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Dubai International Financial Centre – Updates To Prescribed Company Law – Corporate and Company Law

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The Dubai International Financial Centre (“DIFC”)
recently issued the Prescribed Company Regulations 2022 (“PC
Regulations”). The new PC regulations from the DIFC have
amended the previous regime for Prescribed Companies. This article
explores the changes and extension to use of Prescribed Companies
under the DIFC legislative framework.

What is a Prescribed Company under the DIFC?

A Prescribed Company is a company incorporated or continued in
the DIFC pursuant to provisions of the DIFC Companies Law No. 5 of
2018. The Prescribed Company offering from the DIFC is most
relevant to investors with existing nexus to the DIFC and the UAE.
The Prescribed Company has truly unique benefits from an
operational and financial perspective given its low cost of
application, licensing and renewal which is approximately USD 1,000
per annum for each Prescribed Company.

Requirements for PC setting up

An applicant wishing to incorporate or continue a Prescribed
Company in the DIFC must meet the requirement of either being
controlled by a Qualifying Applicant or being used for a Qualifying
Purpose.

Qualifying Applicant

A Qualifying Applicant could be any of the following:

  • a DIFC registered entity;

  • an entity under common control or ownership of a DIFC
    registered entity;

  • a DFSA authorized firm;

  • a family operated business which is owned or controlled by a
    single family;

  • a collective investment fund which can be a domestic fund or a
    foreign fund;

  • a government entity;

  • an ultimate beneficial owner of a DIFC based structure; or

  • an entity wholly owned or control by one or more of the
    above;

Qualifying Purpose

A Qualifying Purposes could be any of the following:

  • an aviation structure;

  • a crowdfunding structure;

  • a DIFC holding structure;

  • an innovation holding structure;

  • an intellectual property structure;

  • a maritime structure; or

  • a structured financing.

Restrictions on use of PC

  • The Prescribed Company can be used for various structuring
    purposes including Financial Services as a Special Purpose Vehicle
    to hold property on behalf of a fund however the Prescribed Company
    cannot be used to be the Fund Manager, the Trustee or the General
    Partner of a Fund or the Fund itself.

  • A Prescribed Company whose Qualifying Purpose is a crowdfunding
    structure can be used to hold assets invested through a
    crowdfunding platform but not itself be used as a crowdfunding
    operator.

  • The Prescribed Company is not permitted to provide any
    Financial Services unless authorized by the DFSA.

Under the new regime the use of Prescribed Company for
investment holding and structuring is expanded which will further
promote the use of DIFC Prescribed Company as a cost effective and
efficient tool for investors and investment managers alike
regionally.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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