Dubai Multi Commodities Centre (DMCC) recently announced new DMCCA Company Regulations 2020, which came into effect from 2 January 2020 to further enhance the ease of registration and operation of businesses.
The new Regulations have brought in some changes in the existing company law framework, increasing by this the remit of the activities undertaken by the DMCC registered companies.
Some of the key changes brought in through the New Regulations are as under:
1. Articles of Association:
- To adopt the Articles prescribed by DMCCA (Standard DMCC Articles)
- To amend clauses within the Standard DMCC Articles, or
- To adopt their own Articles entirely by special resolution, provided they meet the required standards and conditions as set out in the Regulations
DMCCA has made it easier for shareholders to determine how they structure the activity of their business, within the existing regulatory framework.
2. Share Types:
As per the new regulation DMCC companies will have the option to structure their shareholdings in the way that best suits their requirements. Previously DMCCA only allowed only ordinary shares. Under the 2020 Regulations, a company may issue other share types such as treasury shares, preference shares, redeemable shares and bonus shares, by this reflecting more flexibility in the equity structure of the organization.
3. Share Capital:
The new regulations have repealed the previous requirement of minimum share capital requirement of AED 50,000. However, Registrar still has the right to specify the minimum amount of share capital for companies, in agreement with the applicable business standards and the type of activity undertaken.
4. Managers and other company officers:
The new Regulations expressly prohibit the financial assistance to directors and further deals with the role, duties and liabilities of directors, managers or company secretaries. For adding clarity, each of these responsibilities is described in terms of actions and outcomes.
5. Auditing requirements:
The new Regulations stress out the already existing rule on mandatory yearly audits for DMCC companies, audits that are to be prepared in accordance to IAS, submitted to and approved by the DMCC Authority. In furtherance, the auditors are subject to new obligations of disclosure of breaches in the activity of the companies at issue and, correlatively, companies are being called to implement adequate internal standards in order to comply with the new requirements.
6. Transferring companies to and from the DMCC:
As per the new regulation and Non DMCC entity can make an application to the registrar of DMCC for transfer of company to DMCC or transfer of DMCC company to another jurisdiction subject to fulfilling of certain conditions stipulated in the Regulations.
As per the new Regulations, a DMCC company may request to the Registrar to voluntarily suspend its License for a period of up to twelve months or even for a longer period, as approved by the Registrar. The change of status to “dormant” allows a company to cease operations for a determined period, without being required to terminate its commercial license.
8. Winding-up and insolvency:
New sections on winding up and insolvency outline, among other things, the different methods of winding up a company and the specific obligations of office holders. The new Regulations also give office holders much clearer guidance on the steps involved in winding up a company, and the obligations they are required to fulfill. It also states that the provisions of the UAE Federal Bankruptcy Law and any repealing or amending legislation are applicable to DMCC companies.