The Dubai Creative Clusters (DCC) Authority has recently issued
the Private Companies Regulations 2016 (Regulations). The
Regulations apply to companies registered in the DCC and came into
force on 1 February 2017. The Regulations repeal and replace the
Dubai Technology and Media Free Zone Private Companies Regulations
Shareholder increase – A company incorporated in
the DCC may now be incorporated by up to 75 persons (previous
maximum was 50).
Constitution - New standard articles of association
are to be issued, combining the previous memorandum and articles
into a single constitutional document.
Registration - The Registrar of Companies is to
maintain a register of companies, containing details of all DCC
companies. The Regulations envisage that, in due course, this
register may be accessible to the public and certain information
may be made available online.
Non-cash consideration for share issues - The
Regulations include a new process to allow shares to be issued for
Changes to share capital - More detailed provisions
are included on changes to share capital, including new provisions
to allow share buy-backs and treasury shares, and more detailed
provisions in relation to dividends and distributions. The
Regulations allow shares to be issued at a premium and contain
provisions addressing how a premium is to be applied.
Pledges - New provisions are included on share
pledges, including registration, perfection, priority and
release. The Registrar will maintain a Security Register,
which may be made available to "interested
persons". The parties may agree in the pledge instrument
to submit to the jurisdiction of the DIFC courts (rather than the
onshore Dubai Courts). These are helpful provisions for
groups with DCC private company subsidiaries, enabling their shares
to be included in financial security arrangements.
Corporate governance - Clearer, modernised provisions
are included in relation to company management and administration,
including allowing for participation in both board and shareholding
meetings by conference call. The Regulations also address the
role and responsibilities of the General Manager.
Branch offices - The Regulations consolidate previous
regulations on the operation in the DCC of companies incorporated
outside the DCC.
Continuation of incorporation – The Regulations
contain provisions which permit companies to move their place of
incorporation into and out of the DCC.
Future flexibility in form – The DCC Authority
is now able to prescribe different types of company in addition to
the FZ-LLC. This allows flexibility to respond to future
Existing companies have until 1 February 2018 to adjust their
positions in line with the Regulations. Before this date,
each DCC company will need to consider whether it needs to adjust
its Memorandum and Articles of Association to comply with any
mandatory requirements in the Regulations. DCC companies may
also want to take advantage of some of the new non-mandatory
In addition to the implementation of the Regulations in the DCC,
the Jebel Ali Free Zone Authority recently adopted new companies
regulations. A trend seems to be emerging, and it will be
interesting to see whether other free zones in Dubai (and across
the UAE) take similar steps to modernise their regulations.
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