DIFC Seeks To Broaden And Simplify Prescribed Company Regulations In Latest Update

The Dubai International Financial Centre (DIFC) is set to broaden and streamline its Prescribed Company (PC) regime through proposed amendments to the Prescribed Company Regulations. This initiative, as outlined by Jacques Visser, Chief Legal Officer at DIFC Authority, aims to address the growing market demand for accessible holding company vehicles for structuring purposes within the Centre. The DIFC introduced the PC regulations in 2019 and has since updated them in 2020 and 2022 to cater to a broader applicant base. Despite these updates, the demand for further expansion of the regime persists.

With the UAE Corporate Tax introduction, concerns regarding substance requirements have diminished, prompting DIFC to consider a more extensive expansion of the PC regime as timely and appropriate. The proposed changes are designed to make it feasible to establish a Prescribed Company under various scenarios, including control by GCC citizens or entities, Authorised Firms, or DIFC Registered Persons. Additionally, PCs can be established for holding legal title to or controlling GCC Registrable Assets or for a Qualifying Purpose, akin to the current regime.

The amendments aim to significantly widen the applicant base for PCs by eliminating the need for a local corporate service provider if an alternative registered address in DIFC is available and removing the requirement for local management or board representation. This move is expected to make PCs more attractive as pure holding company vehicles rather than operational entities. The DIFC has highlighted that PCs under the new regulations should not employ any staff directly.

Details of these proposed amendments are available in Consultation Paper No. 2 of 2024, which has been released for a 30-day public consultation period ending on 1 June 2024. Stakeholders and interested parties are encouraged to review the consultation paper and provide their feedback within the stipulated timeframe. This step marks a significant move by DIFC to adapt its regulatory framework in response to market needs and trends, potentially making it a more attractive destination for international business and investment.

With inputs from WAM