DMCC Proposed Company Regulations
Consultation Paper, December 2018
Background to the Proposed Regulations
The Dubai Multi Commodities Centre Authority (DMCC) is proposing to amend and replace the current Company Regulations No. 1/03 (the Current Regulations) with a draft new set of regulations to introduce the following:
- greater flexibility for free zone members, and other persons who wish to conduct business in the Dubai Multi Commodities Centre (DMCC)
- clearer guidance on the steps involved in winding up a company and the obligations that the officeholders of a company are required to fulfil
- greater clarity for officeholders on their roles and responsibilities
- improved readability of the regulations.
The key changes and benefits of the proposed draft new Company Regulations (Proposed Regulations) are further summarised in this Consultation Paper, December 2018 (Consultation Paper).
The main objective of the Proposed Regulations is to update the existing DMCC company law framework in accordance with international best practice. As part of this updating exercise, factors specific to DMCC’s operations and businesses have been fully taken into account, and data gathering and relevant stakeholders’ engagement have also been undertaken.
This Consultation Paper would be of interest to DMCC members and persons proposing to conduct business in the DMCC. These include:
- shareholders
- directors, company secretaries, managers, compliance officers, senior executive officers
- legal advisors, auditors, consultants and liquidators.
Rules and Guidance Notes
In addition to the Proposed Regulations, certain Rules and Guidance Notes will be introduced to support DMCC members and those who are proposing to conduct business in the DMCC in their understanding of the implementation and application of the Proposed Regulations.
Key changes and benefits as in the Proposed Regulations
Summary of key changes and benefits (list is non-exhaustive)
| Key Change | What it means |
|---|---|
| Articles of Association (Articles)
Companies are allowed to adopt non-Standard Articles, provided they meet the required standards and conditions as set out in the Proposed Regulations |
Companies will have the flexibility to adopt the Articles prescribed by DMCCA (Standard DMCC Articles), amend clauses within the Standard DMCC Articles, or adopt their own Articles entirely, provided they meet the required standards and conditions as set out in the Proposed Regulations. DMCCA has made it easier for shareholders to determine how they wish to set out the rules for their company. |
|
Share Capital |
Companies can decide the level of share capital required to achieve the activities of their company. |
|
Share Types |
Companies will have the option to structure their shareholdings in the way that best suits their requirements. Previously DMCC only allowed ordinary shares. Under the Proposed Regulations, a company may issue other share types such as treasury shares, preference shares, redeemable shares and bonus shares. |
|
Dormancy |
The change of status to dormant, allows a company to cease operations for a period, and remove employees, without being required to terminate its Commercial Licence. |
|
Officeholders |
There will be new rules that provide officeholders with greater clarity of their roles and responsibilities. These new rules will provide for high-quality corporate governance standards that remain appropriate for the DMCC. |
|
Directors |
Unlike in the Current Regulations, the Proposed Regulations do not stipulate the maximum number of Directors. The business and affairs of a company are to be managed by one or more Directors, with the number of Directors to be specified in the Articles. |
|
Audited Financials |
The Proposed Regulations provide a more reasonable time period within which to submit audited financial statements. |
|
Winding up, Insolvency |
The Proposed Regulations give officeholders much clearer guidance on the steps involved in winding up a company, and the obligations they are required to fulfil. |
|
Drafting |
We have greatly improved the readability of the regulations, and Rules and Guidance Notes will also be introduced to support DMCC members and those who are conducting or proposing to conduct business in the DMCC in their understanding of the application of the Proposed Regulations. |
Feedback
Based on your feedback, DMCCA will consider any applicable amendments to the Proposed Regulations and provide further guidance where required. The Proposed Regulations will be enacted and come into force once DMCCA determines the Proposed Regulations to be in the appropriate form. We will issue further notice to notify you as to when this will occur.
