The Dubai International Financial Centre (DIFC) has long been recognized as a premier jurisdiction for financial services and corporate structuring in the Middle East. In recent years, the DIFC has introduced the Prescribed Company (PC) regime, offering a flexible and cost-effective corporate vehicle for various structuring needs. This article provides an in-depth analysis of the DIFC Prescribed Company, its benefits, eligibility criteria, and practical applications.
Understanding the DIFC Prescribed Company
A DIFC Prescribed Company is a private company limited by shares, established under the DIFC Prescribed Company Regulations. It is designed to facilitate specific structuring purposes, offering reduced regulatory requirements and lower operational costs compared to standard DIFC companies. The PC regime consolidates and replaces the previous Special Purpose Company (SPC) and Intermediate Special Purpose Vehicle (ISPV) frameworks, providing a more streamlined and accessible option for investors and corporate entities.
Key Features and Benefits
Cost Efficiency
One of the primary advantages of establishing a DIFC Prescribed Company is the significant cost savings. The incorporation fee is set at USD 100, with an annual license fee of USD 1,000. Additionally, if applicable, a data protection fee of USD 750 may be incurred. These fees are substantially lower than those associated with standard DIFC entities, making PCs an attractive option for cost-conscious investors.
Simplified Compliance
DIFC Prescribed Companies benefit from a streamlined compliance framework. Notably, PCs can utilize the registered office of their Qualifying Applicant or a Corporate Service Provider (CSP), eliminating the need for dedicated office space. This flexibility reduces administrative burdens and operational costs.
Operational Flexibility
While PCs are primarily intended for passive holding activities or specific qualifying purposes, the DIFC has introduced the Active Enterprise Commercial Package. Under this package, PCs are permitted to have employees and engage in certain operational activities, such as managing offices and proprietary investments. This development enhances the versatility of PCs, allowing them to accommodate a broader range of business needs.
Eligibility Criteria
To establish a DIFC Prescribed Company, applicants must meet specific eligibility criteria. These criteria have been expanded under the 2024 regulations to accommodate a wider range of applicants
Control by Qualifying Applicants
A PC can be established if it is controlled by one or more of the following entities:
- GCC citizens or entities controlled by GCC citizens
- Authorised Firms
- DIFC Registered Persons (excluding PCs and Non-Profit Incorporated Organisations)
Control is defined as the power to direct the company’s affairs through shareholding, voting rights, or other means.
Purpose-Based Establishment
Alternatively, a PC can be established for a Qualifying Purpose, such as:
- Holding legal title to or controlling GCC Registrable Assets
- Structured Financing
- Aviation Structures
- Crowdfunding Structures
Appointment of CSP Director
A PC can also be established by any person, provided that:
- A director who is an employee of a DFSA-registered Corporate Service Provider is appointed
- The CSP has an arrangement with the DIFC Registrar to perform compliance and anti-money laundering functions
This provision opens the PC regime to a global base of applicants while maintaining regulatory oversight.
Practical Applications
DIFC Prescribed Companies are versatile vehicles suitable for various structuring needs:
Holding Companies
PCs can serve as holding entities for assets such as real estate, shares, or intellectual property, providing a centralized structure for asset management.
Structured Finance
They are ideal for structured financing arrangements, including securitizations, collateralized debt obligations, and other complex financial transactions.
Family Offices
Family-owned businesses can use PCs to consolidate holdings, facilitate succession planning, and manage investments within a regulated framework.
Investment Platforms
PCs can act as vehicles for crowdfunding initiatives or other investment platforms, offering a regulated environment for investor participation.
Recent Regulatory Updates
As of July 15, 2024, the DIFC enacted significant amendments to the Prescribed Company Regulations:
- Expansion of Eligibility: The regime now accommodates a broader range of applicants, including global entities appointing CSP directors.
- Introduction of Commercial Packages: The Active Enterprise Commercial Package allows PCs to have employees and engage in specific operational activities, such as managing offices and proprietary investments.
- Transitional Arrangements: Existing PCs that no longer meet the updated criteria can benefit from continued licensing benefits akin to the previous regime for a transitional period.
Establishment Process
To set up a DIFC Prescribed Company, the following steps are typically involved:
- Determine Eligibility: Assess whether the intended structure meets the criteria for a PC.
- Prepare Documentation: Draft the necessary incorporation documents, including the Articles of Association.
- Appoint a CSP (if required): Engage a Corporate Service Provider for compliance and administrative support.
- Submit Application: File the application with the DIFC Registrar of Companies, along with the applicable fees.
- Obtain License: Upon approval, receive the commercial license to commence operations.
Conclusion
The DIFC Prescribed Company regime stands as a robust, cost-effective, and flexible tool for international investors, family offices, and businesses seeking efficient structuring options in the UAE. With its favorable regulatory treatment, minimal compliance burden, and broadened eligibility rules, the DIFC Prescribed Company is poised to remain a preferred vehicle for asset holding and financing structures well into 2025 and beyond.
For investors considering establishing a foothold in the Middle East, or structuring their international portfolios with confidentiality and tax neutrality, the DIFC Prescribed Company offers an unparalleled blend of legitimacy and convenience.
Whether you are looking to consolidate family holdings, launch a cross-border investment platform, or establish a special purpose vehicle, this corporate structure meets a wide variety of needs while aligning with internationally recognized legal and regulatory standards.
FAQs
How much does it cost to set up a DIFC Prescribed Company?
The incorporation cost for a DIFC Prescribed Company is significantly lower than traditional DIFC entities. As of 2025, the one-time incorporation fee is USD 100, with an annual license renewal fee of USD 1,000. There may be additional fees, such as a data protection fee of USD 750 if applicable.
Is a DIFC Prescribed Company suitable for holding real estate assets?
Yes, a DIFC Prescribed Company can be used to hold legal title to real estate and other registrable assets within the GCC, provided the structure complies with the regulatory framework and is established for a qualifying purpose.
What are the tax benefits of a DIFC Prescribed Company?
DIFC Prescribed Companies benefit from the DIFC’s qualifying free zone person tax regime.
Can a DIFC Prescribed Company open a bank account in the UAE?
Yes, a DIFC Prescribed Company can open a bank account in the UAE.
What’s the difference between a DIFC Prescribed Company and a Special Purpose Company (SPC)?
The DIFC Prescribed Company regime replaces and expands upon the older SPC and ISPV frameworks. It offers broader eligibility, increased flexibility, and improved cost-efficiency while serving similar purposes such as structured finance, asset holding, and securitization.
Can foreign investors own 100% of a DIFC Prescribed Company?
Yes, foreign investors can own 100% of a DIFC Prescribed Company, especially when a corporate service provider (CSP) director is appointed under the regime’s third eligibility pathway, ensuring compliance with local regulatory standards.
