Few Key Changes of the New Dubai Multi Commodities Centre Authority Companies Regulations 2020

Fichte & Co. | View firm profile

Dubai Multi Commodities Centre (DMCC) recently announced new DMCCA
Company Regulations 2020, which came into effect from 2 January 2020 to further enhance the ease of registration and
operation of businesses.

The new Regulations have brought in some changes in the existing
company law framework, increasing
by this the remit of the activities undertaken by the DMCC registered

Some of the key changes brought in through the New Regulations
are as under:

  • Articles of
    Association –
    As per the New Regulations, DMCC
    registered Companies will have the following flexibility in drafting their Articles
    of Association:
  • To adopt the Articles
    prescribed by DMCCA (Standard DMCC Articles),
  • To amend clauses
    within the Standard DMCC Articles, or
  • To adopt their own
    Articles entirely by special resolution, provided they meet the required
    standards and conditions as set out in the Regulations.

DMCCA has made it easier for shareholders to determine how they
structure the activity of their
business, within the existing regulatory framework.

  • Share Types: As per the new regulation DMCC companies will have the option to
    structure their shareholdings in the way that best suits their requirements.
    Previously DMCCA only allowed only ordinary shares. Under the 2020 Regulations,
    a company may issue other share types such as treasury shares, preference
    shares, redeemable shares and bonus shares, by this reflecting more flexibility
    in the equity structure of the organization.
  • Share Capital: The new regulations have repealed the previous requirement of minimum
    share capital requirement of AED 50,000. However, Registrar still has the right
    to specify the minimum amount of share capital for companies, in agreement with
    the applicable business standards and the type of activity undertaken.
  • Managers and other
    company officers:
    the new Regulations expressly prohibit the financial assistance
    to directors and further deals with the role, duties and liabilities of
    directors, managers or company secretaries. For adding clarity, each of these
    responsibilities is described in terms of actions and outcomes.
  • Auditing requirements: the new Regulations
    stress out the already existing rule on mandatory yearly audits for DMCC
    companies, audits that are to be prepared in accordance to IAS, submitted to
    and approved by the DMCC Authority. In furtherance, the auditors are subject to
    new obligations of disclosure of breaches in the activity of the companies at
    issue and, correlatively, companies are being called to implement adequate
    internal standards in order to comply with the new requirements.
  • Transferring companies
    to and from the DMCC
    : As per the new regulation and Non
    DMCC entity can make an application to the registrar of DMCC for transfer of
    company to DMCC or transfer of DMCC company to another jurisdiction subject to
    fulfilling of certain conditions stipulated in the Regulations.
  • Dormancy: As per the new Regulations, a DMCC company may request to the Registrar
    to voluntarily suspend its License for a period of up to twelve months or even
    for a longer period, as approved by the Registrar. The change of status to “dormant”
    allows a company to cease operations for a determined period, without being
    required to terminate its commercial license.
  • Winding-up and
    New sections on winding up and
    insolvency outline, among other things, the different methods of winding up a
    company and the specific obligations of office holders. The new Regulations
    also give office holders much clearer guidance on the steps involved in winding
    up a company, and the obligations they are required to fulfill. It also states
    that the provisions of the UAE Federal Bankruptcy Law and any repealing or
    amending legislation are applicable to DMCC companies.

For more information or enquiries, email us at companysetup@fichtelegal.com

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