Newsletter Archives - Page 34 of 57

Newsletter, U.A.E

This Year has been a Positive Start for UAE businesses

April 15, 2019

With an upsurge of the expansion rates in terms of output and even new orders in the middle of reports of a bigger market demand in 2019, all the non-oil businesses operating in the UAE felt that this year had a very positive start.

Mostly, the businesses remained confident about further progress in new orders resulting in growth of business activity in this year. Though some companies said that offering price discounts had enabled them to get bigger volumes in terms of new work, the output prices went down for the fourth consecutive month along with competitive pressures and comparatively feeble cost inflation.

As per surveys, the business activity expanded at the strongest rate since August, 2018. The rate of growth has also been faster than the series average. Where the output augmented, it was associated to higher number of new orders and also because of marketing and promotional activities.

The survey’s results are in tandem with IMF’s observation that non-oil development in the UAE would go up further this year and in 2020 because of fiscal stimulus and also due to fast-track arrangements for the upcoming Expo 2020 Dubai.

The global financial institution has forecasted that UAE’s non-oil sector is all set to expand faster this year as compared to the oil sector in spite of some recovery in the crude prices and new company formation in Dubai is a good idea at this point of time.

The expansion in business activity was because of promotions partially and also because of huge price discounting done by various companies. The output price index continued to be below the neutral 50-level in January, 2019, indicating lower average selling prices in the country, although the percentage of price discounts in January was lesser. Selling prices have gone down for last eight out of nine months. However, the input costs went up modestly in the month of January.

Because of higher activity requirements, most of the firms had to hire extra staff during January. With companies acting as per higher order growth and bigger output, the purchasing activity was very strong in January. But the stock of pre-production inventories went down for the consecutive second month, proving that businesses are managing their inventories in a better manner and not building up stocks in expectation of the prospective demand.

Over 68 percent of the companies expected their output to be higher within a year’s span. None of the companies that were surveyed predicted the output to be lower within a year’s time and optimism about the business in terms of future output stayed high in the month of January.

The business sentiment has been very high this year and has been strengthened as compared to that in December last year. The improvements in demand seen lately are expected to further go up, as all the marketing campaigns are forecasted to get positive results in 2019.

Another research shows that the investors in the UAE could be vulnerable to over-estimating the potential for the growth of investments in the near future. When the survey respondents were asked to guess their expected investment return in 2019, almost 24 percent people expected returns over 10 percent and just seven percent of the population expected returns to below two percent or in negative. Thus, this year seems to be a perfect time for business set up in Dubai free zone and if you have that as an agenda, but do not know how to go about it, please get in touch with us, and we would be happy to assist you.

Newsletter, U.A.E

Airbnb Invests In OYO’s Series E Funding Round

April 3, 2019

Home-renting company Airbnb dives deeper into the hotel-booking business by investing in Indian hotel reservation start-up OYO’s series E funding round. Though Airbnb did not disclose the amount of the investment made, sources in the know said that the investment ranges between $100 to $200 million. As part of this deal, OYO is likely to list its properties on Airbnb platform thereby expanding its international reach and simultaneously strengthening Airbnb’s presence in Asia.

This investment underscores a growing trend of companies in the hospitality and travel segment to leverage each other’s strengths.

On 8^th March, Airbnb bought HotelTonight, an app for finding hotel rooms at a discount, ahead of its hotly anticipated initial public offering (IPO).

“Emerging markets like India and China are some of Airbnb’s fastest-growing, with our growth increasingly powered by tourism to and from these markets,” said Greg Greeley, president of homes, Airbnb.

On the other hand, OYO has also been aggressively expanding its global footprint by entering markets such as UAE, Philippines, the US, and China over the past one year.

“Airbnb’s strong global footprints and access to local communities will open up new opportunities for OYO Hotels & Homes,” said Maninder Gulati, global chief strategy officer at OYO Hotels & Homes.

Airbnb has about 47,000 properties listed in India. Globally it has almost 6 million listings across 81,000 cities in 191 countries. Whereas, OYO has its presence in more than 259 cities in India with over 8,700 buildings and over 1,73,000 rooms.

Newsletter, U.A.E

A breakthrough double tax treaty signed between the UAE and the KSA is now published

March 18, 2019

The detailed information about the double tax treaty between the UAE and the KSA (the “DTT”) signed on 23 May 2018, has been finally made available.

The verdict for approving the DTT in KSA was published in the official Saudi Gazette and Umm Al-Qura, recently along with the text of the DTT. This publication of the decision done in the official Gazette brings an end to the ratification process for KSA. Both the countries involved have to inform the other about the completion of the process as per their law so as to bring the DTT into force.

The key features of this treaty are as follows:

Abuse of the treaty: In accordance with the Multilateral Convention to Implement Tax Treaty related procedures to Prevent Base Erosion and Profit Shifting (“MLI”), which both the UAE and the KSA have signed, the DTT says that the treaty access would be denied in case even one of the chief purposes of the arrangement is to get treaty benefits.
Effective date: The DTT would be entering into force on day one of the second month after the above notifications. The DTT would be effective for all the payments that are made on or post 1 January after the date on which the DTT came into force particularly for withholding tax reasons and for tax years which begin on or post 1 January of the same annual year for the purposes of income tax.
Persons covered: The DTT is applicable to the residents of the UAE and the KSA. Please note that the DTT is not restricted only to GCC nationals; thus, non-GCC nationals could also take advantage from the DTT.
Permanent establishment (PE): The DTT applies the general OECD definition of a Permanent Establishment. A PE is a basically a fixed place of a company from where the business is fully or partially carried on. A PE would include a branch, a place of management, an office or a factory; however, it excludes all the activities that are of a preparatory or auxiliary nature.
Income derived from immovable property: This kind of income could be subject to tax in the nation where the property is actually located.
Business profits: Business profits are usually taxable in the nation of residence. However, an exception to this is where the company carries on the business in another country via a PE and in that case, the profits of that PE could be taxed in the other nation.
Dividends: Dividends would be taxed in the source nation but the tax will be limited to a maximum of 5 percent in case the beneficial owner of those dividends is residing in another country.
Interest: Interest income is allowed to be taxed only in the residence country in case the recipient is the beneficial owner and is also a resident of that country.
Royalties: Royalties are to be taxed in the source nation but the tax would be limited to 10 percent in case the recipient is the beneficial owner and is also a resident of the other nation.

Capital gains: Any capital gains would be taxed only in the residence country except if one of the exceptions is applicable to provide the taxing rights to the source country.

The DTT is actually a rare agreement between two GCC countries and is set to improve the economic relations and also the bilateral cooperation between the UAE and the KSA. After it comes to effect, the DTT is surely going to have major tax implications. The conclusion of the DTT might have an impact on the existence of a PE and could reduce the withholding tax rate applicable in the KSA. Companies and persons who do cross-border transactions should ideally evaluate their transactions and also corporate structures immediately so as to ensure their eligibility for treaty advantages. As both the KSA and the UAE have signed the MLI, the provisions of the DTT could be amended by the MLI as per the final MLI positions taken up by the UAE and the KSA. As of now, the KSA is in its provisional MLI positions, and has included the DTT as a covered agreement, though the UAE has still not included it as such.

Newsletter, U.A.E

Dubai Announces the Second Stimulus to Boost SMEs and Public-Private Partnership

March 18, 2019

This step focuses on easing the process of performing business and reducing the expenses for companies.

The Government of Dubai’s Department of Finance (DoF) has announced the second package with some economic growth initiatives which aim to augment the emirate’s current economic incentive package under the government’s response to the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

The directives regarding leadership which were given to the government aimed at simplifying the steps of performing business and bringing down the costs for enterprises by using all the possible resources, so as to aid the economic accomplishments.

Abdulrahman Saleh Al Saleh who is the DoF director-general said that the new initiatives package comes with five initiatives aimed to encourage small and medium-sized businesses and public-private partnership. The work needs to be carried out while complying with the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum and execute various economic and financial incentives for reducing the cost of doing business, aiding the registered enterprises in the emirate and also attracting more and more new investments.

The first incentive proposal is to pay all the dues of SMEs who are supplying goods and services government bodies within 30 days rather than 90 days, as long as the payment period is within the 10 days in case of the members of Dubai SME. As per the initiative, the government would be classifying the SMEs who are permitted to get their dues within 30 days. This initiative will be able to provide SMEs with some extra liquidity of Dh1.6 billion per annum.

The second initiative is regarding cutting down the value of primary insurance for all the SMEs to bring them between 1-3 percent range instead of 2-5 percent range, in order to promote them to carry on with supplying to the government agencies. As per this initiative, the minimum primary insurance has been reduced from the original Dh40 million to Dh20 million (which includes 80 percent of SMEs), while the maximum primary insurance was cut down from Dh100 million to Dh60 million (which involves 20 percent of the establishments).

This initiative also aims to offer better liquidity for SMEs, and also ensure bigger opportunities for them to take part in procurement to the government agencies.

The third economic incentive proposal is regarding the final insurance for the performance of SMEs in government projects. This initiative includes cutting down of the final insurance rate or “performance insurance” and slashing it from 10 percent to half or 5 percent on all the supplies. As per this initiative, the Government of Dubai plans to chart out a classification of SMEs who will be entitled for this performance insurance reduction.

This initiative will help to increase the total value of the retrieved final insurance from all the classified companies or businesses, which add up to almost 70 percent of the SMEs, going up to Dh100 million over a shorter period of time.

The fourth initiative aims to allocate 5 percent of government capital projects to the SMEs. Targeted at members of Dubai SME, this initiative will promote business setup in Dubai and various enterprises to expand their business, participate into key projects contracts particularly with the government agencies and also form alliances to contest for government projects.

This move of allocation of 5 percent of government capital projects to the SMEs enables them to get projects which are worth Dh400 million.

The fifth initiative is allocating projects worth Dh1 billion to the PPP, so as to invite the private sector investments, improve the government service quality and finally decrease the burden on the budget.

This initiative will make sure that there is optimal use of Law No.22 of the year 2015 on Public-Private Partnership, and the execution of the projects planned by government agencies are on time and in compliance with the Dubai 2021 Plan.

Newsletter, Singapore

Singapore Upgrading to get Fresh Opportunities and Cater to New Business Models

March 18, 2019

Singapore is planning to upgrade its trade pacts to get improved access to global markets for its local firms and businesses, and also to cater to new business models as shared by the Minister for Trade and Industry, Chan Chun Sing.

It is also going to expand its free trade agreement (FTAs) network to aid Singapore enterprises enter into more economies, and assist in diversifying the nation’s markets and supply chains.

Mr. Chan also said that they want to expand their FTA network to provide our enterprises a privileged access to more and newer markets in comparison to our competitors. This will not only diversify their markets and supply chains but we would also not completely depend on any one specific market.

He also mentioned that they are also in a process to broaden their reach by planning FTAs with the Pacific Alliance, Eurasian Economic Union, and the Southern Common Market in South America (Mercosur). Especially for long-term, they should take up more opportunities in specifically in the new, emerging markets by acquainting themselves with the regulations and business networks and also the culture in those regions. Mr. Chan also explained how the authorities are planning to prepare the Republic and get ready for the next stage of development.

Other parts of Singapore’s strategy comprise transforming various industries to grab fresh opportunities, enhancing the skill-sets of workers, improving the capabilities of businesses, and enabling faster and effective regulations to get a more pro-business environment, thus empowering enterprises and consumers.

Due to several benefits from the pacts, Singapore’s business with its FTA partners currently totals to 92 percent of its total business or trade in goods and service. Enterprises here also recorded tariff savings of almost $730 million in the year 2016, which went up from $450 million a decade ago, which meant that such savings are a major advantage that is derived from signing FTAs.

Mr. Chan also assured that the ministry would continue to work with the Singapore Business Federation and various trade associations and chambers to assist businesses to get advantage from the FTAs.

During its chairmanship of Asean in 2018, Singapore completed various initiatives to develop the region into a more attractive destination for setting up a business, company formation in Singapore or doing investments.

This also meant having the Asean Single Window, under which now there are five Asean countries who are exchanging their business and trade documents electronically, while the remaining countries would be coming on board in 2019. An Asean agreement regarding e-commerce was also signed, among others.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership in 2018, which was Singapore’s first trade pact with Canada and Mexico and also the European Parliament’s approval of the European Union-Singapore FTA earlier this year came into force.

Singapore’s trade agreements map up to the efforts by the Republic and partners with similar objectives to advance the international rules and regulations and support the rules-based multilateral trading system personified in the World Trade Organisation.

Singapore is currently working actively with like-minded members of WTO, which includes recently giving an e-commerce joint statement to assist in decreasing the cross-border obstacles on this front, while welcoming new associations to push the envelope on digital trade.

Mr Chan also mentioned Singapore’s challenges in his speech, such as the uncertainties of the US-China trade relations and collaborations in the near future and transformation in the international trade patterns and also the production chains in the mid-term.

In the long-term, Singapore has to carefully observe the developments in global taxation, which is going to shape the Republic’s attractiveness as the best business destination in future.

He said that if they can get the fundamentals right, they can be unique and attract more global investors to come to Singapore and create better jobs. These fundamentals should include efficient governance which is based on long-term political stability and effective planning; an international mindset; a competitive edge in terms of innovation and high levels of creativity and standards; and a talented workforce with a focus on regular training and learning.

Newsletter, Saudi Arabia

Saudi Arabia has Permitted Shipping Agent Licenses for Full Foreign Ownership

March 18, 2019

Kingdom of Saudi Arabia’s (KSA) government authorities are working towards enhancing the investment environment, which was planned under the National Transformation Plan and Vision 2030. In this regard, the Saudi Arabian General Investment Authority (SAGIA), which is the governing authority dealing with foreign direct investments (FDIs) and has been working hard to develop the foreign investment regime targeting to simplify some of the restrictions put on global investments in the KSA.

According to this, all the shipping agents would be able to function independently with the support of the KSA’s privatization plans. Till some time back, the ship agency services were only allowed to be conducted by a 100 percent owned KSA company or any KSA national. However, after the recent reforms, foreign shipping companies or shipping agents are allowed to decide if they would work with a local investor or not and also have the right to function autonomously as ship agents at Saudi Arabian ports. After the recent letter that was issued in August 2018 by the Saudi Minister of Commerce and Investment, the Minister of Commerce confirmed that now the shipping agency operations would not fall under the purview of the Saudi Agency Law and thus it will not be a prohibited activity for any companies that are non-KSA owned. This has enabled giving foreign investors a shipping agency license.

SAGIA has also confirmed that they have started welcoming all global shipping companies and shipping agents, and there are no specific requirements to perform the shipping agency activities besides the usual requirements for establishing a company in the KSA. This is a positive step for the marine sector and also for the KSA economy as a whole.

The foreign investment license would be valid for a period of five years and could be renewed every year. Investors would also need to get a shipping agency license from the Saudi Ports Authority (Mawani) after the setting up of the company and prior to conducting the activities. Mawani and SAGIA are collaborating to execute this change and to apply the necessary process for regulating the investment of various shipping agencies.

Mawani confirmed that shipping agency the activities would mainly include vessel clearance and also related activities such as booking of cargos, as loading and unloading of cargos, paying port dues, representing the shipping line and also supplying various supplies to ships. However, foreign direct investment companies cannot perform the following services, that is, customs clearance and supplying fuel to ships.

India, Newsletter

India Ranks as the Fastest Emerging Economies World-wide

March 18, 2019

India is going to surpass UK with regards to world’s largest economy rankings as its GDP growth is projected to be 7.6 percent in 2019. Data trends show that US growth is estimated to be temperate from 2.8 percent in 2018 to approximately 2.3 percent in 2019. Labour markets in developed economies are estimated to tighten, thus increasing the wages.

India and France are expected to cross the UK with regards to world’s largest economy ranking this year, pushing it from the fifth to the seventh position in the global ratings, as per the projections. Though the UK and France usually switch places because of similar levels of development and almost equivalent population, India’s spiraling up the rankings is most likely to be stable and lasting now. As per the projections, UK would experience almost 1.6 percent real GDP growth, 1.7 percent for France and 7.6 percent for India in the year 2019.

India is expected to have a healthy growth rate of almost 7.6 percent in FY20, assuming that there are no big headwinds in the world economy like more trade tensions or any supply shocks in oil. The growth will be aided by further realization of efficiency gains that come from the newly-implemented GST and policy momentum predicted in the first year of the new government.

Today, India has become the fastest developing large economy throughout the world, with the gigantic population, very favorable demographics and the huge potential because of the low initial GDP per head. It is assured to continue to go up in the global GDP league ratings in the next few decades and this surely is a good time for company formation in India.

The restrained growth in the UK last year and again in the year 2019 is probable to turn the statistics in France’s favor. When comparing the currencies, the relative strength of the Euro as against the Pound is also an important factor to consider here. The world-wide economy is estimated to slow down this year as G7 countries go back to long-run average growth rates, as per new projections and data.

The lift in growth of many major economies observed between 2016 end and 2018 beginning has now ended. The boost from the fiscal stimulus is estimated to decrease, while higher interest rates could diminish consumer expenditure and a strong dollar is expected to continue dragging on net exports. The projections point out that US growth is going to be moderate from a projected 2.8 percent last year to around 2.3 percent in 2019.

The development in China is also expected to slow down as compared to 2018. Although the Government would try to ensure a minimal slowdown, the effect of US tariffs and the necessity for controlling the debt levels are probable to create a meek deceleration in growth this year.

The labour markets in developed economies are likely to go on tightening with unemployment decreasing even if job creation slows. This will push up wages, but would cause challenges for enterprises planning to fill talent shortages. In 2019, unemployment would fall a little more in the US and Germany, though the rates of job creation in these countries have remained strong.

Newsletter, U.A.E

Dubai Chamber has Announced Establishing New Zealand Business Council

March 8, 2019

Dubai Chamber of Commerce and Industry has recently announced forming of the New Zealand Business Council (NZBC) in Dubai for strengthening the relations between UAE and New Zealand and expanding their bilateral economic ties.

The New Zealand Business Council has become the 50^th country-specific trade council to be formed in Dubai in the aegis of Dubai Chamber. About 100 New Zealand companies are members of this Council and they operate in an array of economic sectors like healthcare, trade, legal services, public relations, education, food and beverage, agriculture, aviation, hospitality and tourism.

This was announced during the inauguration ceremony held at Dubai Chamber’s head office and was attended by the Honorary Mr. Kevin Mckenna, who is New Zealand’s Consul General in Dubai & Trade Commissioner Gulf States; Mr. Clayton Kimpton, who is the Commissioner General for New Zealand Pavilion at Expo 2020; Mr. Hassan Al Hashemi, who is the Vice President of International Relations for Dubai Chamber; and several representatives from New Zealand companies established in Dubai.

Non-oil business between Dubai and New Zealand has been expanding in recent years and has reached AED 2 billion in 2018, and this was enhanced by the growing export of food products from New Zealand into the Emirate. The UAE ranks as one of New Zealand’s biggest trading partners, and this new council will augment bilateral cooperation especially in new economic areas, and both these business communities will reap benefits from New Zealand’s involvement in Expo 2020 in Dubai.

Mr. Al Hashemi talked about the importance of trade groups and councils in assisting Dubai’s economic development and competitive edge by offering their capabilities, expertise, and resources and valuable ideas on business and business setup in Dubai.

Dubai Chamber is a facilitator for trade groups and all the councils in Dubai and it aims to advance business between the trade communities of Dubai and improve ties between Dubai and several other countries globally.

Newsletter, Singapore

Is Singapore VCC Going to Change the Game for FDI in India?

February 28, 2019

Singapore’s VCC (Variable Capital Company) framework has been a major development for investment fund industry looking for investing in India and also in whole of Asia-Pacific. Especially from India’s point view, the VCC regime can be a game-changer.

Singapore ranks as a significant global hub particularly for the asset management industry, due to its AUM (Assets under Management) shooting up to $2.4 trillion. It has also become one of the countries who are investing the most in India, with its cumulative FDI gong over$73 billion and its portfolio investment crossing $37 billion.

However, most of the funds handled by managers based out of Singapore are pooled or domiciled out of Singapore because of there is no flexible corporate vehicle available. To tackle this, Singapore is launching a corporate vehicle named the Variable Capital Company (VCC). The good news is that the VCC framework is cleared by the Singapore Parliament and would be operational early this year.

The corporate framework

The VCC framework is intended just for fund industry as it’s compulsory to appoint a Singapore-regulated fund manager along with an independent custodian.

A VCC is typically alike a conventional business in terms of a board of directors, share capital with limited liability, and other features. In addition, to aid investors’ entry and exit, the VCC framework offers additional flexibility:

It can distribute out of its capital to shareholders in case it makes no profits or has reserves;
Its shares are allowed to be redeemed regularly or even bought back without having to seek shareholder approval every time;
Its paid-up capital’s value is always considered equivalent to its NAV and its shares should be issued, redeemed and even repurchased at such NAV; and
Other than various classes of shares, VCCs are allowed to issue bonds and debentures listed on stock exchanges;

VCCs could be established either as a single standalone fund or it could be an umbrella fund. A standalone fund gets to enjoy all the features of the VCC framework, however, an umbrella fund has an advantage of making two or higher sub-funds where the assets and liabilities are totally segregated, that is, losses of a sub-fund would not impact other sub-fund’s NAV.

The structure of an umbrella fund helps a big fund manager gain through economies of scale as they save operational and other compliance costs connected to establishing multiple corporate vehicles.

The taxation framework

A VCC is treated as a single entity for tax purposes. If it’s an umbrella VCC, the sub-funds are not needed to assume different tax compliance. Also, a VCC should be made eligible to utilize Singapore’s tax treaty network wherever it is taken as a Singapore tax resident who has based the ‘control and management’ in Singapore.

Regarding incentives, a VCC is entitled to apply for all tax exemptions offered to other funds handled by a fund manager based in Singapore. The exempt VCCs would also be entitled for GST remissions thus decreasing the Singapore GST incidence particularly on management fees to a tiny fraction. Fund managers are qualified to request for 10% concession of tax rate in terms of their fees from VCCs.

Re-domiciliation of current overseas funds operating in Singapore

The current offshore funds which have a framework like VCC would be allowed to be re-domiciled in Singapore. In case the overseas fund is not similarly structured as a VCC, in that case, restructuring could be explored before re-domiciliation.

This is likely to provide enhancement to local domiciliation of the investment funds in Singapore.

VCCs in Indian context

India-Singapore tax treaty was recently revised to remove the tax exemption of capital gains particularly on Indian company’s sale of shares. The treaty continues to offer grandfathered exemption especially for cash equity investments that were made till March 31, 2017. It also still exempts the profits from other financial instruments like bonds, derivatives instruments, debentures, etc.

The VCC framework offers an efficient method to deal with so many challenges posed to investment funds. After the framework is successful, fund managers can pool funds in Singapore only. In addition, the VCC would also have an investment manager, administrator and custodian based in Singapore, which will majorly reinforce the commercial substance for investment funds and support the case for treaty entry in this post-BEPS age.

Newsletter, U.A.E

The New DIFC Companies Regime is in Effect Now

February 20, 2019

Recently, the DIFC introduced the new companies’ regime under the Companies Law (DIFC Law No. 5 of 2018), and also as per the Operating Law (DIFC Law No. 7 of 2018), and Companies Regulations and Operating Regulations (together the ‘New Legislation’), which became applicable on 12th November 2018.

The New Legislation is a replacement of the earlier Companies Law (DIFC Law No. 2 of 2009) and the operating regulations and it revised several areas regarding registration and operation of businesses in the DIFC.

The New Legislation was awaited by various small and medium size private companies that are limited by shares, including their shareholders and directors, and legal and financial experts advising businesses considering DIFC as the area in which to function or those who are already functioning in the DIFC.

These changes are specifically aimed at:

Providing more flexibility to firms functioning in the DIFC;
Depending more on enterprise-level internal audits and balances;
Ensuring the discretion of the board of directors; and
Prescribing a strong sanctions’ regime in case businesses don’t conform to DIFC law.

Likewise, in some other jurisdictions internationally, the role of Registrar of Companies’ (‘ROC’) would be to oversee and monitor if companies are complying with DIFC law.

Major Changes in the Previous Companies Regime

The main changes to the previous regime that was introduced under the Companies Law and Regulations relate to the following areas:

types of companies/classification;
articles of association;
duties; and
that can be imposed by the DIFC ROC especially in case of non-compliance with the New Legislation.

Types of Companies and Classification
Earlier, there were two ways to incorporate a company in the DIFC- a limited liability company or a company limited by shares.

Now, limited liability companies are no longer there and the only firms that can function in the DIFC are the ones limited by shares: be it private and public.

What Happens to Current Limited Liability Companies (‘LLC’)?
The ROC will direct every LLC registered under the DIFC for conversion to either a private or to a public company limited by shares so as to be in compliance with the New Legislation.

Private Company Limited by Shares (‘Ltd.’)

Just as the earlier company limited by a shares vehicle, the name that is approved for a private firm limited by shares as per New Legislation should also have the word ‘Limited’ or ‘Ltd.’ In the end. But, there are major changes in this structure to the earlier Ltd. structure, which specify the below requirements:

no requirement of minimum share capital;
at least one director; and
company secretary remains optional.

Public Company Limited by Shares (‘Plc’)

The approved name of a public company that is limited by shares should end in ‘Public Limited Company’ or ‘PLC’. A PLC as per the New Legislation has:

no limitation for the number of shareholders;
a requirement of the minimum share capital of USD 100,000;
at least two directors; and
at least one secretary.

Articles of Association

A new standard of DIFC Articles reflecting the provisions of the New Legislation is also introduced. The need for a legal opinion to be given along with modified Articles of Association is now replaced with incorporator’s statement (for preliminary Articles) or the director’s certification (in case of post-incorporation changes) of compliance with DIFC law concerning the projected amendments to the Articles.

Directors’ Duties

The New Legislation also introduces several duties by which the directors should abide. They are:

acting within the given powers;
promoting the success of the business;
exercising autonomous judgment;
exercising rational care, ability and diligence;
avoiding any conflicts of interest;
not accepting any benefits from third parties; and
declaring concern in a planned transaction or arrangement.

Fines

For ensuring that the companies follow the provisions of the New Legislation, some administrative fines have been introduced, which are levied and which range from USD 2,000 to 30,000.

To conclude, the New Legislation further improves the legislative regime of the DIFC, offering the current DIFC companies and the new investors more flexibility in running their businesses, with better and more options related to the regulation required. So if you are thinking of business setup in Dubai free zone or company formation in Dubai, this is the best time to do so.

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The corporate framework

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Re-domiciliation of current overseas funds operating in Singapore

VCCs in Indian context

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