A Prescribed Company (“PresCo”) is a simplified DIFC company designed to hold assets, such as shares, investments and intellectual property, rather than carry on an active commercial business.
The Dubai International Financial Centre (the “DIFC”) has introduced significant amendments to its PresCo Regulations, making PresCos available to a much broader range of individuals, family offices and businesses. The amendments also introduce mandatory Corporate Service Provider (“CSP”) oversight for most PresCos, strengthen governance and regulatory compliance.
The amendments remove the previous eligibility requirements and establish the Dubai Financial Services Authority (“DFSA“)-licensed CSPs as the primary administrative and compliance interface with the DIFC Registrar of Companies.For many clients, these amendments create new opportunities to simplify holding structures within the DIFC.
What Has Changed?
| Key requirement | Previous position | New position |
|---|---|---|
| Eligibility requirements for establishing a PresCo | A PresCo had to satisfy specified ownership or control[1], purpose, or particulars of the statutory directors requirements[2] | Any person may apply to establish a PresCo, subject to the requirement to appoint a DFSA-licensed CSP (unless exempt) |
| Appointment of a CSP | The appointment of DFSA-licensed CSP to administer the PresCo was optional | Unless an exemption applies, every PresCo must appoint a DFSA-licensed CSP. Existing non-exempt PresCos have six months from the effective date of the Regulations to comply. |
| Registered office of the PresCo | A PresCo could generally use either the registered office of an eligible affiliate[3] or, where appointed, its CSP. | Non-exempt PresCos must use the registered office of their appointed CSP. Exempt PresCos may instead use the registered office of an eligible affiliate. |
[1] For purposes of this alert, control broadly means the direct or indirect power, through shareholding, voting rights or constitutional arrangements, to ensure that an entity’s affairs are conducted in accordance with a person’s wishes.
[2] The requirement concerned the appointment of a director who is an employee of a qualifying CSP. A qualifying CSP refers to a CSP that has entered into an arrangement with the Registrar under Regulation 3.3.2 of the DIFC Prescribed Company Regulations, enabling it to perform specified incorporation-related filings, assessments, checks and verifications on behalf of the Registrar.
[3] An affiliate is a legal entity under the same control as the PresCo. For registered-office purposes, the affiliate must have a registered office in the DIFC that is not used as retail premises.
A PresCo is exempt from the mandatory CSP requirement where it is controlled by:
- an eligible DIFC-registered entity, excluding a variable capital company, non-profit incorporated organisation, Foundation or another PresCo;
- a financial services firm licensed by the DFSA or another recognised financial services regulator;
- a company listed on a recognised securities exchange; or
- a qualifying government entity.
Ownership by a DIFC Foundation alone does not qualify for the exemption.
What Has Not Changed?
The amendments do not change the fundamental purposes of a PresCo. They continue to:
- operate as passive holding vehicles;
- be prohibited from employing staff or engaging other workers;
- be prohibited from conducting regulated financial services unless appropriately authorised; and
- benefit from no requirement to lease office premises, although they must maintain a registered office in the DIFC.
Why It Matters?
- Broader accessibility: Full removal of previous DIFC, UAE or GCC nexus and qualifying-purpose requirements.
- Greater flexibility: PresCos are now available to a wider range of investors, family structures and corporate groups.
- Mandatory oversight: Most existing and new PresCos must appoint a DFSA-licensed CSP.
- Transition requirement: Existing PresCos should review their current arrangements now to ensure they comply before the end of the six-month transition period.
- Consequences of non-compliance: Failure to appoint a CSP may result in regulatory action, including financial penalties and the loss of PresCo status.
What We Say
The amendments significantly increase the flexibility and accessibility of the PresCo regime while maintaining appropriate regulatory safeguards. We expect the changes to make PresCos an increasingly attractive option for family offices, investment holding structures and corporate groups. Requiring most PresCos to appoint a DFSA-licensed CSP should improve regulatory engagement, enhance ongoing compliance and simplify interaction with the Registrar.
Existing M/HQ clients, whose PresCos are administered by M/HQ, are well positioned. In most cases, no action will be required.
From a UAE Corporate Tax perspective, a PresCo wholly owned and controlled by one or more tax transparent UAE “Family Foundations” may elect to be treated as part of the relevant Family Foundation structure. Where approved, the PresCo would not be treated as a separate taxable person for UAE Corporate Tax purposes.
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We assist in establishing and service regulated financial institutions on one hand – and multi-/single- family offices, sophisticated investment structures, group-/family- holdings, foundations on the other hand.
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