Dubai International Financial Centre (DIFC) has proposed to enact amendments to the Prescribed Company Regulations. The proposed regulations seek to significantly expand and simplify the current Prescribed Company (“PC”) regime in the DIFC.
Jacques Visser, Chief Legal Officer, DIFC Authority, said:
“Since the introduction of the Prescribed Company Regulations in 2019, DIFC has committed to keeping the regime under review. In response to continued market demand for greater access to holding company vehicles that can be used for structuring purposes in and from the Centre, DIFC is proposing a significant expansion and enhancement of the existing regime.”
The Prescribed Company Regulations, enacted in 2019 and updated in 2020 and 2022, aim to broaden eligibility. Despite amendments, DIFC faces demand for further expansion. Balancing substance with access to special purpose vehicles is crucial. With UAE Corporate Tax introduction, substance concerns diminish, prompting DIFC to consider expanding the PC regime. Currently limited to Qualifying Applicants or specific purposes like Structured Financing, proposed regulations seek to widen scenarios for establishing a Prescribed Company.
Where the PC is:
- Controlled by one or more: i) GCC citizens or entities controlled by GCC citizens; ii) an Authorised Firm; or iii) a DIFC Registered Persons, other than a PC or an NPIO (in line with the existing regime).
- Established or continued for the primary purpose of holding legal title to, or controlling, one or more GCC Registrable Assets (i.e. assets that are registered with a GCC Authority).
- Established or continued for a Qualifying Purpose (in line with the existing regime).'
DIFC believes the proposed changes significantly improve and simplify the current regime, widening access to this vehicle for a broader applicant pool. Notably, no local corporate service provider is required if alternative means for a registered address exist, nor is local representation necessary in management or the board. The amendments also restrict Prescribed Companies to their Qualifying Purpose or as holding company vehicles, barring them from employing personnel. These adjustments ensure Prescribed Companies function solely as holding entities, not operational ones. Transitional arrangements will be communicated to existing PCs potentially affected by the amendments.
Further details about the proposed Prescribed Company Regulations can be found in Consultation Paper No. 2 of 2024, available via the link. The proposed regulations have been posted for a 30-day public consultation period with the deadline for providing comments ending on 1 June 2024.
News Source: Emirates News Agency
