Introduction
Jebel Ali Free Zone Authority (JAFZA) is one of the oldest free zone in the country and catering to the needs of thousands of the business and supporting UAE’s objectives of attracting foreign investments and ensuring sustainable developments. It continuously strives to offer the best services for its member without compromising on quality and compliance of law of the region.
In line with its objectives of ensuring sustainable growth and best services for its member, JAFZA has issued a new set of guideline on 23rd May, 2016 which came into force on 24th August, 2016 and shall apply to all the companies registered or registering in the future at the free zone. The new regulations repeal the previous regulations issued for companies registered as free zone establishment and free zone companies in JAFZA. This article aims to highlight some of the major amendments made by these guidelines.
Major Amendments
Some of the significant changes brought in by the new law are
- Commercial Companies Law will be applicable to JAFZA entities
- New structure of the companies introduced
- Limit of minimum share capital abolished
- JAFZA companies can now issue different class of share
- No effect of change of Domicile of Business
We shall discuss all these amendments in brief in the following paragraphs.
Applicability of Commercial Companies Law
The government of the UAE has issued a new commercial companies law which came in force in 2015. Commercial companies law defines the laws applicable to the companies in the mainland of the country and the entities formed in free zones are generally be governed by the regulations issued by respective free zone in this regard. JAFZA regulations now direct the companies to comply with the provisions of Commercial companies’ law and with this the compliance requirements for JAFZA companies will be similar as for mainland companies. However, if the commercial company law is silent matter the rules in JAFZA regulations shall apply to companies registered in the free zone.
Introduction of New Structure of Companies
Until now, the companies can register in JAFZA either as Free Zone Establishment (FZE), Free Zone Company (FZCO) or the branch of a Foreign Company. The new regulations add one additional structure, namely, Public Listed Companies (PLC) as a new type of entity that can be registered in JAFZA. PLC shall have at least two shareholders and can offer its shares to the public subject to regulations prescribed in this regard.
No Requirement to have Minimum Share Capital
The entities registered in JAFZA are required to maintain a minimum share capital depending on their form. The new regulations waive off this requirement and states that the companies should have minimum capital as required for their activities and no minimum amount or limit is prescribed in this regard. It will also be in line with the provisions of Commercial Companies Law.
Issue Different Class of Share
Many free zones do not allow companies registered with them to issue different class of share and JAFZA were no exception to this rule until recent changes. As per the new regulations, the businesses registered in JAFZA can issue a different class of shares, subject to approval by majority of shareholders. An PLC company can do so, if allowed by its Memorandum and Articles of Association.
Change of Domiciliation
The new regulations allow the foreign companies to register in JAFZA without having to apply as a new registration. In simpler terms, their operations will be transferred to free zone without registering as a new company and they can have their legacy of being an older company just changing their domicile.
Conclusion
The new regulations are a welcome step as they allow companies to enjoy more freedom and at the same time putting the responsibility of self-governance and complying with Commercial Companies Law to be in line with companies registered in the mainland of the country. Many international companies may find it a more lucrative option now as they can transfer their operations without losing their old identity.
If you are looking to set up a company in Jebel Ali Free Zone reach us at [email protected]
