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
companies.
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- Share Capital: The new regulations have repealed the previous requirement of minimum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
insolvency: 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