall:

  1. change its name to remove reference of “SPC” or “ISPV” and include “Limited” instead, within (90) ninety days of the enactment date of the New Regulations;
  2. file a confirmation statement in accordance with the Operating Law No. 7 of 2018 and the New Regulations prior to the next anniversary of its incorporation; and
  3. amend its articles of association to comply with the New Regulations and to evidence the new name.

 

Benefits of a Prescribed Company:

  1. It can Outsource Certain Functions to a Corporate Service Provider, e.g. completing the filling requirements and representing the prescribed company before the DIFC.
  2. It can use Registered Address of Its Corporate Service Provider.
  3. It Needs No Auditor: It does not need to appoint an auditor nor file accounts with the DIFC.
  4. The DIFC Fees are Symbolic: The Prescribed company incorporation fee is only USD 100 and the license renewal fee (payable annually) only USD 1,000.

 

How can we help?

Our team will be delighted to assist you by:

  1. Advising your existing SPC or ISPV on the steps to take to comply with the New Regulations (e.g. name change, articles revisions);
  2. Assisting you with the incorporation process of a Prescribed Company;
  3. Acting as a corporate service provider for your Prescribed Company (existing or to be formed); and/ or
  4. Revising the Articles of Association of your existing SPC or ISPV to comply with the New Regulations.

 

For Further information contact:

Izabella Szadkowska
Partner, Corporate Structuring
i.szadkowska@tamimi.com

Noff Al Khafaji
Senior Associate, Corporate Structuring
n.alkhafaji@tamimi.com