The Dubai Multi Commodities Centre (DMCC) Authority has issued a new set of Companies Regulations 2020, updating the DMCC company law framework in accordance with international best practice. This briefing outlines some of the key changes that will apply to all companies operating in the DMCC.
Key changes resulting from the Companies Regulations 2020 (the Regulations) are as follows:
Articles of association: companies will have the flexibility to adopt template Articles prescribed by the DMCC Authority, amend clauses within the template DMCC Articles, or adopt their own Articles entirely. If the standard Articles are not adopted, the company must provide the DMCC Registrar with a legal opinion confirming compliance with the Regulations.
Shares: the previous minimum share capital requirement of AED 50,000 has been removed, although the DMCC Registrar may still specify a minimum amount of share capital for companies. DMCC companies may now issue different classes of shares, and may hold shares in treasury.
Corporate officers: there are new provisions expressly dealing with the appointment of the Company's manager, and his/her functions. There is a new, broader prohibition on financial assistance to directors. New Officer Rules have also been published, describing in detail the role and duties of DMCC company directors, managers and secretaries.
Accounts and compliance: there are much more detailed provisions on company accounts and auditors. Companies must prepare annual audited accounts in accordance with IAS. Auditors of DMCC companies must be approved and registered with the DMCC Authority. Companies and auditors are subject to new obligations to disclose any breaches of the Regulations or of other applicable laws, and companies must establish and implement appropriate systems and internal procedures to enable compliance.
Dividends: there are more onerous provisions in relation to dividends, including specific provisions to address the consequences of an unlawful distribution.
Dormancy: a dormant company status has been introduced, to enable the voluntary suspension of a commercial licence.
Winding-up and insolvency: the Regulations include new provisions on the winding-up and insolvency of DMCC companies. However, the provisions of the UAE Federal Bankruptcy Law 2016 relating to the bankruptcy of companies generally are also stated to apply, and it is not clear how the two regimes will interact in practice.