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DIFC Introduces New Prescribed Company Regulations for 2024
The Dubai International Financial Centre (DIFC) has unveiled the DIFC Prescribed Company Regulations 2024 (the “2024 Regulations”), which came into effect on 15 July 2024. These new regulations replace the previous DIFC Prescribed Company Regulations 2019, including updates made in 2020 and 2022 (collectively known as the “Former Regulations”). One of the key updates in the 2024 Regulations is the broader range of applicants now eligible to set up a prescribed company in the DIFC.
Evolving Eligibility Criteria
Under the Former Regulations, only specific entities could establish a prescribed company in the DIFC. These included:
- Qualifying Applicants: Entities that already had a connection to the DIFC, such as those already registered there or affiliated with DIFC-registered entities. This also included businesses that met certain criteria, like being an “Authorised Firm” or a “Government Entity.”
- Qualifying Purpose Applicants: Entities involved in particular activities, such as structured financing, aviation, or crowdfunding structures.
What’s New in 2024?
Expanded Eligibility
Businesses considering free zone company formation UAE can benefit from the enhanced flexibility introduced under the DIFC Prescribed Company Regulations 2024. The expanded eligibility criteria provide greater opportunities for GCC entities, international investors, and DIFC-connected businesses to establish efficient corporate structures within one of the UAE’s leading financial free zones.
With the 2024 Regulations, more entities can now establish or continue a prescribed company in the DIFC. To do so, an applicant must meet at least one of the following criteria, as confirmed by the DIFC
Registrar of Companies:
- The prescribed company is controlled by one of the following:
- GCC Persons: This includes individuals who are citizens of a GCC member state, companies controlled by GCC citizens, entities with securities listed on a GCC stock exchange, or government entities.
- Registered Persons: A corporate entity that is incorporated, registered, or continued within the DIFC (excluding prescribed companies and non-profit organizations registered in the DIFC).
- Authorised Firms: Any person who holds a license from the Dubai Financial Services Authority (DFSA) or a recognized financial regulator within the UAE or other specified jurisdictions.
- The prescribed company is established or continued in the DIFC for the purpose of holding or controlling one or more GCC Registrable Assets.
- The company is set up in the DIFC for a Qualifying Purpose, as defined by the regulations.
- The prescribed company has a director who is an employee of a Corporate Service Provider, and that provider has an arrangement with the DIFC Registrar of Companies in line with the relevant provisions of the 2024 Regulations.
Employment Restriction
A notable change in the 2024 Regulations is the explicit prohibition on prescribed companies employing staff. However, this restriction does not apply to the appointment of directors.
Entrepreneurs and investors planning a business setup Dubai can benefit from the updated DIFC prescribed company framework, which offers improved accessibility, flexible structuring options, and simplified regulatory pathways. These regulatory enhancements strengthen Dubai’s position as a preferred destination for international business expansion and corporate structuring.
The DIFC’s 2024 Regulations mark a significant change in how prescribed companies are regulated, making the process more accessible and flexible for a wider range of businesses and purposes. By broadening the eligibility criteria, the new regulations are expected to make prescribed companies in the DIFC a more appealing option for corporate structuring.
