The Dubai International Financial Centre (DIFC), the leading financial hub in the Middle East, is a preferred centre for foreign investors who wish to transfer their company’s domicile into the UAE. Most recently Malabar Gold & Diamonds transferred the place of incorporation of Malabar Investments ( the company’s investment arm) into DIFC.
A few years ago, HSBC Middle East also transferred their domicile into DIFC from Jersey to leverage the free zone’s efficient infrastructure and the common law regime. Foreign companies can redomicile into DIFC with the help of the best business setup consultants in Dubai. This article provides the investors with key considerations they should keep in mind before transferring domicile into the DIFC. Read ahead.
Finding the Suitable Corporate Structure
The DIFC companies law is perfectly suited for the re-domiciliation process. The following are the popular ways of redomiciling into the DIFC:
(a) An existing ultimate holding company can transfer its place of incorporation from a foreign jurisdiction to the DIFC
In this method, the company’s current incorporation simply get transferred to the DIFC counting from the date of migration. The viability of this method depends upon whether the existing jurisdiction allows the company to transfer its domicile. However, most inshore jurisdictions across the world permit this type of migration.
(b) A new ultimate holding company can be incorporated into DIFC
When incorporating a new company in the DIFC, the important question will be the ability of the current company to transfer its shares for those of the new company. Whatever mode of re-domiciliation is adopted, the best business setup consultants in Dubai can help the investors navigate the required steps.
Contracts and recognition
Once a company completes the process of migration, the company will continue in DIFC with all rights and obligations. The company will be considered as if it has always been incorporated in the DIFC. English and New York laws and most Middle East jurisdictions generally recognise the migration of the company into the DIFC. However, the investors should check the contractual terms to ensure that the migration won’t result in any breach of third-party rights or breach contracts.
Activities Permitted to Perform in DIFC
Since DIFC is a free zone, the entities are not allowed to conduct business directly in the UAE market. A bank that migrated to the DIFC can’t accept deposits from the UAE markets or deal in the UAE Dirhams. A foreign company that wishes to migrate to the DIFC as a Designated Non-financial Business or Profession (DNFBP) must obtain written permission from Dubai Financial Services Authority (DFSA).
Laws Applicable to Companies Migrating to DIFC
On the positive side, companies established in the DIFC are not subject to the UAE’s Federal commercial or civil laws and most Dubai laws. The DIFC companies are governed by a common law system where UAE Federal civil and commercial laws are not applicable. However, UAE criminal laws such as the UAE Penal Code and Anti-Money Laundering and Combatting Financing of Terrorism (AML/ CFT) Laws laws do apply. Other administrative laws such as immigration regulations also apply in the DIFC.
Major Legal Requirements to Redomicile into DIFC
As per Article 8.1 of DIFC Companies Law, a foreign company applying to transfer its incorporation from another jurisdiction to the DIFC and be continued as a Company should submit an application that contains the following details:
(a) Company name
(b) Type of Company (Private Company or Public Company)
(c) the Company’s address of its place of business in the DIFC
(d) the nature of the Company’s business
(e) the names and addresses of the Company’s Directors or Secretary (if applicable)
(f) any declaration, certification, information, document or confirmation as the Registrar may ask
Documents Required for Transfer of Incorporation
The following documents are necessary for successfully transferring the domicile into the DIFC,
- copy of the Foreign Company’s certificate of incorporation (certified by the relevant authority in the original jurisdiction)
- a copy of Articles of Association or any constitutional document of similar effect (certified by the relevant authority in the original jurisdiction)
- Evidence that the laws of Original jurisdiction permit the foreign company to operate under the laws of DIFC
- Evidence that the company has all necessary consents from the original jurisdiction that are certified by relevant authorities
- Evidence that shows the company meets the requirements to operate as a Private Company or Public Company as applicable
- A copy of the company’s most recent audited books of accounts submitted to the relevant authority in the original jurisdiction
Why Should Companies Migrate to DIFC?
Companies seek to re-domicile into DIFC due to the free zone’s efficient legal system and efficient infrastructure. The need to select an efficient place of incorporation has become pertinent especially after the implementation of transparency regulations such as Economic Substance Regulations. The following are the major reasons why foreign companies should migrate into DIFC:
- The benefit of incorporating in a white-listed jurisdiction such as the UAE
- 100% foreign ownership
- 100% repatriation of profits abroad
- Easy to open a corporate bank account in Dubai
- DIFC has a sufficient pool of resources to help companies meet ESR requirements
- Common law jurisdiction
Jitendra Business Consultants Can Help you to Redomicile into DIFC
If you are convinced about why you should move your foreign company into DIFC, the next step should be hiring the best business setup consultants in Dubai such as Jitendra Business Consultants (JBC) to take necessary action. JBC regularly advises financial institutions and other businesses that are established in or planning to migrate into DIFC. JBC’s company formation specialists in Dubai possess the legal know-how to advise companies on DIFC’s regulatory framework and ongoing requirements. Transfer of domicile into DIFC becomes hassle-free with the robust advice from JBC.