DIFC Announces Amendments to Prescribed Company Regulations: Simplified
The Dubai International Financial Centre (DIFC), a leading financial hub for the Middle East, Africa, and South Asia (MEASA), has revised its Prescribed Company Regulations. These changes aim to significantly broaden and simplify the existing framework for establishing Prescribed Companies (PCs) in DIFC, making it easier for businesses to take advantage of the opportunities within this dynamic region.
Overview of Prescribed Company Regulations
Initially introduced in 2019 and updated in 2020 and 2022, these regulations have continuously evolved to accommodate a wider range of applicants. Despite these enhancements, there has been a persistent demand for further expansion. DIFC strives to balance its role as a jurisdiction of substance with the need for special-purpose vehicles used in legitimate structuring and transactions. The introduction of UAE Corporate Tax has alleviated concerns about substance requirements, paving
Key Changes to the DIFC Prescribed Company Regulations 2024
- Expanded Eligibility for Prescribed Companies:
Previously, establishing a PC was restricted to Qualifying Applicants with a connection to DIFC or those engaged in low-risk activities. The new regulations will allow for the establishment of Prescribed Companies in several new scenarios:
- PCs controlled by one or more:
- GCC citizens or entities controlled by GCC citizens.
- Authorized Firms.
- DIFC Registered Persons, excluding PCs or NPIOs (consistent with the existing regime).
- PCs established primarily to hold or control GCC Registrable Assets (assets registered with a GCC Authority).
- PCs established for a Qualifying Purpose (consistent with the existing regime).
- New criteria introduced:
- PCs can be established by anyone worldwide if they appoint a director who is an employee of a DFSA-registered Corporate Service Provider (CSP). This CSP must have an agreement with the DIFC Registrar of Companies to manage compliance and anti-money laundering (AML) functions for the PC.
Benefits of the New DIFC Amendments
These changes are expected to significantly enhance the current regime, making these vehicles accessible to a broader global audience while maintaining a strong connection to DIFC and the GCC. DIFC is also updating its AML procedures to handle the expected increase in demand.
Additional Key Amendments for Prescribed Companies in DIFC
The revised regulations stipulate that Prescribed Companies must be used solely for their specific purpose or as holding companies and cannot employ staff. This ensures PCs function as true holding entities rather than operational businesses. Existing PCs that don’t meet the new criteria will get continued licensing benefits similar to the previous rules. Transitional arrangements will be communicated to these entities.
Implementation and Access to DIFC Regulations
The new legislation came into effect on July 15, 2024, and can be found in DIFC’s Legislative Database.
Excerpt from Gulf News
“Dubai International Financial Centre (DIFC) on Monday enacted new legislation on how private companies can be established at the international financial hub. DIFC said in a statement that it is enacting amendments to the ‘Prescribed Company’ regulations, which ‘significantly expand and simplify the current ‘Prescribed Company’ regime in DIFC'” (Gulf News, 2024).
Contact Maldbury & Co for Professional Support
Navigating the complexities of the new DIFC regulations can be challenging. Maldbury & Co offers expert guidance and support to help you take full advantage of these changes. Whether you are setting up a new entity or adapting to the updated regulations, our team is here to assist you every step of the way.
For more information and personalized support, visit Maldbury & Co or email us at hello@maldbury.com. We are here to help you succeed in DIFC.
References
Gulf News, 2024. New DIFC rules for private companies come into effect. [online] Available at: https://gulfnews.com/business/markets/new-difc-rules-for-private-companies-come-into-effect-1.1721033117472 [Accessed 18 July 2024].