Mimo Legal Consulting

Dubai International Financial Center (DIFC)

Dubai International Financial Center (DIFC) is a financial centre based in Dubai onshore which is located strategically between the East and the West. DIFC provides a secure and competent regulatory environment for business and financial institutions to reach out the emerging markets of the region. DIFC has its own regulatory framework which consists of independent regulations based on the principles of common law. Moreover, DIFC has its own independent courts. It also offers high-class infrastructure, tax-free regime, decent location within Dubai, high-quality office and residential buildings. This makes DIFC the perfect base to setup a business in DIFC and take advantage of the region’s fast growing demand for financial and business services.

DIFC is a connection point between leading financial centres such as of London and New York in the west and Hong Kong and Tokyo in the east. DIFC adheres to its core values such as integrity, transparency and efficiency and it has been playing a pivotal role in enhancing the financial services sector in the region.

Dubai Financial Services Authority (DFSA)

All DIFC based banks and financial institutions are regulated and licensed by the Dubai Financial Services Authority (DFSA), which is an independent risk-based regulator. DFSA as a regulatory body was established based on the principles and legislative model that are used in London and New York. The DFSA plays a major role in ensuring financial companies that they have a sound, firm, protected and growth-oriented platform for their business. DFSA has its own set of rules and regulations which are related to financial services such as:

  • Regulatory Law 2004
  • Market Law 2012
  • Law Regulating Islamic Financial Business 2004
  • Trust Law 2005
  • Collective Investment Law 2010
  • Investment Trust Law 2006

DIFC Legal System

DIFC is exceptional in that its legislation system is based on English Common law. Such DIFC laws comprised of set of civil and commercial laws and regulations. DIFC has also developed a comprehensive code of law and regulations governing financial services. Some of the laws introduced in the Centre include:

  • DIFC Companies Law
  • Contract Law
  • Arbitration Law
  • Insolvency Law
  • DIFC Courts Law
  • Data Protection Law
  • Collective Investment Law
  • Investment Trust Law
  • Single Family Office
  • Special Purpose Company Regulations
  • Payment Systems Settlement Finality Law
  • Preferential Creditor Regulations
  • Strata Title Law

In addition, as an autonomous financial free zone, DIFC has created its own courts, which is responsible for the administration and enforcement of justice in DIFC. The DIFC Courts have exclusive jurisdiction over all civil and commercial disputes arising within DIFC as well as disputes relating to entities registered in DIFC.

The DIFC uses English as its main language. Within the DIFC, UAE federal civil and commercial laws do not apply including UAE foreign ownership restrictions. However, the criminal laws of the UAE apply in the DIFC.

Company Formation in DIFC

The Registrar of Companies (ROC) is established under DIFC in order to receive, review and process all applications submitted by prospective DIFC registrants seeking to set up a company in DIFC. ROC accepts application to register all types of companies in accordance with the Companies Law, the General Partnership Law, the Limited Liability Partnership Law, or the Limited Partnership Law, and the implementing regulations.

Benefits of DIFC Company Formation:

  • It offers a platform to access regional wealth and investment opportunities
  • Companies can be 100 percent foreign owned
  • Tax-free regime guaranteed for a period of 50 years
  • UAE has signed double taxation treaties with many countries in the world
  • No currency exchange controls (free capital convertibility)
  • Comprehensive and efficient laws, rules and regulations
  • Legal system based on Common Law of England & Wales
  • A fully transparent operating environment that conform with global best practices and internationally accepted laws and regulatory framework
  • A variety of legal entities and investment vehicles can be established with capital structuring flexibility
  • Access to a large number of skilled professionals from all over the world residing in Dubai and the region
  • High class infrastructure, a modern transport and communications system
  • A responsive one-stop shop service for visas, work permits and other related requirements
  • DIFC has been designed as a ‘city within a city’ that provides a complete range of business and lifestyle facilities for today’s professionals such as ultra-modern office space, retail outlets, restaurants, residential apartments and hotels.

Following types of companies can be setup in DIFC:

Under the Companies Law, a prospective registrant may seek to incorporate:

  • A Company Limited by Shares (LTD)
  • A Limited Liability Company (LLC) or
  • A branch office of a pre-existing foreign company (Recognized Company)
  • A party may also seek to transfer the incorporation of an existing company to the DIFC from another jurisdiction (Continued Company)

Under the Limited Liability Partnership Law a prospective registrant may seek to establish:

  • A Limited Liability Partnership (LLP) or
  • A Branch of a pre-existing foreign Limited Liability Partnership (RLLP)

Under the General Partnership Law, a prospective registrant may seek to establish:

  • A General Partnership (GP) or
  • A Branch of a pre-existing foreign general partnership (RP)

Under the Limited Partnership Law, a prospective registrant may seek to establish:

  • A Limited Partnership (LP) or
  • A Branch of pre-existing limited partnership (RLP)
  • A party may also seek to transfer the existing limited partnership into DIFC from another jurisdiction (Continued Limited Partnership/Foreign Limited Partnership)

An LTD or LLC may be established in the DIFC by one or more shareholders who can be either natural persons or corporate entities. LLPs, GPs and LPs may be established by two or more persons. Upon the incorporation of an LTD, LLC, LLP or LP, the ROC issues a "Certificate of Incorporation".

The Recognized Company/Partnership can only be established by another existing company/partnership respectfully. Thus LTDs, LLCs, LLPs and LPs have separate and independent legal status from their incorporator(s); however, the Recognized Company and Recognized Partnerships are mere extension of the foreign-incorporated company/partnership. Upon the registration of a Recognized Company or Recognized Partnership/Recognized Limited Liability Partnership/Recognized Limited Partnership the ROC issues a "Certificate of Registration".

In the case of transfer of incorporation or limited partnership to the DIFC, the ROC issues a “Certificate of Continuation”.

Non-Regulated Entities

DIFC companies are divided into two different groups based on the type of the business activity: Non-Regulated Entities and Regulated Entities.

Non-regulated entities are those, which are not engaged in carrying on a Financial Service (as defined in the DFSA Rulebooks) or are not required to be regulated due to certain exemptions set out in the DFSA Rulebooks. Some of the non-regulated companies that can be formed in DIFC are holding companies, companies carrying out proprietary investments, companies carrying out activities of a support or back-office nature, service providers such as restaurants, coffee shops and bars and professional consultancy firms such as recruitment agencies, law firms and alike.

Regulated Entities

Regulated entities are the entities that carry on a “Financial Service” activity in the DIFC. In general, a person that wishes to carry on a “Financial Service” activity in the DIFC, must first obtain an appropriate approval and a licence from the Dubai Financial Services Authority (DFSA) to carry on such activity.

Some of the activities, which fall under “Financial Services” in DIFC and require a license from DFSA, are asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, an international equities exchange and an international commodities derivatives exchange. The DFSA also regulates and supervises the activities of persons in the DIFC in relation to anti-money laundering, counter-terrorist financing and sanctions compliance.

Conclusion

The DIFC is a unique global financial centre strategically located between the east and the west. It is currently the only dedicated financial free zone in the region with high level of developed infrastructure, facilities and legal framework required to operate sophisticated fund, corporate and financial structures. It has become a key regional financial hub and has provided significant confidence to the financial community as a result.

Our Expertise

We provide full company formation services in DIFC. Our services include:

  • Advising on the suitable company and license in DIFC based on your business model
  • Registering your company’s branch, subsidiary or representative office in DIFC
  • Assistance with obtaining residency visas and work permits after your DIFC company formation
  • Assistance with opening bank accounts for your DIFC company
  • Assistance with all other legal requirements

If you are looking to set up a company in DIFC, please get in touch with us for professional assistance. You can call us on +97144449481, send us email at contact@mimolegal.com or use the contact us form on this website. First consultation is FREE.

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