The Dubai International Financial Centre ("DIFC") recently issued the Prescribed Company Regulations 2022 ("PC Regulations"). The new PC regulations from the DIFC have amended the previous regime for Prescribed Companies. This article explores the changes and extension to use of Prescribed Companies under the DIFC legislative framework.
What is a Prescribed Company under the DIFC?
A Prescribed Company is a company incorporated or continued in the DIFC pursuant to provisions of the DIFC Companies Law No. 5 of 2018. The Prescribed Company offering from the DIFC is most relevant to investors with existing nexus to the DIFC and the UAE. The Prescribed Company has truly unique benefits from an operational and financial perspective given its low cost of application, licensing and renewal which is approximately USD 1,000 per annum for each Prescribed Company.
Requirements for PC setting up
An applicant wishing to incorporate or continue a Prescribed Company in the DIFC must meet the requirement of either being controlled by a Qualifying Applicant or being used for a Qualifying Purpose.
A Qualifying Applicant could be any of the following:
- a DIFC registered entity;
- an entity under common control or ownership of a DIFC registered entity;
- a DFSA authorized firm;
- a family operated business which is owned or controlled by a single family;
- a collective investment fund which can be a domestic fund or a foreign fund;
- a government entity;
- an ultimate beneficial owner of a DIFC based structure; or
- an entity wholly owned or control by one or more of the above;
A Qualifying Purposes could be any of the following:
- an aviation structure;
- a crowdfunding structure;
- a DIFC holding structure;
- an innovation holding structure;
- an intellectual property structure;
- a maritime structure; or
- a structured financing.
Restrictions on use of PC
- The Prescribed Company can be used for various structuring purposes including Financial Services as a Special Purpose Vehicle to hold property on behalf of a fund however the Prescribed Company cannot be used to be the Fund Manager, the Trustee or the General Partner of a Fund or the Fund itself.
- A Prescribed Company whose Qualifying Purpose is a crowdfunding structure can be used to hold assets invested through a crowdfunding platform but not itself be used as a crowdfunding operator.
- The Prescribed Company is not permitted to provide any Financial Services unless authorized by the DFSA.
Under the new regime the use of Prescribed Company for investment holding and structuring is expanded which will further promote the use of DIFC Prescribed Company as a cost effective and efficient tool for investors and investment managers alike regionally.
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.