INSITE - UAE - July 2024
- sukhwinder21
- Aug 1, 2024
- 6 min read
Updated: Oct 7, 2024
DIFC Announces Enactment of Updated Prescribed Company Regulations
Summary: Dubai International Financial Centre (DIFC) is updating its Prescribed Company Regulations. These changes will expand and simplify the existing Prescribed Company (PC) regime, enhancing the financial center's framework.
In Detail: The PC Regulations were first introduced in 2019 and updated in 2020 and 2022 to broaden their scope. Despite these updates, DIFC continued to face high demand for expanding the regime. With the introduction of United Arab Emirates (UAE) Corporate Tax reducing concerns about substance requirements, DIFC now believes it is appropriate to further expand the PC regime.
Starting July 15, 2024, DIFC will implement significant amendments to the PC Regulations. These changes aim to simplify and expand the regime, addressing the growing need for special-purpose vehicles used in legitimate transactions while maintaining DIFC’s reputation for substantial business practices.
Key Changes to the Regime
The amendments introduce several significant updates to the PC regime:
Control by Gulf Corporation Council (GCC) Entities: PCs can now be controlled by GCC citizens, entities controlled by GCC citizens, an Authorised Firm, or DIFC registered persons (excluding PCs or Non-Profit Organisations).
Holding GCC Assets: PCs can be established to hold or control GCC registrable assets.
Qualifying Purposes: PCs can be created for purposes defined as ‘Qualifying’ in the existing regime.
Global Applicants: Anyone worldwide can now set up a PC if they appoint a director from a Dubai Financial Service Authority (DFSA) a registered Corporate Service Provider (CSP) that works with the DIFC Registrar of Companies for compliance and anti-money laundering functions.
DIFC believes these changes significantly improve the current regime by making it accessible to a global pool of applicants while maintaining a strong connection to the DIFC and the GCC.
Additional Amendments
Further amendments require that a PC be used only for its qualifying purpose or as a holding company and may not employ any employees. This ensures PCs remain true holding companies rather than operational entities. Additionally, a new commercial package will offer continued licensing benefits to existing PCs that no longer meet the new criteria. Details of transitional arrangements will be provided to these entities.
The new legislation, effective July 15, 2024, is available in DIFC’s legislative database. It shows DIFC's commitment to meeting market needs while maintaining a strong and transparent legal framework.
The commercial package helps existing PCs that don’t fit the new criteria and offers more structuring options with lower fees and flexible licensing for applicants meeting specific requirements.
Conclusion: The amendments to the PC Regulations are a major improvement to DIFC's regulatory framework. They offer more flexibility and make it easier for a broader range of global applicants to set up PCs. These changes strengthen DIFC's role as a top global financial center by accommodating diverse business needs and maintaining high regulatory standards.
Key Links: https://www.difc.ae/whats-on/news/difc-announces-enactment-of-updated-prescribed-company-regulations
DIFC Announces Consultation of updated Real Property Law and Regulations
Summary: DIFC, the leading financial hub in the Middle East, Africa and South Asia (MEASA) region, plans to amend the Real Property Law (DIFC Law No. 10 of 2018) and the Real Property Regulations 2020. DIFC has issued a consultation paper detailing these proposed changes, which include a new mortgage registration fee and updates to the Off Plan Sales regime.
In Detail: The DIFC has announced a consultation on proposed changes to the DIFC Real Property Law (DIFC Law No. 10/2018) and the DIFC Real Property Regulations 2020. These changes are relevant for those purchasing Off Plan Lots, buying property with a mortgage, or leasing property within the DIFC.
Key proposed changes include extending the period to register an Off Plan Sale from 30 days to 60 days. There is also a clarification on when a prospective owner can terminate an off plan sales agreement if the developer fails to provide a disclosure statement after the agreement has been made.
Article 156(4) of DIFC Law No. 10/2018 requires developers to register each off plan sale within 30 days of entering into an off plan sales agreement with a prospective owner. This includes any reservation form or similar agreement involving a payment of AED 5,000 or more, which is considered an off plan sales agreement. However, since it often takes longer than 30 days for a prospective owner to sign the final sale and purchase agreement, the proposal suggests extending the registration period to 60 days to accommodate this process.
Article 160(1) of DIFC Law No. 10/2018 requires developers to provide prospective owners with a disclosure statement before entering into an off plan sales agreement. This statement details the development, including community amenities, service charges, and finishes of the lots. Article 160(6) allows prospective owners to terminate the agreement any time before the lot is handed over if the developer fails to provide this statement. However, the Dubai International Financial Centre Authority (DIFCA) believes this termination period is too long and could lead to last-minute cancellations for unrelated reasons. While it is important for developers to provide disclosure statements, the DIFCA aims to balance the rights of both parties and prevent unfair terminations of agreements.
If a developer provides a prospective owner with a disclosure statement after signing an Off Plan Sales agreement, the owner has 60 days to review it. During these 60 days and for an additional 20 days, the owner can terminate the agreement if the statement does not accurately reflect the development. Article 160(6) clarifies that termination is valid only if exercised within 20 days after the 60-day review period.
Another proposed change is introducing a mortgage registration fee in the DIFC, aligning with Dubai's onshore fee of 0.25% of the mortgage amount. Additionally, a standard lodgement fee of $100 for all mortgage instruments ($273 for Islamic mortgages) is proposed. The DIFCA does not propose a mandatory registration period for mortgages, as it is in the mortgagee's interest to register to protect their interests.
The DIFC has proposed extending the lease registration period with the Registrar of Real Property (RORP) from 20 to 30 days to give lessors more time to register and pay fees. This change addresses feedback that 20 days is often insufficient, especially for overseas owners.
The requirement for parties to have a UAE address for service of notices will be removed, allowing email as a valid mode of service. This change accommodates the many foreign purchasers in the DIFC.
Additionally, the first registered instrument will be treated as the valid address for service until amended, ensuring clarity on address changes.
Lastly, the definition of "Prescribed fee" will be clarified to mean only the lodging fee for an instrument, resolving existing ambiguities.
The consultation has been posted for a 30-day public consultation period with the deadline for providing comments ending on 02 August 2024.
Conclusion: The proposed changes to the DIFC Real Property Law (DIFC Law No. 10/2018) aim to enhance regulatory clarity and operational efficiency. By extending the lease registration period and allowing email as a valid mode of service, the amendments address practical challenges faced by lessors, lessees, and foreign purchasers. The introduction of a mortgage registration fee aligns with onshore practices, ensuring consistency and fairness. These revisions reflect the DIFC's commitment to maintaining a robust legal framework that accommodates the evolving needs of its global stakeholders while fostering a transparent and efficient real estate market.
New UAE Telemarketing Regulations
Summary: The UAE) has introduced new rules for marketing via telephone calls with Cabinet Resolution No. 56 of 2024 and Cabinet Resolution No. 57 of 2024. These rules are designed to protect consumers from unwanted or misleading marketing calls and ensure that companies follow ethical and legal standards. The regulations apply to all licensed companies in the UAE, including those in free zones, which use phone calls for marketing.
In Detail: The UAE has introduced new telemarketing rules with Cabinet Resolution No. 56 of 2024. These rules, along with Cabinet Resolution No. 57 of 2024 on penalties for violations, are designed to protect consumers from intrusive and misleading marketing calls and ensure companies follow ethical and legal standards.
Key Provisions of UAE Telemarketing Regulations
Definition and Scope: Telemarketing includes any marketing phone calls or messages made by a company or individual to promote products or services. This covers both landline and mobile calls, text messages, and social media messages.
Consumer Protection:
Do Not Call Registry (DNCR): Managed by the Telecommunications and Digital Government Regulatory Authority (TDRA), consumers can register here to avoid unwanted marketing calls. Companies must not contact DNCR-listed numbers and must respect consumer preferences.
Data Protection: Companies must not disclose or trade consumer data without consent.
Obligations for Telemarketers:
Approval: Obtain prior permission from the relevant authority.
Training: Train staff on ethical conduct and the DNCR.
Local Numbers: Use local numbers registered under their commercial license.
Record-Keeping: Keep records of all marketing calls.
Calling Hours: Limit calls to between 9:00 am and 6:00 pm.
Disclosure: Identify themselves and state the call’s purpose at the start.
Consent: Get explicit consent from consumers before marketing.
Enforcement and Penalties:
Resolution No. 57 of 2024 sets penalties for violations, including warnings, fines, or license suspension or cancellation.
The regulations were published on June 28, 2024, and will be enforced starting August 27, 2024. Companies should review and update their practices to comply with these new rules.
Conclusion: These regulations aim to enhance consumer protection and ethical practices in telemarketing by setting clear guidelines and enforcing strict penalties.
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