In July 2024, the Dubai International Financial Centre (“DIFC”)enacted the DIFC Prescribed Company Regulation 2024 (the “Regulations”),amending the former regime to ease the substance requirements and broaden the applicants for setting up a Prescribed Company (“PC”) as an establishment in the DIFC.

UPDATED Qualifying Requirements

Prior to the Regulations, the former PC regime had specifically defined and listed the qualifying applicants for a PC, but this has now been removed to expand the scope of applicants establishing a PC. An applicant to incorporate a PC, or continue with a PC license, must satisfy one of the following criteria (all capitalized terms not defined herein are as defined in the Regulations):

(i) The PC shall be controlled by one or more of the following: (a) GCC Persons; (b) Authorised Firms;  or (c) DIFC Registered Persons excluding Non-Profit Incorporated Organisation;

• A “GCC Person” is defined as (a) a natural person who is a citizen of a GCC Member State; (b) a body corporate or body unincorporated, including a company, partnership, or unincorporated association, that is Controlled by one (1) or more natural persons who is a citizen of a GCC Member State; (c) a body corporate that has any class of its securities listed on a securities exchange in the GCC; or (d) a Government Entity.

(ii) The PC is established or continued in the DIFC for the purpose of holding legal title to or Controlling one or more GCC Registrable Assets;

• A “GCC Registrable Asset” is defined as an asset or property interest that must be registered with a GCC Authority to establish legal ownership, secure rights, or encumbrances against it, and to provide public notice of such interests, including: (a) land and real property; (b) shares in companies; (c) partnership interests; (d) intellectual property; and (e) aircraft and Maritime Vessels.

(iii) The PC is established or continued in the DIFC for a Qualifying Purpose; or

• The definition of a “Qualifying Purpose” was amended to remove a “DIFC holding structure” and “innovation holding structure” and is now defined as any of the following: (a) an Aviation Structure; (b) a Crowdfunding Structure; (c) an Intellectual Property Structure; (d) a Maritime Structure; or (e) a Structured Financing.

(iv) The PC that is established or continued in the DIFC has a director that is also an employee of a corporate service provider (“CSP”)and that CSP has an arrangement with the DIFC Registrar pursuant to Section3.3.2 of the Regulation.

Where the PC is established or continued for the purposes of paragraphs (ii) or (iii) above, it has six months from the date of receiving its PC license, to confirm with the DIFC Registrar that it holds or Controls on or more GCC Registrable Assets or that it has begun to carry on its Qualifying Purpose.

OTHER IMPORTANT AMENDMENTS TO THE REGULATIONS

A PC must only be used for a Qualifying Purpose or as a holding company and must not have any employees – to ensure its status as anon-operational entity.

Existing PCs who wish to continue on as such have the option to avail the new commercial package offered by the DIFC which lists the relevant criteria in order to conform to the updated Regulations.  The DIFC Registrar will communicate directly with such entities on any relevant transitional arrangements.

COSTS

The costs associated with applying for or continuing a PC are as follows (note that there may be further costs association with an application to for continuation as per the commercial package):

‍

‍

Our Experience

lecocqassociate provides a full range of financial regulatory, corporate and commercial advice in relation to the structuring and incorporation of entities. This article is for information purposes only. It does not constitute professional advice or an opinion.

If you would like to know more about the new Regulations, please feel free to contact our firm.

‍

‍