This article was updated on July 5th, 2023
This article was updated on July 5th, 2023
This article has been researched and written by Scott Greaves and the team at Creation Business Consultants and has not used AI in generating this article.
Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai and Prime Minister of the UAE enacted the Dubai International Financial Centre’s (DIFC’s) legal framework changes in December 2018, which included the abolishment of Limited Liability Companies (LLC). At the same time, the changes included the introduction of new categories among public and private companies.
The DIFC Laws Amendment Law, DIFC Law No. 2 of 2022, manages the amendments to the rules of Data Protection Law of 2020, the Insolvency Law of 2019, the Trust Law of 2018, the Common Reporting Standard Law of 2018, the Electronic Transactions Law of 2017, and the Strata Title Law of 2007.
Public input was sought before changes to the Data Protection Law of 2020 and the Insolvency Law of 2019 were made. The input of numerous stakeholders was helpful in forming the changes.
These laws, which involve an update on the DIFC’s property and companies’ regimes, as well as regarding businesses in the centre’s operating environment, aim to ensure that the DIFC remains the region’s most pro-business Common Law jurisdiction.
The DIFC Companies Law 2018 follows a public and private company administration after consultation and global benchmarking to enable flexibility, most especially among small private companies.
Additionally, DIFC also introduced the restructuring and merging schemes that greatly contributed to the growing partnerships in the corporate market.
The framework changes in DIFC are also comprised of new regulations for complex corporate arrangement faults including associated units, mergers, and debt restructurings.
These implemented changes are in line with the DIFC companies’ revamp. The framework changes aim to simplify business and comply with the latest requirements of the financial action task force and the organisation for economic co-operation and development on Anti-Money Laundering and transparency of beneficial ownership.
The following areas are where the Companies Law and Regulations’ major revisions to the prior system are focused:
Before, there were only two ways to form a corporation in the DIFC: as an LLC or as a company limited by shares.
LLC are no longer permitted to conduct business in the DIFC; instead, only companies limited by shares, both public and private, are permitted.
The ROC will instruct each LLC currently registered within the DIFC to convert the LLC to either a private or public company limited by shares to comply with the New Legislation.
Companies Law, DIFC Law No. 5 of 2018, abolishes LLC and creates new categories for public and private companies.
On the other hand, the Operating Law, DIFC Law No. 7 of 2018 regulates the main requirements and conduct within DIFC, as well as creating a framework for Registrar of Companies’ role. It also has introduced improvements to the licensing rule, which will allow more company formations within, or from, the centre.
Amendments to the DIFC Real Property, DIFC Law No. 10 of 2018 guarantee that clients get full disclosure on the properties being bought. Additionally, escrow accounts are now required among developers for the collecting sums paid in an off-plan development.
The Strata Title Law Amendment Law, DIFC Law No. 11 2018, shall increase the functions of the Registrar of Real Property (RORP) to oversee parties that breach their duties. The modification will also enable DIFC Courts to directly communicate with interested parties so that disputes are dealt with efficiently.
Additionally, the DIFC has announced the Ultimate Beneficial Ownership (UBO) Regulations, which entail all DIFC units to provide beneficial ownership information while maintaining their accuracy.
The changes were announced after the enactment of DIFC Regulatory Amendment Law, No. 6 of 2018, which aims to improve the Centre’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) rule, ahead of the UAE Financial Action. All these amendments have further promoted enhancements on Dubai’s growth and investment.
Creation Business Consultants will keep you informed about the latest regulations which could impact your business. Our team of Corporate Structuring and tax experts will leverage our experience to help understand the latest changes while simultaneously providing you with all the details needed to run your company in Dubai. Contact a member of our Corporate Structuring team to learn more about setting up a company or expanding your business in DIFC, email us at [email protected] or call UAE at +971 4 878 6240.