SETTING UP YOUR BUSINESS IN DUBAI INTERNATIONAL FINANCIAL CENTRE (DIFC) – #2023 Update

Introduction

Are you a part of a financial entity, corporate setup, a professional service provider, or a retail business? Discover the myriad of prospects your business can tap into by setting up your business in Dubai International Financial (DIFC).

Situated as a central onshore financial hub between the East and West, DIFC acts as a secure and productive springboard for businesses and financial firms to penetrate into and emanate from the burgeoning markets of the region.

The Dubai International Financial Centre (DIFC) is among the more than 30 Free Zones in Dubai, purposefully positioned at the juncture of the East and West. It presents a secure and streamlined base for businesses and financial establishments to delve into and spread out from the emerging markets of the region. DIFC’s independent regulatory environment, Common Law framework, supportive infrastructure, and its tax-beneficial setup make it an ideal location to capitalise on the region’s escalating demand for business and financial services. A standout feature of the DIFC is its legal system, which is in line with English Common Law.

Setting up your business in Dubai International Financial Centre (DIFC) offers unique opportunities for growth and innovation. Recently, DIFC partnered with the Alternative Investment Management Association (AIMA), a global network of over 2,100 corporate members managing over $2.5 trillion in assets. This collaboration aims to attract high-performing hedge funds and alternative investment firms, fostering a robust and hyper-connected ecosystem for the alternative investment industry. The move marks a pivotal moment for Dubai and DIFC, further solidifying its status as a global financial hub.

Primary Sectors: DIFC accommodates a diverse range of financial and non-financial entities from all over the world. The business sectors within the Centre span banking, professional services, multinational corporations, insurance, wealth management, and capital market access.

Who should consider this: DIFC is particularly beneficial for professional and financial service companies, as well as a variety of business operations. It serves as a regional hub for several globally recognised banks, insurance companies, and law firms.

How to Setup a Business in DIFC?

Embarking on the journey of setting up a company in the Dubai International Financial Centre (DIFC) is a rewarding venture. DIFC, one of the world’s leading financial hubs, boasts zero tax for corporations, 100% foreign ownership, and a sophisticated regulatory framework. This pathway, however, requires traversing through a series of steps, which ADAM Global, an international leader in business services, can effectively streamline for you.

1. Define Your Business Activities: Before stepping into the process, be clear about your business activities. Your business operations should align with DIFC’s permitted activities for corporations.
2. Choose a Legal Structure: DIFC offers a variety of legal structures, such as Limited Liability Companies, Partnership Firms, and more. You must select the most suitable structure for your business.
3. Submit the Initial Application: The next step is to fill out and submit the initial application to the DIFC Registrar of Companies, along with a non-refundable application fee.
4. Prepare and Submit Legal Documentation: Depending on your chosen business structure, specific legal documents need to be prepared. These include the Articles of Association, a business plan, and relevant personal documents of the shareholders and directors.
5. Lease an Office Space: Companies registered in DIFC are required to lease a physical office within the Centre. The size and type of the office will depend on your company’s nature and size.
6. Pay Registration and License Fees: Upon approval of your documents, you will need to pay the registration and license fees to finally obtain your license.

ADAM Global’s wealth of experience spans across these multifaceted steps. We provide strategic planning, handle legal requirements, manage documentation, and deliver effective solutions that streamline your DIFC company setup experience.

To complement our services, we offer an array of resources through our Dubai Business Advisors blog. It hosts an extensive article detailing the DIFC company setup process, delving into each step and offering valuable tips. The blog stays updated with the latest developments, making it a treasure trove of information for prospective entrepreneurs looking to set up their business in DIFC.

Advantages of DIFC (Dubai International Financial Centre):

• World Class Regulatory Environment:
  • The Dubai Financial Services Authority (DFSA) acts as an independent risk-based regulator within DIFC.
  • DFSA grants licenses and regulates the activities of banking and financial institutions in DIFC.
  • DIFC offers a world-class regulatory environment for subsidiaries and incorporated entities.
  • 100% foreign ownership is allowed within DIFC.
  • Various options for structuring legal entities are available.
• Unique Legal Framework:
  • DIFC follows a legislative system based on English Common law.
  • DIFC has its own set of civil and commercial laws and regulations.
  • A comprehensive code of law governs financial services regulation in DIFC.
  • DIFC has established an independent judicial system, known as the DIFC Courts.
  • DIFC Courts have exclusive jurisdiction over civil and commercial disputes within DIFC.
• Independent Regulatory Environment:
  • The Dubai Financial Services Authority (DFSA) is an independent regulator.
  • DFSA grants licenses and regulates financial services activities in DIFC.
• Tax Efficiencies:
  • DIFC guarantees zero taxes on corporate income and profits for 40 years.
  • Double taxation avoidance treaties with regulators and central banks enhance tax benefits.
  • Access to the UAE’s wide network of double taxation treaties is possible.
• No Restriction On Capital Repatriation:
  • DIFC allows unrestricted repatriation of capital.
• Skilled Professionals:
  • Dubai and the UAE have a pool of skilled professionals in the financial sector.
• Transparent Operating Environment:
  • DIFC operates in a wholly transparent manner, adhering to global best practices and internationally accepted laws and regulations.
• International Stock Exchange:
  • DIFC hosts an international stock exchange with primary and secondary listings of debt and equity instruments.
• Hub & Spoke Model:
  • DIFC serves as a platform for businesses to centralize regional and global management of operations, facilitating expansion to branches worldwide.
• Modern Infrastructure:
  • DIFC benefits from modern transport, communications, and internet infrastructure.

Types of Licenses in DIFC:

• Professional services
• Regulated/non-regulated business
• Proprietary investment
• Holding/regional headquarters

Legal Entity Types in DIFC:

Under the Companies Law:

• Company limited by shares (LTD)
• Limited Liability Company (LLC)
• Branch of an existing foreign company (Branch of a Foreign Company)
• Representative Office of a pre-existing foreign company (Representative Office)
• Transfer of incorporation of an existing company from another jurisdiction (Continued Company)

Under the Limited Liability Partnership Law:

• Limited Liability Partnership (LLP)
• Branch of a pre-existing foreign Limited Liability Partnership (RLLP)

Under the General Partnership Law:

• General Partnership (GP)
• Branch of a pre-existing foreign general partnership (RP)

Under the Limited Partnership Law:

• Limited Partnership (LP)
• Branch of a pre-existing limited partnership (RLP)
• Transfer of an existing limited partnership from another jurisdiction (Continued Limited Partnership/Foreign Limited Partnership)

Documents Required for Setting up Your Business In Dubai International Financial Centre (DIFC)

• Detailed business plan
• Details of key controllers, major shareholders having above 5% shares and key staff certificate confirming the company’s ability to conduct business
• Proposed applicants’ organizational chart
• Detailed information on operating systems and controls
• Company processes on internal audits and compliance systems
• Audited account report for shareholders of the last 3 years
• Anti-money laundering completed application form
• If the applicant is a branch, company financial position and regulatory history profile

Setting Up A Financial Business in the DIFC

With an ever-adapting financial regulatory infrastructure in place, the DIFC largely comprises regulated corporations. Any company looking to establish a foothold in DIFC is obligated to present an application to DIFC’s regulatory authority, the DFSA. This authority will assess the viability and appropriateness of the applicant, as well as the specific license category being applied for.

The early stages of the registration procedure involve an initial meeting with the DIFC and DFSA, and the submission of a Letter of Intent (LOI) to the DIFC. After the DFSA has performed a preliminary review of the submission, the applicant can proceed to file the comprehensive application, which includes a Regulatory Business Plan. The DFSA then initiates a preliminary examination of the application materials to ensure they are well-prepared, followed by a detailed due diligence process. It also engages in an ongoing communication process with the applicant.

Upon receipt of the In-Principal Approval, it becomes incumbent upon the applicant to undertake the following tasks:

• Execute the formation or registration of the proposed organization with the DIFC Registrar of Companies (ROC).
• Initiate and furnish proof of the establishment of a local bank account, corroborated by evidence of capital remittance to the DFSA.
• Present substantiation of an operational office locale from where financial activities will be managed.

Upon satisfactory completion of these prerequisites, the DFSA awards the applicant with the appropriate license. The application procedures, prerequisites, and conditions may fluctuate based on the specific category of the regulated body in question.

All matters pertaining to authorisation, which encompass applications for initial licensing, scope modifications (extensions or reductions) of a license, or the designation of authorised personnel, are meticulously outlined in the General Module and the Conduct of Business Module of the DFSA. The license’s category and breadth are tailored according to the range of financial services that the regulated organization is sanctioned to provide.

The following Financial Businesses can be established within the DIFC:

• Fintech
• Traditional Banking
• Private Banking
• Investment Banking
• Brokerage Services
• Capital Markets
• Innovative Financial Services
• Asset Management
• Fund Management
• Wealth Management
• Private Equity
• Insurance, Reinsurance, and Captive Insurance

Establishing a Non-Financial Business in the DIFC

The DIFC is not solely about financial and banking affairs, even though they form the central part of its activities. The most accomplished financial business ecosystems worldwide incorporate a far-reaching spectrum of economic undertakings. Among these are professional services companies regulated in areas like law and accounting, in addition to a vast array of non-financial and non-regulated ventures.

These businesses that offer non-financial products and services play a dual critical role. On one hand, they supply financial firms with an array of products and services necessary for smooth and effective operations. This could include consultancy in investor relations and human resources, as well as services like printing, couriering, and legal translations.

On the other hand, these businesses contribute to an environment of leisure and lifestyle that modern finance professionals anticipate from premier global financial hubs. At any time of day, these professionals demand diverse goods and services. These range from personal services like tailoring, beauty salons, and fitness centers; retail outlets offering jewelry, electronics, and clothing; to a broad selection of dining options. Beyond these, non-financial activities also include specialized institutions such as hotels and educational facilities, further expanding the array of opportunities available to professionals at DIFC.

Here are the list of non-financial businesses that can be established in the DIFC:

• Corporate Headquarters
• Professional Service Agencies
• Retail and Convenience Stores
• Eateries and Cafes
• Prescribed Corporations (These are public companies that are planning or currently conducting authorized business. DIFC provides a suitable business framework for these entities, aligned with global best practices.)
• Art Galleries

FAQs ON SETTING UP YOUR BUSINESS IN DUBAI INTERNATIONAL FINANCIAL CENTRE (DIFC)

WHY CHOOSE ADAM GLOBAL BUSINESS ADVISORY FOR BUSINESS SETUP IN DIFC?

Choosing Adam Global Advisory for your business setup in Dubai International Financial Centre (DIFC) is a decision that promises comprehensive, efficient, and seamless support. With a profound understanding of the DIFC’s regulatory framework and strategic positioning, our team is adept at providing expert guidance tailored to your specific business needs. Whether you’re launching a startup or expanding an existing business, our advisors offer a blend of local expertise and global perspective, aiming to optimize your operational efficiency and profitability.

In terms of assistance, our scope of services encompasses every aspect of DIFC business setup. We initiate the process by comprehending your business model and goals, which helps us to recommend the most suitable license type, company structure, and facility options. Once the foundation is laid, our team assists you through the application process, ensuring that all documentation and requirements are accurately completed. Additionally, we provide support for visa applications, bank account setup, and compliance with all DIFC regulations. By entrusting your DIFC business setup to Adam Global Advisory, you can focus on your core business while we handle the intricate details of your company formation.