The Dubai Creative Clusters (DCC) Authority has recently issued the Private Companies Regulations 2016 (Regulations). The Regulations apply to companies registered in the DCC and came into force on 1 February 2017. The Regulations repeal and replace the Dubai Technology and Media Free Zone Private Companies Regulations 2003.
- Shareholder increase – A company incorporated in the DCC may now be incorporated by up to 75 persons (previous maximum was 50).
- Constitution - New standard articles of association are to be issued, combining the previous memorandum and articles into a single constitutional document.
- Registration - The Registrar of Companies is to maintain a register of companies, containing details of all DCC companies. The Regulations envisage that, in due course, this register may be accessible to the public and certain information may be made available online.
- Non-cash consideration for share issues - The Regulations include a new process to allow shares to be issued for non-cash consideration.
- Changes to share capital - More detailed provisions are included on changes to share capital, including new provisions to allow share buy-backs and treasury shares, and more detailed provisions in relation to dividends and distributions. The Regulations allow shares to be issued at a premium and contain provisions addressing how a premium is to be applied.
- Pledges - New provisions are included on share pledges, including registration, perfection, priority and release. The Registrar will maintain a Security Register, which may be made available to "interested persons". The parties may agree in the pledge instrument to submit to the jurisdiction of the DIFC courts (rather than the onshore Dubai Courts). These are helpful provisions for groups with DCC private company subsidiaries, enabling their shares to be included in financial security arrangements.
- Corporate governance - Clearer, modernised provisions are included in relation to company management and administration, including allowing for participation in both board and shareholding meetings by conference call. The Regulations also address the role and responsibilities of the General Manager.
- Branch offices - The Regulations consolidate previous regulations on the operation in the DCC of companies incorporated outside the DCC.
- Continuation of incorporation – The Regulations contain provisions which permit companies to move their place of incorporation into and out of the DCC.
- Future flexibility in form – The DCC Authority is now able to prescribe different types of company in addition to the FZ-LLC. This allows flexibility to respond to future market demand.
Existing companies have until 1 February 2018 to adjust their positions in line with the Regulations. Before this date, each DCC company will need to consider whether it needs to adjust its Memorandum and Articles of Association to comply with any mandatory requirements in the Regulations. DCC companies may also want to take advantage of some of the new non-mandatory provisions.
In addition to the implementation of the Regulations in the DCC, the Jebel Ali Free Zone Authority recently adopted new companies regulations. A trend seems to be emerging, and it will be interesting to see whether other free zones in Dubai (and across the UAE) take similar steps to modernise their regulations.