The
Dubai Multi Commodities Centre free zone Register (DMCC) introduced significant changes to its rules and regulations, which came into force on October 10, 2023. These amendments were made to improve the flexibility and efficiency of business operations within the free zone in Dubai, while simplifying the legal frameworks for various types of companies and activities.
Companies Limited by Guarantee (CLG)
A new set of rules governing CLGs was introduced within the DMCC Register in 2023. These companies, which have no share capital, have members whose liability is limited to a defined amount, payable only in the event of liquidation. CLGs are suitable for entities such as commercial and social enterprises, property management companies, clubs, associations, and professional organizations. The rules specify members' rights, liquidation procedures, and governance structures, thereby providing a simplified legal framework for these types of entities. In addition, CLGs not domiciled in the DMCC Register may now transfer their domicile to this free zone, facilitating the transfer of existing structures.
Special Purpose Vehicles (SPVs)
SPVs may now register with the DMCC Register to hold assets or support projects without conducting operational activities. These companies are exempt from the requirement to appoint a secretary or hold annual general meetings, thereby simplifying their management within Dubai's regulatory framework. An SPV does not have to lease premises in the DMCC Register's free zone, but it must maintain a registered office address, which may be that of a corporate services provider licensed by the DMCC Register.
Holding Companies in Dubai
Companies registered with the DMCC Register may now operate as holding companies, allowing them to structure their corporate groups more flexibly. A holding company does not conduct operational activities, but may serve as a registered office and employ staff for this purpose, in compliance with regulatory standards.
Freelance Activities in the Emirates
Individuals may now work independently within the jurisdiction of the DMCC Register, without requiring an employment contract or commercial premises. A list of approved freelance activities is available online.
Updates to Company Regulations
The DMCC Register has revised several aspects of its rules, including:
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Share Capital, an essential aspect of financial transactions in the United Arab Emirates.: Companies may now set their share capital in currencies other than the UAE dirham, which particularly benefits international companies. They may also issue bonus shares from retained earnings or share premiums and reduce their capital in various ways.
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Redeemable Shares, a key element for investors in the DMCC Register.: Companies may now issue redeemable shares, providing greater flexibility in capital management.
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Rights of Share Classes under Dubai regulations.: Minority shareholder protections have been strengthened, particularly regarding changes to share class rights and share capital structures, in accordance with Dubai's regulatory requirements. The 20% limit on non-ordinary shares has been removed.
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Pre-Insolvency: Companies may now manage losses exceeding 75% of their share capital more easily without immediately having to convene a general meeting to decide on liquidation or recapitalization. They are no longer required to notify losses exceeding 85% of capital, but must inform shareholders if losses exceed 75%.
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Audited Accounts and Financial Statements, necessary to ensure transparency in banking transactions.: Holding companies must prepare consolidated group accounts, while dormant companies are exempt from preparing individual accounts and audits unless shareholders representing at least 10% of the share capital request them.
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Redomiciliation: The redomiciliation process has been clarified, ensuring harmonization with other jurisdictions.
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Establishment of a Branch: Any eligible entity, including those already registered with the DMCC Register, may establish a branch within the DMCC Register's free zone.
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Articles of Association: Companies adopting customized articles of association must provide a legal opinion confirming their compliance with the DMCC Register's rules.
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Directors and Corporate Governance: The minimum age required for directors, secretaries, and managers has been lowered from 21 to 18.
These updates aim to improve the flexibility and efficiency of business operations in the DMCC Register by providing clearer legal frameworks for various types of companies and activities.
Family Office Rules
The new Family Office rules:
(a) codify the existing practices of the “DMCCA” concerning the current “DMCC” license for Single Family Office (SFO) services, and
(b) introduce a new license category for entities wishing to provide Multi-Family Office (MFO) services within or from the “DMCC” Register.
These licenses establish a legal framework for managing family wealth in the DMCC Register, in compliance with the regulatory laws of the United Arab Emirates. Key elements include:
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Scope of investments under Dubai rules.: SFOs may manage the wealth of only one family, while MFOs may manage the wealth of multiple families, offering investors diversified options. An entity may hold either an SFO or an MFO license, depending on the regulations in force in Dubai.
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Assets: SFO license applicants must have at least USD 1 million in investable assets. All shareholders and directors must belong to the same family, in accordance with UAE requirements. No minimum investable asset requirement applies to MFO license applicants in the United Arab Emirates.
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Confidentiality: Information concerning the operations of SFOs and MFOs is kept confidential by the DMCC Register, with disclosure rights limited to family members or authorized representatives.
These reforms aim to strengthen the attractiveness of the DMCC Register as a destination of choice for companies and individuals. With flexible corporate structures such as CLGs and SPVs, as well as the introduction of licenses for freelancers and family offices, the DMCC Register positions itself as a competitive alternative to established free zones such as ADGM and DIFC. These changes, particularly the easing of capital requirements and the expansion of available services, make the DMCC Register more attractive by offering greater flexibility and simplicity for business operations, while meeting the needs of local and international companies.
If you wish to establish your company without using this prestigious register, we can assist you from A to Z. Contact us for a free consultation at our offices in JLT:
support@merritt.group.
