Embark on a realm of possibilities through DIFC company formation. Delve into our expert insights as Adam Global navigates you through this transformative journey, securing your business’s triumph within the Dubai International Financial Centre.
Dubai International Financial Centre (DIFC) is Dubai’s only independent financial free zone covering 110 –acre located centrally in the heart of Dubai and strategically placed between new and old Dubai, providing a steady and secure platform for businesses and monetary organizations to tap into the emerging markets of the Middle East, Africa and South Asia region. DIFC is a well regulated hub for investment firms, and other financial institutions that wish to take advantage of the wealth of opportunities in the region by providing full banking services including deposit taking and provision of credit, as well as providing services in respect of underwriting, mergers, acquisitions, venture capital /private equity, brokerage, trade finance, asset management, capital market and Islamic finance operations. The Centre provides depth to the regional financial markets by broadening the range of financing options available in the region and attracting liquidity into investment opportunities.
Dubai International Financial Centre (DIFC) was established in accordance with United Arab Emirates (UAE) Federal Decree No. 35 of 2004, as a part of Dubai’s strategic vision to expand its financial assets and attract capital and investments in the region. Since then Dubai International Financial Centre (DIFC) has grown to be the top 10 Global Financial Centre and a leading International Financial Hub in the Middle East, Africa and South Asia region.
Dubai International Financial Centre (DIFC) is popular for creating its own legal and regulatory framework for all civil and commercial matters. This framework is embedded in the UAE’s constitution and the country’s laws, both at Federal and Dubai levels, permitting the DIFC to have its own civil and commercial legal framework, inclusive of financial services regulation and a courts system modeled closely on international standards and principles of common law and tailored to the region’s unique needs.
In 2022, Dubai’s DIFC achieved a remarkable milestone by registering its highest revenue in history. This achievement underscores the robust growth and potential of the Dubai International Financial Centre as a prime destination for businesses. The substantial revenue increase reflects the favorable business environment, regulatory reforms, and strategic initiatives within the DIFC. This positive trajectory further reinforces its appeal for companies seeking a dynamic and prosperous business hub.
Further, to support the growth and development of businesses in the Centre, the following three independent bodies have been established:
- Dubai International Financial Centre Authority (DIFC): DIFC Authority was established by virtue of Dubai Law No. 9 of 2004, as amended. DIFC Authority is responsible to administer the strategic development, operational management and planning of Dubai International Financial Centre. It is also responsible for the development and administration of laws and regulations other than those related to the financial services firms.
- Dubai Financial Services Authority (DFSA): The DFSA was created under Dubai Law No. 9 of 2004, as amended. DFSA is an independent regulator of financial and related services conducted in or from the Centre. The DFSA also supervises regulated companies and monitors their compliance with the relevant laws and regulations. The DFSA’s powers as a regulator are granted to it under the provisions of the Regulatory Law, DIFC Law No. 1 of 2004. Consequently, the DFSA is authorized to make rules that enable it to swiftly respond to market developments and business needs. It is responsible for:
- Authorizing, licensing and registering financial services and related activities;
- Regulating these financial services and related activities; and
- Supervising market activities.
- Dispute Resolution Authority (DRA): Operating within a common law framework to ensure the highest international standards of legal procedure and dispute resolution. Originally formed in 2014, the DRA administers justice and legal excellence within the DIFC.
The DRA currently incorporates four divisions:
- DIFC Courts: Dubai’s established English-language, commercial common law judicial system.
- DIFC Wills and Probate Registry: The first Common Law, English language wills and probate service for non-Muslims in the Middle East.
- DIFC Academy of Law: An independent entity that provides excellent legal education and support to the UAE legal community.
- Dubai International Arbitration Centre (DIAC): offers a high caliber of arbitration services and facilities on an international scale.
Benefits of DIFC company formation:
- 100% Foreign Ownership – In DIFC, expatriates, corporates (local and international), Foundations and Trust enjoy 100% ownership.
- 100% Capital Repatriation – Companies can repatriate capitals and profits without any restrictions or penalties or locking periods.
- Common Law Framework – DIFC is an independent jurisdiction unlike any other with its own courts adopted as per the Common Law Judicial Systems.
- 0% Tax on corporate income & profits – The companies in the free zone enjoy no taxation of any sort for the next 34 years, guaranteed.
- 0% Tax on personal income – People working in the free zone enjoy tax free income locally.
- Independent Risk Based Regulator Environment – The DFSA adheres to the highest standards in place in the industry and offers sophistication, comfort and trust to the companies and individuals working with DIFC Companies.
Types of Companies in DIFC
- Authorized Firms
- Authorized Market Institution
- Designated Non-Financial Business or Profession
- Registered Auditors
- Non-Regulated Entities
- Exempt Companies
- Authorized Firms
A person or institution willing to carry out any financial services in or from the DIFC must be licensed and authorized by the Dubai Financial Services Authority (DFSA) as an Authorized Firm.
The primary areas of financial activities that an Authorized Firm can carry out, in and from the DIFC, include banking services, asset management, fund registration, Islamic finance, reinsurance, captive reinsurance and capital markets. All authorization matters in respect of an Authorized Firm, which includes the application for initial license, extension or reduction to the scope of a license and an appointment of authorized individuals, are set out in the DFSA’s General Module and the Conduct of Business Module.
Authorized Firms are categorized into 5 categories depending on the type of activities that the Firm will be undertaking.
The 5 categories of Authorized Firms in the DIFC
| CATEGORY 1 | CATEGORY 2 | CATEGORY 3 | CATEGORY 4 | CATEGORY 5 | ||
| 3A | 3B | 3C | ||||
| Accepting Deposits | Dealing in Investments as Principal (not as Matched Principal) | Dealing in Investments as Principal (only as a Matched Principal) | Providing Custody (only if for a fund) | Managing a Collective Investment Fund | Arranging Deals in Investments | An Islamic Financial Institution which Manages a PSIAu |
| Managing a PSIAu | Providing Credit | Dealing as Agent | Acting as the Trustee of a Fund | Managing Assets | Advising on Financial Products | |
| Providing Trust Services as a trustee of an express trust | Arranging Custody | |||||
| Managing a PSIAr | Insurance Intermediation | |||||
| Providing Custody (other than for a Fund) | Insurance Management | |||||
| Operating an Alternative Trading System | ||||||
| Providing Fund Administration | ||||||
| Providing Trust Services other than as a trustee of an express Trust | ||||||
| Arranging Credit and Advising on Credit | ||||||
| Operating a Crowd funding Platform |
NOTE: Above table is for guidance purposes only, in order to determine the category of license, it is important to have a clear understanding of the scope of the financial activities, detailed in each category.
- Authorized Market Institution
These are entities that are authorized to operate an exchange and/or clearing house in or from the DIFC. Authorized Firms cannot be licensed to operate such businesses, despite the fact that they are defined as Financial Services.
An applicant who intends to carry on either or both of the financial services of operating an exchange or operating a clearing house must seek authorization from the DFSA. The DFSA will only consider an application for a license from an applicant who is a body corporate and who is not an Authorized Firm or an applicant to be an Authorized Firm.
- Designated Non-Financial Business or Profession (DNFBP)
Designated non-financial business or professional services can only be carried out in or from the DIFC by persons or institutions that are registered and authorized by the DFSA as a Designated Non-Financial Business or Profession (DNFBP). A firm providing DNFBP services must be a body corporate or a partnership.
A DNFBP can be formed either inside the DIFC via the Companies Law, Limited Liability Partnership Law or General Partnership Law, or alternatively, outside the DIFC but having a branch office in the DIFC that is registered with the DIFC Registrar of Companies.
In carrying out its services, a DNFBP is subject to the rules which are set out in the DFSA AML Module.
NOTE: A DNFBP may not carry on any Financial Service in the DIFC unless it is also licensed as an Authorized Firm, and the DFSA will take action against any violations of this restriction.
The following class of persons whose business or profession is carried on in or from the DIFC is a DNFBP:
- Real estate developers and agents that carry out transactions with a customer involving the buying or selling of real property;
- Dealers in precious metals and dealers in precious stones;
- Dealers in any saleable item of a price equal to or greater than USD $15,000 high-value goods; • Law firms, notary firms and other independent legal businesses;
- Accounting firms, audit firms or insolvency firms;
- Company service providers that carry out any of the following activities for a customer:
- acting as a formation agent of legal persons;
- acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;
- Providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;
- acting as (or arranging for another person to act as) a nominee shareholder for another person; or
- Single Family Offices.
Registered Auditors
The role and duty of a Registered Auditor is intended to enhance investor confidence, ensuring the financial statements in the DIFC comply with the required financial reporting standards and give a true and fair view of the financial position of the entity being audited.
Public Listed Companies, Domestic Authorized Firms, Authorized Market Institutions and Domestic Funds are required to appoint an auditor which is registered with the DFSA.
- Non-Regulated Entities
Non-regulated entities do not offer Financial Services and thus fall outside the scope of the DFSA Rules and Regulations. Non-regulated entities include companies or partnerships that provide outsourcing or business processing activities for the DIFC and the regulated community. Such entities normally include those which are set up to monitor, regulate and provide support to other businesses in terms of back office administrative operations. Other types of non-regulated entities in the DIFC include restaurants and recruitment agencies.
- Special Purpose Companies
Special Purpose Companies (SPC) are non-regulated companies carrying out a specific activity, that is, acting as a Special Purpose Vehicle (SPV). Accordingly, SPCs do not undertake any Financial Services, and only undertake Exempt Activities as defined in the DIFC’s Special Purpose Companies Regulations.
If an SPC carries out any activities other than Exempt Activities, the Registrar of Companies (ROC) is entitled to revoke the status of the company as an SPC following which the company will be subject to all provisions of the Laws.
DNFPBs and AML in UAE
Designated non-financial businesses and professions (DNFPBs) are businesses and professions that are subject to high risk of money laundering and terrorism financing, due to the nature of goods or services they provide. In the UAE, DNFPBs are regulated by the Anti-Money Laundering and Counter-Terrorism Financing Department (AML/CFT) of the Ministry of Economy.
The AML/CFT Department has issued a number of guidelines for DNFPBs, which set out the requirements for compliance with AML/CFT regulations. These requirements include:
- Customer due diligence (CDD): DNFPBs must identify and verify the identity of their customers, and understand the purpose and nature of the business relationship.
- Suspicious transaction reporting (STR): DNFPBs must report any suspicious transactions to the AML/CFT Department.
- Record-keeping: DNFPBs must keep records of all transactions and customer information for a period of five years.
DNFPBs that fail to comply with AML/CFT regulations may be subject to a number of sanctions, including fines, imprisonment, and the loss of their license to operate.
The following are some examples of DNFPBs in the UAE:
- Accountancy firms
- Lawyers and law firms
- Estate agents
- Trust and company service providers
- Casinos and gaming establishments
- Dealers in precious metals and stones
- Real estate brokers
- Money remitters
It is important for DNFPBs to be aware of their AML/CFT obligations and to take steps to comply with these regulations.
Setting up a Regulated Entity in the DIFC
An Applicant interested in setting up operations in DIFC are required to submit an application to DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant and category of license for which the application is made.
Once the DFSA has informally reviewed the submission, the applicant can lodge the full application, including a Regulatory Business Plan. DFSA will conduct an initial review of the application documents to ensure they are in good order and will then undertake its own due diligence and enter into an ongoing dialogue with the application.
Following the issuance of the In-Principal Approval, the applicant is required to attend to the following:
- Incorporation or registration of the entity with the DIFC Registrar of Companies (ROC)
- Opening a local bank account and providing the DFSA with proof of remittance of capital
- Evidence of office space from which it will conduct its financial activities.
Once the conditions are fulfilled, the DFSA grants a license to the applicant. Conditions and requirements for application processes vary according to the type of regulated entity.
DFSA, DIFC Application Fees & Capital Requirements
| DFSA Category | Activity | DFSA Application fee per activity | DFSA Annual Renewal fee per activity | DFSA Base Capital Requirement | DIFC Registration (one-time fee) Commercial License Fee | Commercial License Fee (annual recurring fee) | Data Protection Fee |
| Rep Office | Financial Promotion | $4,000 | $4,000 | $2,000 | $4,000 | $1,000 | |
| Cat 4 | Advising & Arranging | $15,000 | $15,000 | $10,000 | $8,000 | $12,000 | $1,000 |
| Cat 3C | Managing Assets | $25,000 | $25,000 | $500,000 | $8,000 | $12,000 | $1,000 |
| Cat 3C (startup) | Managing a CIF – QIF | $5,000 | $5,000 | $70,000 | $8,000 | $12,000 | $1,000 |
| Cat 3C (startup) | Managing a CIF – Exempt | $10,000 | $10,000 | $70,000 | $8,000 | $12,000 | $1,000 |
| Cat 3C (startup) | Managing a CIF – Public | $10,000 | $10,000 | $140,000 | $8,000 | $12,000 | $1,000 |
| Cat 3A | Dealing as Agent | $25,000 | $25,000 | $500,000 | $8,000 | $12,000 | $1,000 |
DIFC Licensed Functions
DIFC-registered entities are required to have a physical presence within the DIFC and must appoint Authorized Individuals to cover the following licensed functions, some of which may be combined:
- Senior Executive Officer (SEO)
- Chief Financial Officer (CFO)
- Compliance Officer (CO)
- Money Laundering Reporting Officer (MLRO)
- Company Secretary
- Risk
Setting up a Non- Regulated Entity in the DIFC
DIFC strives to provide a smooth process when establishing a Non-DFSA (Dubai Financial Services Authority) regulated business. An Applicant interested in setting up Non-DFSA regulated business in DIFC are required to submit an application for Company Registration & Audited Financial Statement for the Last 2 Years to Registration Review Committee (RRC) for Provisional approval.
The decision is made after evaluating a number of criteria which include:
- Reputability
- Centre/Cluster Building
- Financial wherewithal
- Business Risk
- Employee Suitability
- Business Implementation
- Contribution to Dubai GDP
Upon receiving the approval of the application by the DIFC Registration Review Committee (RRC), the formal Provisional Approval will be forwarded to the applicant in order to complete the DIFC Registrar of Companies (ROC) requirements. The ROC then reviews the application documents, and if the documentation is complete, the relevant Certificate of Incorporation, Registration or Continuation will be issued to the applicant, along with its non-regulatory Commercial License.
DIFC Application Fees & Capital Requirements
The fee for Application for Registration/ Incorporation of company in the DIFC: $8,000
Annual commercial license fee: $12,000
Filing of Confirmation Statement: $300
Data Protection Fee: $500
For retail outlets, the application fee for incorporation or registration is US $3,400 and the annual commercial license fee is US $5,100.
Please note that the fees may be different depending on the type of legal entity to be incorporated or registered.
Timeframe in DIFC company formation
Regulated Entity – On an average it takes between 6 to 8 months
Non- Regulated Entity – On an average it takes between 1 to 2 months
To know of the activities and latest updates on DIFC company Formation click here
Why Choose Adam Global for DIFC Company Formation in Dubai
With a wealth of experience spanning back to 2002, Adam Global has emerged as a stalwart in the field of business advisory, offering comprehensive services that extend far beyond mere consultation. When it comes to Dubai International Financial Centre (DIFC) company formation, our expertise shines through in every step of the process.
Navigating the intricate landscape of DIFC company formation requires a partner that not only understands the intricacies of the process but also stays updated with the ever-evolving regulatory framework. Adam Global takes pride in supporting Anti-Money Laundering (AML) regulations, a pivotal aspect of modern business operations. Our team ensures that your company formation aligns seamlessly with AML compliance, providing a solid foundation for your business’s ethical and lawful practices.
Our commitment goes beyond paperwork and compliance; we are dedicated to facilitating a holistic business setup experience. From the initial stages of brainstorming and strategizing to the final steps of execution, Adam Global acts as your guiding beacon. Our expertise doesn’t stop at DIFC company formation; we provide a comprehensive suite of services, including PRO services that streamline government interactions and approvals, ensuring your company remains on the right track from the very beginning.
Financial matters are the bedrock of any business, and our financial advisory services are tailored to ensure that your accounting, auditing, and financial planning needs are met with precision and accuracy. We understand the significance of sound financial management, and our experienced professionals work hand in hand with you to manage your resources efficiently.
In a competitive market, protecting your brand is paramount. Our services extend to trademark registrations, ensuring that your business identity is safeguarded against potential threats. We recognize the significance of intellectual property in modern business, and our experts guide you through the intricacies of trademark registration.
Beyond these key services, Adam Global encompasses a world of knowledge and expertise. Our vast network of professionals, each a specialist in their field, ensures that your journey through DIFC company formation is as smooth and efficient as possible. We take pride in our ability to simplify complex processes, offering clarity and confidence at every stage.
In conclusion, Adam Global’s journey since 2002 is a testament to our dedication to empowering businesses. Our role in DIFC company formation extends beyond consultancy; it’s a partnership built on trust and expertise. From adhering to AML regulations and navigating the business setup landscape to offering financial advisory, trademark registrations, and more, we stand by you as your comprehensive business advisory partner. Your success is our success, and we are here to guide you towards a thriving business journey within DIFC and beyond.
You can directly get in touch with us on the below details Email: info@dubaibusinessadvisors.com Mobile : +971 56 501 4164
