Understanding the Types of Companies You Can Set Up in the DIFC: A Guide to Prescribed Companies

The Dubai International Financial Centre (DIFC) has established itself as one of the most attractive destinations for businesses in the Middle East, offering a robust regulatory framework and a thriving ecosystem for international companies. One of the most flexible and strategic structures available in DIFC is the DIFC Prescribed Company. But what exactly does this entail? And what types of companies can benefit from this unique setup?

Let’s take a deep dive into the types of companies you can set up in the DIFC and the key advantages they offer.

What is a DIFC Prescribed Company?

A DIFC Prescribed Company is a private company limited by shares, falling under the regime of a Small Private Company as per DIFC’s Companies Law. Notably, companies already established as Special Purpose Companies (SPC) or Intermediate Special Purpose Vehicles (ISPV) automatically qualify as Prescribed Companies. In addition, other entities can be formed as Prescribed Companies depending on their purpose.

Who Can Set Up a DIFC Prescribed Company?

DIFC allows a wide range of entities to set up as a Prescribed Company, including:

1. Authorised Firms: These are entities licensed by the Dubai Financial Services Authority (DFSA) or any Recognised Financial Services Regulator to carry out financial services, excluding representative offices.
2. Funds: Investment funds can benefit from the DIFC Prescribed Company framework.
3. Family Offices: For managing wealth and investments of high-net-worth families.
4. Fintech Entities: Businesses in the financial technology space can leverage the DIFC’s growing fintech ecosystem.
5. Foundations: Non-profit entities established for specific purposes, including charitable or educational endeavors.
6. Government Entities: Government-owned organizations can also be structured as Prescribed Companies.
7. Holding Companies: Entities primarily established to own and manage investments in other companies.
8. Private Trust Companies: For managing trusts and related structures.
9. Proprietary Investment Companies: Companies formed to manage specific investments.
10. Other Qualifying Entities: Any person wholly owned by one or more of the above entities may also qualify to establish a Prescribed Company.

Qualifying Purposes for a DIFC Prescribed Company

The DIFC framework allows businesses to establish Prescribed Companies for several specific purposes, including:

• Aviation Structures: Ideal for managing aviation assets and related operations.
• Crowdfunding Structures: Facilitating crowdfunding activities for innovative projects or ventures.
• Structured Finance: For businesses engaging in complex financial transactions such as securitizations or other structured financial products.
• DIFC Holding Structures: For entities that exist primarily to own shares or investments in other DIFC entities.

What Are the Prescribed Company Regulations?

For more detailed guidance on the specific regulations surrounding the DIFC Prescribed Companies, you can explore the full list of regulations directly from the DIFC’s official portal. These regulations outline the specific legal framework and compliance standards that entities must adhere to when setting up a Prescribed Company.

Key Advantages of Setting Up a DIFC Prescribed Company

Why should a business choose to set up a Prescribed Company in the DIFC? Here are some key advantages:

1. Strategic Structuring: The DIFC provides businesses with an ideal framework for structuring entities that focus on specific objectives, enhancing decision-making and accountability.
2. Protection of Intellectual Property (IP): DIFC Prescribed Companies offer a unique environment to protect intellectual property, which can be used as security for raising funds or for commercialization.
3. Ring-fencing Assets: By establishing a Prescribed Company, businesses can isolate and protect their assets, simplifying the ownership structure and streamlining the sale or transfer process.
4. Financing & Securitization: Companies can leverage the Prescribed Company structure for asset securitization, a powerful tool for raising capital or financing purchases.
5. Risk Mitigation: For businesses exposed to volatile markets, isolating risk by holding assets or liabilities in a Prescribed Company can provide significant protection for the parent company.
6. Tax Efficiency: The DIFC offers a free-of-tax structure on profits, gains, and shareholder returns, making it an attractive option for companies looking to improve their tax efficiency.
7. Succession Planning: Family businesses, in particular, can use the Prescribed Company structure for long-term succession planning, helping to ensure continuity and preserve wealth across generations.

Conclusion

The DIFC offers a flexible and dynamic business environment, with the Prescribed Company structure catering to a wide range of entities across various industries. Whether you are managing a fund, starting a fintech venture, or looking to safeguard your family’s wealth, the DIFC provides the tools and regulatory framework to help you succeed.

If you’re considering setting up a Prescribed Company in the DIFC, it’s important to understand your entity’s specific requirements and the various benefits this structure can provide. The DIFC continues to attract global investors, entrepreneurs, and businesses with its tax-efficient, transparent, and business-friendly environment, positioning itself as a key player in the Middle East’s financial landscape.

Interested in learning more about how to set up a Prescribed Company in the DIFC? Reach out for expert advice and guidance tailored to your business needs.

Let me know if you’d like further details or help with specific aspects of setting up your business in the DIFC!