DIFC amends Prescribed Company Regulations
In May 2024, the Dubai International Financial Centre (DIFC) published a consultation paper with proposal for amending the Prescribed Company Regulations in the DIFC. After two-month long consultation and deliberation process, the amended Prescribed Company Regulations have now come into effect on 15th July 2024.
Amendments
Qualifying requirements
An applicant wishing to establish or continuing a Prescribed Company in the DIFC shall establish one of the following factors:
1. The control of the Prescribed Company is with one or more
(i) GCC persons (a GCC citizen, a body corporate or unincorporated body Controlled by a GCC citizen(s), a body corporate that has any class of its securities listed on a securities exchange in the GCC, the UAE government or person in which the UAE government owns (directly or indirectly) an interest of at least 25%, or such other percentage as approved by the DIFCA), or
(ii) Registered Persons (a legal body incorporated, registered or continued in the DIFC), or
(iii) Authorised Firms (a person who holds a licence from the DFSA or financial services regulator in the UAE or certain other recognised jurisdictions).
2. The Prescribed Company is for the purpose of holding legal title to, or controlling GCC Registrable Assets, or
3. The Prescribed Company shall be for a Qualifying Purpose or
4. The Prescribed Company has a director that is an Employee of a Corporate Service Provider (CSP) having arrangements with the Registrar.
A GCC registrable asset has been defined as an asset or property interest that must be registered with a GCC Authority to establish legal ownership and includes among other things land and real property, shares in companies, partnership interests, intellectual property, etc.
The qualifying requirement relating to the Corporate Service Provider were not part of the proposed amendments but were included after public consultation.
Qualifying Purpose
The Qualifying Purpose as referred above can be any structure which relates to, a) an Aviation structure, b) a Crowdfunding structure, c) an Intellectual Property structure, d) a Maritime structure, e) a Structured Financing.
The amended regulations have removed the DIFC Holding Structure and an Innovation Holding Structure from the definition of Qualifying Purpose. Since the qualifying requirements have been widened, the DIFC thinks that these two structures can be sufficiently covered under the same.
Corporate Service Provider
The provision of Corporate Service Provider (CSP) already existed in the previous version of the regulation. However, the amendments have made it possible wherein a Prescribed Company may continue to function in the DIFC, if an Employee of a CSP is a director in that Prescribed Company. This requires that such a CSP must have an arrangement with the Registrar of the DIFC, wherein the CSP is responsible for assessing the applicant of the Prescribed Company if he complies with the Anti Money Laundering, Unique Beneficial Owner and other such requirements mentioned in Regulation 3.3.2.
Conclusion
The DIFC has through these regulations liberalised the Prescribed Company regime wherein additional applicants shall now be allowed to establish this corporate structure in the DIFC. The changes provide the applicant with increased structuring options that will enable them to expand their business.
For more information, you may contact:
Thomas Paoletti
Fauzia Khan
