Recently, Jebel Ali Free Zone Authority (JAFZA) has issued its new JAFZA Offshore Companies Regulations, 2018 (‘New Regulations’) applicable to all the Offshore Companies formed with the Authority and shall repeal and replace the JAFZA Offshore Companies Regulations, 2003 (‘Old Regulations’). However, the exact enforcement date of the new regulations is yet to be announced by JAFZA.
Some of the key changes brought in through the New Regulations in comparison to old regulations are as under:
Classes of Shares
As per Article 19 of the New Regulation, an offshore company registered with JAFZA may subject to the consent of the Registrar, create different classes of shares, by providing the different classes of shares in its articles of association. This was not there in the old regulations.
As per Article 14.2 of the New Law, an offshore company registered with JAFZA can:
- Hold a lease of property for use as a registered office in any designated freehold area in the United Arab Emirates approved by the Authority.
- Own a property in one of the designated freehold areas in the United Arab Emirates.
- Own a stake in another operating Company within the United Arab Emirates.
As per Article 31.2, an Offshore Company which owns a property in a designated freehold area in the United Arab Emirates may apply to the Authority for a residency visa for its members, and the approval of such visa application is subject to the Authority’s eligibility requirements.
The Old Regulations made it mandatory for an offshore company to have minimum two directors in the company. However, Article 33.1 of the New Regulations stipulates that Subject to any limitations in the articles of association, the business and affairs of an Offshore Company shall be managed by at least one Director.
Further, Article 33.3 of the new regulation stipulates that an Offshore Company may also have a Nominee Director, which includes a body corporate as well, other than the registered agent, subject to approval from authority.
Under the Old Regulations, it was mandatory for every offshore company to have a registered agent at all times. However, as per Article 32.1 of the New Regulations, appointment of registered agent is optional for those offshore companies that maintain an office in JAZFA freezone.
Apart from above, the authority will issued some guidelines which shall prescribe the roles, responsibilities, duties of the registered agent, obligation to maintain offshore company records, and accountability of the registered agent towards the Authority.
The New regulation defines resolution as “Resolution” means a resolution passed by 75% of such members as (being entitled to do so) vote in person or, where proxies are allowed, by proxy, at a general meeting of which notice specifying the intention to propose the Resolution has been duly given;”
Whereas the old regulation defines resolution as passed by the simple majority of members.
Re-domicile or Transfer
As per Article 116 of the New Regulation, an offshore companies through a resolution, may apply to the appropriate official or public body of a foreign jurisdiction to transfer its incorporation to the foreign jurisdiction and request that the Offshore Company be continued as a foreign company.
Conversion of an Offshore to Freezone Company
As per Article 118 of the New resolution, an Offshore Company may by a Resolution apply to the Registrar for its corporate form to be converted to, and on conversion, to continue as a Free Zone Company. The date of incorporation of the Free Zone Company will be that of the Offshore Company and all rights and obligations of the Offshore Company shall continue with the Free Zone Company