The Dubai Multi Commodities Centre (DMCC) introduced, on 2 January 2020, a new set of rules and regulations aimed at improving the ease of setting up and doing business in the free zone. Changes include increased flexibility around a company’s articles of association, the introduction of different classes of share and a new ‘dormant’ company status.
The DMCCA Company Regulations 2020 update DMCC’s existing company law framework in line with international best practice and to offer more simplicity and flexibility to businesses registered within DMCC and increasing the remit of their activities.
Companies may adopt model ‘standard articles’ of association as prescribed by the DMCC Authority (DMCCA) or can choose to modify the standard articles or adopt their own. Companies that do not use the standard articles must provide the DMCC Registrar with a legal opinion that its articles do not contradict and are consistent with the regulations.
The DMCC’s previous AED50,000 (c. USD13,500) minimum share capital requirement has been repealed, although the regulations state that the DMCC Registrar may specify a minimum amount of share capital for a particular company.
Companies may now issue different classes of shares provided that the rights associated with each share class are stipulated in the articles of association, and may hold shares in treasury. The regulations also contain new rules around payment of dividends and unlawful distributions.
The regulations contain new provisions to make it easier to transfer company incorporation to the DMCC, as well as provisions around winding up. They also introduce the concept of dormancy, allowing companies to suspend a licence for up to 12 months or an extended period if approved by the Registrar.
The regulations further introduce detailed requirements around accounts, record-keeping and auditing. Auditors are required to be registered with the DMCCA as an approved auditor and follow International Accounting Standards (IAS) rules when preparing financial statements.
DMCC is a Dubai free zone focused on commodities trade and enterprise. Almost 2,000 new companies registered in the DMCC in 2019, according to official figures, taking the total number of companies registered in the free zone up to over 16,000.
DMCC executive director Ahmad Hamza said: “The new rules and regulations are indicative of our commitment to providing companies with a seamless ability to set up and grow their operations. We are confident that these enhancements will attract even more companies to do business in DMCC”.
According to DMCC figures, about seven new businesses are established in DMCC every day. The DMCCA is confident that, in addition to the location, infrastructure and service, this new legislation will also trigger an increase in a number of businesses incorporated in DMCC.
