New 2024 DIFC Prescribed Company Regulations – DIFC Passive Holding Company
The Dubai International Financial Centre (DIFC) made significant revisions to its Prescribed Companies Regulations, effective on 15 July 2024.
Now, DIFC Prescribed Companies, equivalent to Special Purpose Vehicles, are available to global investors. Previously, only Qualifying Applicants with an existing nexus to the DIFC and certain low-risk applicants were eligible.
These changes demonstrate DIFC’s commitment to meeting market demand for more inclusive and flexible holding company vehicles while maintaining a transparent, robust legal and regulatory framework. The new regulations coincide with the introduction of UAE Corporate Tax, reducing concerns about substance requirements for such holding vehicles.
Updates to the Prescribed Companies Regulations:
- Broader Eligibility Criteria
- Limited to Passive Holding Company
- Prohibition on Employment
New Eligibility Criteria for Prescribed Company:
One or more of the following conditions must be met:
- Control Requirements: The company must be controlled by one or more:
i) GCC citizens or entities controlled by GCC citizens, or
ii) an Authorised Firm; or
iii) a DIFC Registered Persons, other than a Prescribed Company or an NPIO (in line with the existing regime).
- Asset Holding Purpose: The company is established or continued for the primary purpose of holding legal title to, or controlling, one or more GCC Registrable Assets (including: land and real estate property, shares in companies, partnership interests, aircraft and maritime vessels, etc.).
- Qualifying Purpose: The company is established or continued for a Qualifying Purpose (in line with the existing regime).
- Director Requirement: The company is established by any person (natural or corporate), that is resident anywhere in the world, provided that the Prescribed Company appoints as a director an employee of a DFSA registered Corporate Service Provider (CSP), who has entered into an AML arrangement with the DIFC. This CSP must also have an agreement with the DIFC Registrar of Companies to undertake specific compliance and AML functions on behalf of the Prescribed Company.
The Qualifying purposes are now limited to:
- Aviation Structure
- Crowdfunding Structure
- Intellectual Property Structure
- Maritime Structure
- Structured Financing
A new DIFC Commercial Package – Active Company
A new DIFC Commercial Package has been designed to accommodate existing Prescribed Companies that fall outside the new regime. This package offers additional structuring options with reduced fees and flexible licensing arrangements for applicants meeting certain criteria. Under this new DIFC Commercial Package, companies are permitted to hire employees and are allowed to conduct activities such as: (i) holding company (ii) managing office and (iii) proprietary investment activities, making them ideal for businesses with operational needs.
In case you would like to know more about the DIFC Prescribed Company possibilities, or learn about different alternatives depending on your situation, do not hesitate to contact us.
