United Arab Emirates: An Outline About The JAFZA Company Regulations

Last Updated: 3 August 2017
Article by Global Business Services DMCC

The Jebel Ali Free Zone (JAFZA) issued new company regulations known as the Jebel Ali Free Zone Companies Implementing Regulations 2016. It was announced on 23 May 2016 and came into action in 24th August 2016. It focuses on development of market which shall provide facilities that are prompt, secure and form the best international practice.

The Regulations constitute major modifications of the JAFZA by repealing and replacing the Free zone Establishment Implementing Regulations No.1 of 1992 and the Free Zone Company Implementing Regulations No.1 of 1999. It brings about some new principles and key legislative changes. Earlier JAFZA had separate set of regulations governing free zone establishments and free zone companies, the changed Regulations 2016 bring all types of companies within JAFZA under one regulation.

Below are few of its features and key changes:


Although the federal laws of the UAE are stated in the Regulations to apply to a company and a branch within JAFZA, the Regulations have excluded Law No.2 of 2015 concerning Commercial Companies from the application to a company or a branch in the free zone. However, according to the Regulations, the company registrar of JAFZA ("Registrar") may apply certain provisions of the UAE Companies Law where the Regulations are silent on a certain matter.


Different entities like the Free Zone Establishment (FZE), the Free Zone Company (FZCO) and the branch of a company were permitted prior to the enactment of the Regulations. Under the new Regulations, Public Listed Companies (PLC) is recognized as a new type of company that can be established within JAFZA. It can have two or more shareholders and may offer its shares to the public in accordance with the market's law of the relevant stock market. Within nine months from the date of incorporation of the PLC, a PLC must list its shares on a stock exchange, unless time frame is extended by the Registrar.

As a further notable change in the Regulations, a civil company that is set up under the rules of the UAE Civil Transactions Law (Federal Law No. 5th of 1985) may be incorporated within the free zone. The Regulations give the Registrar the authority to prescribe guidelines for the incorporation and operation of a civil company in the free zone in addition to the rules that are contained in the UAE Civil Transactions Law. Accordingly, the types of entities that are currently recognized by JAFZA are now expanded and comprise the FZE, FZCO, civil partnership and the branch.


Previously, an FZE within JAFZA was required to have a minimum share capital of AED 1,000,000 and an FZCO AED 500,000. While now, with change under the Regulations, a company must only have a share capital that is sufficient for the activities for which it is licensed. This is conforming to the rules of UAE Commercial Companies Law which also requires a limited liability company to have capital that is sufficient for fulfilling its activities. As for a PLC, it is required to have an amount of a share capital that is either sufficient for the activities permitted under its license or the amount of capital required under the relevant markets law.


As per the previous JAFZA regulations for an FZE or FZCO, the contribution in kind for shares was not recognized. Now, with the new Regulations, shares can be issued in an FZE, FZCO (and PLC) for a noncash consideration unlike before where one could subscribe shares through cash only. This is workable only if a resolution is passed by the shareholders at a general meeting by more than 75 % of the votes of shareholders or any greater majority as may be prescribed by the memorandum of association. An auditor's letter and a resolution are required to support this value of consideration. This auditor's letter must be filed with the Registrar within four days from the date of passing the resolution. This principle gives the business a flexibility as well as options for subscription of shares or increasing the share capital of a company.


Earlier only Dubai International Financial Centre and the Dubai Creative Clusters Free Zone companies were permitting different classes of shares in the UAE. With modifications in the Regulations, different classes of shares are now available for businesses within JAFZA too. Rights attached to the shares may be varied by an amendment to the memorandum of association of the company if approved by a resolution consisting more than 75% of the votes of shareholders or by a resolution of all the shareholders holding the shares of the class whose share is being varied. A PLC may also have different classes of shares in accordance with its memorandum and articles of association.


According to the new Regulations, foreign companies can apply to the Registrar for the continuation of the foreign company as a company within JAFZA, as a FZE or FZCO without establishing a new entity.

In order to transfer the foreign company into JAZFA as an FZE or FZCO, the applicant must include specific information and documents including a resolution of the foreign company resolving the transformation. The free zone will issue the foreign company with a license and a continuation certificate once accepted. The date of the incorporation that will be reflected in the continuation certificate is the date of incorporation of the foreign company in its jurisdiction.

In addition to the above key changes, other changes include the recognition of electronic documents and signature giving an FZCO and PLC the right to purchase its own shares as treasury shares and prohibiting financial assistance to the directors of an FZCO and PLC.


By aligning company's legislation in line with global best practices and standards, the Regulations marked a significant step forward which will benefit JAFZA and empower it to attract foreign business and investments in a better way. However, implementation of some aspects of the Regulations needs to checked; especially the incorporation of a PLC and change of domicile of companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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