The Dubai International Center (DIFC), on 31st October, 2019 presented the Prescribed Company’s regulation with the aim of replacing and expanding the scope of the old regulations, i.e. the Special Purpose Company Regulations (SPC) along with the Intermediary Special Purpose Vehicle Regime (ISPVR). A triumph character of this new regulation is that it provides a very flexible regime that are business friendly and allow time saving as well as cost efficiency with respect to the act of doing business in the Prescribed Companies of the DIFC by the way of best practices within the organization.
The Prescribed companies mentioned above are the private companies which are limited by shares that belong to the category of Small Private Companies as per the DIFC Law no. 5 of 2018. Owing to the introduction of the new regulation, the existing SPCs and ISPVs will on its own become a Prescribed Company and will undergo the following changes: Firstly, the name of the company will be changed to remove any kind of reference of the SPCs and ISVPs. In place of it, the term “limited” shall be added within ninety days from the enforcement of the new act; Secondly, the companies need to file the statement of confirmation according to the Operating Law No. 7 of 2018 and shall adopt the new regulations before the next anniversary of its incorporation; And thirdly, the company will have to amend the Article of Association with respect to the new regulations, which will also provide as an evidence to the new name.
There are certain requisites for the small private companies to be a Prescribed Company:
- If the company is formed by any Authorized Firm, Fund, Fintech Entity, Foundation, Family Offices, Governmental Entity, Private Trust Company, Holding Company, Proprietary Investment Company, person or wholly owned by one or more of the above mentioned will be the qualifying applicants with a prerequisite of they being a controlling company.
- The company shall be referred to as the Prescribed Company, if they have a qualified purpose, such as Aviation Structure, Family Holding Structure, Co-funding Structure or Structured financing.
- The companies can be utilised as a special purpose vehicle in order to hold assets as a subject of the fund but cannot be used as fund manager or trustee or a general partner. Also the DFSA has provided such companies with the power to further provide financial services.
- Unlike the old regulations, where a minimum share capital of USD 100 and a maximum of 3 shareholders were required, now a minimum share capital requirement is not provided for, in case of such companies. Also there is no restriction with respect to the number f shareholders of the company.
The following companies will be subjected to the New regulation, Operating Law, that is the DIFC law no. 7 of 2018, Operating Regulations, the Ultimate Beneficial Ownership Regulation as well as the Companies Law.
The expediency that a Prescribed Company will enjoy are:
- An outsourcing option is available to them, where they can turn up to the Corporate Service Providers.
- Joining hands with the Corporate Service Provider will allow the company to use their address also.
- The DIFC incorporation fees and renewal fees is very minimal for such companies, i.e. USD100 and USD1000 respectively.
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