Dr. Laura Voda August 5, 2025August 5, 2025 With the growing number of business incorporations and commercial markets in the UAE, the DMCC regime has taken a substantive step to stimulate better business growth and streamline the process for companies in the DMCC by introducing new changes through its Company Regulations 2024, Companies Limited by Guarantee Regulation 2024, Family Office Rules, and the Licensing Rules of DMCC, which came into effect on 10 October 2024 and were subsequently amended in January 2025 (the new Regulations). The DMCC Regulations aim to enhance the business environment and streamline processes within the free zone while providing a clear legal framework for various types of companies and activities. Businesses that wish to navigate their operations through such streamlined processes and a well-regulated free zone will find DMCC to be an excellent choice for setting up, transferring, or enhancing their business. Key Changes and their Effect on Business Updated Licensing Rules Through the new Regulations, the DMCC has taken a significant step forward by introducing new licensing types to facilitate business flexibility within the free zone. Special Purpose Vehicle (SPV) Under these regulations, existing companies can apply for a license to conduct activities as an SPV, or they can incorporate a new Special Purpose Vehicle (SPV) within the DMCC. SPVs are exempt from the requirement of having a company secretary and from holding annual general meetings. The regulations also exempt SPVs from the requirement of leasing physical premises in the DMCC; however, they must maintain a registered office address, which may be that of a corporate service provider registered with the DMCC. Holding Company The updated Licensing Rules allow a company to apply for a holding company license. This licensing category provides DMCC companies with the flexibility to structure their corporate group in a way that suits their needs. Freelance Licenses Individuals can now obtain freelance licenses to conduct business as freelancers under the DMCC approved freelance activities. This regime allows individuals to carry out their business or services without needing an employment contract, employer sponsorship, or company incorporation. Freelance licenses are exempt from the criteria set for other licenses. Introduction of Companies Limited by Guarantee The new regulation allows businesses to incorporate Companies Limited by Guarantee (CLG) within the free zone. Such companies require no share capital, and the liability of the members is limited to the agreed amount contributed to the company’s assets, payable only in the event of liquidation. CLG structures are generally used where there is no immediate need for capital to carry out the business or the company’s purpose. This legal form helps companies at the time of incorporation, limits members’ liability, and avoids the need to transfer shares every time a member leaves. Introduction of Family Office Rules The DMCC Family Office Rules 2024 mark a significant advancement in the licensing categories offered by the DMCC. These regulations introduce Single Family Office and Multi-Family Office licensing categories, catering to businesses that intend to provide specific family office-related services within and from the DMCC. Family office services are generally considered non-regulated and non-financial services, primarily focused on the wealth management of one or more families. Entities seeking to obtain this license must satisfy the criteria outlined in the new Regulations. Updated Company Regulations The updated Company Regulations 2024 paves the way for smoother corporate governance, incorporation, and other processes. Share Capital The updated regulations provide companies with the option to denominate their shares in AED, or any other currency approved by the Registrar, offering greater flexibility. This benefits international businesses operating across jurisdictions or engaging with foreign markets. Companies can now issue bonus shares from both retained earnings and share premium, allowing them to transfer value to shareholders using non-distributable reserves. Companies may reduce their share capital as needed, provided they comply with the provisions of the regulations. The rules also now clarify the use of redeemable shares and their conditions of redemption. The removal of restrictions on share classes allows companies to define their preferred capital structures. To protect minority shareholders’ rights, the regulation requires obtaining class consents in cases of variation of share class rights. Companies with share capital of AED 50,000 or less are no longer required to deposit it in a bank account. Instead, they can deposit the capital in their DMCC portal account during incorporation and request a certificate of share capital deposit from DMCCA. The deposited capital can be used for DMCC services such as registration, licensing, leasing, and visa applications. Directors must now prepare annual accounts for all companies. Holding companies must prepare consolidated group accounts. Dormant companies are exempt from preparing individual accounts and undergoing audits unless specifically requested by shareholders. The regulations also clarify how auditor reports should be prepared. Re-domiciliation To streamline the transfer process and align with other jurisdictions, the DMCC has updated its regulations on re-domiciliation. A company wishing to redomicile to DMCC must first obtain a Certificate of Continuation from DMCC, then obtain a Certificate of Discontinuation from the jurisdiction it is transferring from. A 75% or higher voting interest is required for individual-owned companies. For corporate-owned entities, a board or shareholder resolution with at least 75% approval is necessary. Companies intending to use non-standard Articles of Association must provide a legal opinion or a directors’ declaration confirming there are no inconsistencies with the Company Regulations. The updated regulations confirm that any eligible entity, including existing DMCC companies, can open a branch within the DMCC Free Zone. Insolvency and Winding Up The DMCC has relaxed its rules on company losses and clarified liquidation procedures. If a company’s losses reach 75% or more of its share capital, shareholders must be notified within 21 days. The regulation no longer requires reporting losses exceeding 85% to the Registrar or calling a general meeting for winding up or recapitalization. This gives businesses more flexibility in managing financial stress. The regulations also clarify the appointment and powers of a liquidator. If a liquidator’s office becomes vacant for any reason, the directors regain their powers until a new liquidator is appointed. The Registrar is now authorized to appoint a liquidator if none is designated. Age of Directors The minimum age for directors, secretaries, and managers has been reduced from 21 to 18 years, allowing for more flexibility and innovation. This change enables businesses to appoint young and capable individuals to leadership roles. What This Means for Businesses The updated DMCC Regulations offer greater flexibility in business structuring and licensing. The new licensing categories and regulatory revisions allow more businesses to set up and operate smoothly within the free zone. Aligning transfer procedures with international standards makes it easier for global investors to re-domicile their businesses. The option to denominate share capital in multiple currencies facilitates international operations. Startups benefit from streamlined capital deposit processes and reduced minimum age requirements for directors, improving accessibility for younger entrepreneurs. The regulations also bring clarity to accounting requirements, shareholder rights, and director responsibilities, supporting stronger corporate governance and operational transparency.
