Highlights of New DCCA Regulations, 2016

Regulations apply to companies registered in the Dubai Creative Clusters Authority (DCCA) and came into force on 1 February 2017. The Regulations repeal and replace the Dubai Technology and Media Free Zone Private Companies Regulations 2003.

The Amendments:

1. 1. Shareholder increase – A company incorporated in the DCC may now be incorporated by up to 75 persons. The earlier regulations prescribed for a limit of 50.
   2. Constitution – New standard articles of association are to be issued, combining the previous memorandum and articles into a single constitutional document. All the existing companies will now be required to adopt the new document within a period of twelve month.
   3. Registration – The Registrar of Companies is to maintain a register of companies, containing details of all DCC companies.  The Regulations envisage that, in due course, this register may be accessible to the public and certain information may be made available online.
   4. Consideration for share issues – The new Regulations provides for allotment of shares to be issued for consideration other than cash.
   5. Changes to share capital – More detailed provisions are included on changes to share capital, including new provisions to allow share buy-backs and treasury shares, and more detailed provisions in relation to dividends and distributions.  The Regulations allow shares to be issued at a premium and contain provisions addressing how a premium is to be applied.
   6. Pledges – New provisions are included on share pledges, including registration, perfection, priority and release. The Registrar will maintain a Security Register, which may be made available to “interested persons”.  The parties may agree in the pledge instrument to submit to the jurisdiction of the DIFC courts (rather than the onshore Dubai Courts).  These is an welcome provisions for multinational companies and groups with DCC private company subsidiaries, enabling their shares to be included in financial security arrangements.
   7. Corporate governance – Clearer, modernized provisions are included in relation to company management and administration, including allowing for participation in both board and shareholding meetings by conference call.
   8. Branch offices – The Regulations consolidate previous regulations on the operation in the DCC of companies incorporated outside the DCC.
   9. Continuation of incorporation – The Regulations contain provisions which permit companies to move their place of incorporation into and out of the DCC.
   10. Future flexibility in form – The DCC Authority is now able to prescribe different types of company in addition to the FZ-LLC.  This allows flexibility to respond to future market demand.
   11. Authorization: A requirement that only those persons acting under an express authority (usually pursuant to a duly authorised power of attorney, resolution of the board of directors or shareholders or pursuant to powers granted under the articles of association) may contract on behalf of the FZ-LLC company
       
   12. Director Duties: Additional duties for directors and officers including the duty to act honestly, in good faith and with a view to the best interests of the company, and a requirement to declare conflicts of interest.
   13. Manager Responsibilities: New provisions in respect of the role and responsibilities of the general manager. For instance, the manager is now liable for maintaining a register of shareholders and a register of officers and for the accuracy of their contents

Action to be taken by DCCA Registered Companies:

All companies and branches established within the DCC prior to the New DCCA Regulations will need to take steps to follow the New Regulations by no later than 1 February 2018.

1. 1. 1. Replace their existing memorandum and articles of association with a consolidated article of association, which will be prepared by the DCCA.
      2. The management to follow the new corporate governance procedures and best practices to facilitate compliance.
      3. Confirm that the company’s registers are maintained and up-to-date.

Registers:

Register of Members : The law mandatorily requires the companies to maintain the following in electornic or any legible form:

1. Register of Meetings & Minutes
2. Register of directors and officers

   Please feel free to contact us at [email protected] for making your company 100% compliant with the regulation.