In a world where one-size-fits-all solutions often fall short, DIFC Prescribed Companies are reshaping the landscape with their targeted approach. DIFC Prescribed Companies stand out by catering to specific operational needs with precision. The recent overhaul has fine-tuned these entities to focus on distinct Qualifying Purposes, each designed to support unique business objectives.
Let’s take a closer look at what is a DIFC Prescribed Company and the updated regulation.
What is a DIFC Prescribed Company?
In 2019, the DIFC introduced Prescribed Companies (PCs) to replace and expand upon Special Purpose Companies (SPCs) and Intermediary Special Purpose Vehicles (ISPVs). This new framework aims to streamline operations and reduce costs for DIFC-based businesses.
Recently, on July 15, 2024, the DIFC amended the PC regulations to further simplify the regime. These changes are designed to clearly position PCs as pure holding companies, distinct from operational entities, and to foster a more efficient business environment within the DIFC.
Key Features of DIFC Prescribed Company:
Simplified Structure: Prescribed Companies enjoy a streamlined regulatory framework compared to regular companies.
Ownership Flexibility: They can be owned by individuals or entities from the GCC, authorized firms, or other DIFC-registered entities.
Director Requirement: Must appoint a director employed by a DFSA-registered Corporate Service Provider (CSP) with specific compliance obligations.
Qualifying purpose: The primary function of Prescribed Companies is to own and manage assets including real estate, shares, and other investments. This understanding is crucial for recognizing PC’s place within the DIFC and exploring their utility in asset management and corporate organization.
Let’s delve into the various qualifying purposes of Prescribed Companies, exploring how their structure supports the management and ownership of assets.
Qualifying Purposes of DIFC Prescribed Companies
A Prescribed Company can be formed in the DIFC for several specific Qualifying Purposes, each catering to distinct business needs:
- Aviation Structure
Facilitate the owning, financing, securing, leasing, or operating of aircraft. This structure is ideal for entities involved in the aviation sector, managing assets related to aircraft and aviation operations.
- Crowdfunding Structure
Hold assets invested through a crowdfunding platform operated by a DFSA-licensed crowdfunding operator. This setup supports businesses that operate in the crowdfunding space, allowing for effective management and growth of invested assets.
- Family Holding Structure
Consolidate holdings of family members, their spouses, and/or descendants in a family office, holding company, or proprietary investment company. This structure is tailored for families looking to manage and consolidate their investments and assets.
- Structured Financing
Hold assets to leverage and/or manage risk in complex financial transactions. This includes various financial instruments such as complex lending arrangements, derivative transactions, hybrid securities, and securitized debt instruments.
- DIFC Holding Structure
Hold shares in one or more DIFC entities. This structure allows for the consolidation of shareholdings within the DIFC, streamlining management and oversight.
- Innovation Holding Structure
Hold shares in entities globally that use, develop, or test new, novel, or innovative technology. This includes companies providing innovative products and services, reflecting a focus on technological advancement.
Regulatory Aspects of Qualifying Purposes for DIFC Prescribed Companies
In terms of regulatory aspects, a DIFC license for a Qualifying Purpose Prescribed Company restricts activities to those specifically aligned with its Qualifying Purpose. This restriction ensures that the company remains focused on its defined role. Additionally, the company’s articles of association must limit its activities to its Qualifying Purpose and related ancillary activities. This requirement reinforces the company’s commitment to its designated purpose, ensuring that its operations remain within the scope outlined by DIFC regulations.
DIFC Prescribed Companies are designed to cater to niche markets and specialized business needs through clearly defined Qualifying Purposes. Whether your focus is aviation, crowdfunding, family holdings, structured financing, DIFC entity holdings, or innovation, the DIFC provides a robust framework to support your business objectives. By aligning with these Qualifying Purposes, companies can benefit from a streamlined regulatory environment that supports their specific operational focus.