A Comprehensive Look at the DIFC Prescribed Company

November 24, 2022by Mohammed Rahali

A Comprehensive Look at the DIFC Prescribed Company

The DIFC hosts a diverse client base ranging from regulated firms, authorized market institutions, designated non-financial businesses to non-regulated businesses and exempt companies. One of such companies are DIFC Prescribed Companies.

What is a DIFC Prescribed Company (DIFC PC)?

The DIFC Prescribed Company is a private company limited by shares that falls under the DIFC regime of a Small Private Company, as per the DIFC Companies Law. The DIFC PC was formerly known as the DIFC Special Purpose Company (DIFC SPC).

The main elements that make a DIFC company a prescribed company are:

  1. The DIFC company has been setup by a qualifying applicant.
    1. A DFSA Authorised Firm, or a recognised financial services regulated company in Australia, Austria, Belgium, Canada, Denmark, European Member States, Finland, France, Germany, Greece, Guernsey, Hong Kong, Iceland, India, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malaysia, Netherlands, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, United Kingdom and United States of America;
    2. A DFSA-regulated fund or a fund domiciled in Australia, Austria, Belgium, Canada, Denmark, European Member States, Finland, France, Germany, Greece, Guernsey, Hong Kong, Iceland, India, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malaysia, Netherlands, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, United Kingdom and United States of America;
    3. A DIFC domiciled Family Office;
    4. A DIFC domiciled FinTech Company;
    5. A DIFC domiciled Foundation;
    6. A Government Entity.

2. The DIFC company has a qualified purpose.

Articles of association of the DIFC Prescribed Company must be restricted to performing only “Exempt Activities” as following ones:

    1. Acquisition by way of leasing, title transfer, and risk transfer or otherwise,
    2. Holding and the disposal of any tangible or intangible asset, including but not limited to receivables and shares in connection with and for the purpose of a transaction.
    3. Obtaining of any type of financing either banking or capital markets,
    4. Granting of any type of security interest over its assets,
    5. Providing of any indemnity or similar support for the benefit of its shareholders or any of its subsidiaries,
    6. Entering into any type of hedging arrangements, in connection with and for the purpose of a transaction.
    7. Acting as trustee or agent for any participant in the transaction.
    8. Financing of a transaction or another PC.
    9. Ancillary activities which are related to the activities mentioned above.
    10. Any other activity approved in writing by the DIFC Registrar of Companies.

What are the restrictions of a DIFC Prescribed Company?

A DIFC PC is restricted from the following:

    • to conduct “Financial Services” unless authorized by the DFSA;
    • to have more than three shareholders;
    • to operate a trading business;
    • to be the general partner of an Investment Partnership.

What are the benefits of establishing a DIFC Prescribed Company?

  • The DIFC PC regime is very attractive to businesses from the operating and financial standpoint for the following reasons:
  • A DIFC PC that has a qualifying purpose of a Structured Financing is exempt from any requirement to file its accounts with the Registrar or have them audited.
  • A DIFC PC benefits from a very low establishment cost and fast timeframe to establish.
  • A DIFC PC does not need to rent its own office space in the DIFC, but can share office space with another DIFC entity, or even use a registered office address of a corporate service provider.
  • A DIFC PC can be used to strengthen a foreign investor’s control over the 51% local shareholding of their mainland LLC business. In this respect, Wincore Advisory Group’s structuring team will advise you on the best structuring to establish your UAE presence and reach your objectives whilst maintaining the highest degree of control over your business and confidentiality. Wincore Advisory Group’s structuring team will advise you also on related capital raising planning, tax structuring and succession planning in a Sharia Law environment.

 How can Wincore Advisory Group help?

Wincore Advisory Group helps businesses to articulate their objectives and aspirations to establish a DIFC Prescribed Company. Contact us at contact@wincoreadvisory.com OR +971 4 221 2602 for assistance today.

 

mm

Mohammed Rahali

Managing Partner

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