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The Dubai International Financial Centre, or DIFC, is a leading financial hub that has earned global acclaim for its business-friendly environment, strong governance, and innovative legal structures. Over the course of nearly two decades, the DIFC has attracted more than 5,000 firms and 40,000 professionals, establishing itself as a focal point for finance and commerce in the Middle East, Africa, and South Asia region. Yet the DIFC also offers solutions for holdings, asset protection, and structured finance, particularly through prescribed companies (PCs). These entities operate as passive vehicles for ring-fencing assets and liabilities, often referred to as SPVs (special purpose vehicles). However, the DIFC has introduced new regulations that expand the PC regime, making it more accessible and flexible for both regional and international business owners.
In this article, we examine how DIFC prescribed companies differ from older SPV models, highlight their practical uses, and explore what the new regulations mean for prospective applicants. We also look at the step-by-step process for establishing a PC in the DIFC, focusing on how the legal framework, infrastructure, and cost structure help owners safeguard assets or reduce risk. By the end, you will see why these prescribed companies can be transformative, whether for holding real estate in Dubai, forming part of a crowdfunding arrangement, or structuring complex financing deals that may extend beyond the GCC.
Understanding the DIFC and prescribed companies
The DIFC is located in the heart of Dubai, bridging time zones between leading markets in Europe, the Americas, and Asia. Its independent English-language common law courts and a robust regulator, the Dubai Financial Services Authority, have helped it become one of the top financial centres worldwide. Over the years, the DIFC introduced multiple corporate vehicles, including special purpose companies that were used for structured transactions, ring-fencing assets, or holding property. Yet the earlier regime had certain limitations, often requiring a qualifying applicant already established in the DIFC, or a qualifying purpose that tied the entity to existing commercial activities within the centre.
In response to market demand for more flexible solutions, the DIFC made changes, creating a new set of regulations for prescribed companies. Now, it is simpler for organisations to set up a dedicated holding or financing entity in the DIFC, even if they do not have an existing anchor in the centre. This shift has expanded the range of potential users, including non-GCC persons, as long as they engage a corporate service provider with an arrangement to carry out basic compliance tasks.
What exactly is a prescribed company?
A prescribed company (PC) is, in many respects, a passive holding company used for ring-fencing and isolating assets and liabilities, though it can serve specific structured finance or investment purposes as well. In other jurisdictions, one might call it a special purpose vehicle. The newly issued DIFC regulations refer to them as “prescribed companies” to differentiate them from older SPV regimes or from more active operating companies. Typically, a PC’s primary function is to hold shares, property, intellectual property, or other registrable assets, or to facilitate structured finance or crowdfunding. They do not employ staff, nor do they conduct day-to-day operating activities that generate direct revenue.
The new regime breaks down the requirements to qualify as a prescribed company. For instance, the parent or controlling entity can be a GCC person, a DIFC-registered person, an authorised firm regulated by a recognised financial services regulator, or an entity that meets specific criteria, such as holding GCC-registrable assets or a “qualifying purpose.” Another route is to appoint a DIFC corporate service provider (CSP) for compliance. This last route means that even individuals or companies from non-GCC countries can form a PC, provided they use a CSP.
Comparing active enterprises and prescribed companies
It is vital to distinguish “active” from “passive” vehicles. While older DIFC regulations mentioned SPVs that needed a link to an existing DIFC business, the centre now recognises that not all entities require employees or active operations. Active enterprises are intended for holding companies, managing offices, or proprietary investment vehicles that can have staff, but the earlier SPV regime for purely passive vehicles has been restructured into the new “prescribed companies.”
Under the latest approach, a firm can establish a prescribed company if it meets certain prerequisites, such as controlling or owning assets in the GCC, or using it for a structured financing or a particular type of holding. Because these vehicles cannot hire employees, they must rely on minimal overhead or a corporate service provider arrangement for day-to-day governance tasks. This separation allows the DIFC to ensure that only truly passive or ring-fenced activities occur in a PC, whereas active enterprises can handle broader duties like employing staff or directly managing operations.
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Why choose a DIFC PC?
A prescribed company is cost-effective compared to some older SPV setups, especially in reputable jurisdictions outside the GCC. For instance, the DIFC’s application fee stands at just 100 US dollars, with a 1,000 US dollars annual licence. Additional charges generally include corporate service provider fees, if the firm is not leasing or sharing an office within the centre. The result is a well-regarded onshore structure at a fraction of the cost one might expect for a fully operational commercial entity in the DIFC.
Another advantage is address flexibility. A PC can lease its own office, co-work with an existing affiliate in the DIFC, or rely on a CSP’s registered address. This adaptability helps large multinationals manage their assets from one central base, while smaller players or non-regional owners can keep their overhead minimal, so long as they meet the regulatory requirement for a local address.
Holding property in Dubai or beyond
One of the more prominent uses of a DIFC PC is property holding within the UAE. An older memorandum of understanding between the DIFC and the Dubai Land Department explicitly allows a PC to register property in specified freehold areas. Examples include Downtown, Business Bay, Palm Jumeirah, or Jumeirah Lakes Towers. If the beneficial ownership remains the same as a direct transfer from an individual to a PC, the authorities might reduce the transfer fee from 4 percent to 0.125 percent, a substantial saving.
Outside the UAE, a PC can hold assets across the GCC or internationally, though if the PC is formed specifically to hold GCC-registrable assets, the majority or a significant part of the holdings must remain in that region. That said, if the aim is purely to hold, say, property in London, the local rules might not align with the PC’s requirement of maintaining GCC-based significance.
DIFC courts: A robust legal system
As with other DIFC entities, a prescribed company can turn to the DIFC Courts for civil and commercial dispute resolution. The Courts operate in English, following common law principles distinct from the UAE’s civil legal system. Many high-profile organisations prefer this environment for clarity on interpretation of contracts and robust enforcement. If shareholders foresee potential disputes or if the PC might be party to structured deals, the presence of an advanced judiciary can prove decisive.
"Prescribed companies benefit from the DIFC’s zero or low tax environment for up to 50 years, with the maximum corporate tax liability of 9 percent if certain thresholds are crossed."
Wide range of use cases
A DIFC prescribed company can be useful in many scenarios:
Holding real estate
If you want to own or transfer property in Dubai in designated foreign-ownership areas, the PC can hold the title. The DIFC has an existing memorandum of understanding with the Dubai Land Department so that property can be registered in a PC’s name. Often, property owners can seek a reduced property transfer fee of 0.125 percent, where the beneficial owners remain the same.
Asset protection
Because the PC is ring-fenced, liabilities connected to operating businesses remain separate from these assets. This approach is common for intellectual property holdings or storing valuable shares.
Structured financing
The regulations specifically highlight “structured financing” as a qualifying purpose. A PC can facilitate bond or sukuk issuances, leveraged or securitised transactions, or hold collateral for derivative trades, without having to run a full commercial enterprise.
Crowdfunding
For platforms regulated by the DFSA under property or investment-based crowdfunding, the PC can hold assets on behalf of investors, ensuring the assets are separate from the platform operator’s own liabilities.
Employee share schemes
A PC can manage employee stock option plans, distributing or holding shares to be issued to staff at a future date.
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GCC-based assets or a qualifying purpose
Although the new approach is more accommodating, the DIFC still wants to ensure that each PC ties back to a legitimate reason for existing. If the controlling shareholder is from the GCC or an authorised DIFC person, that suffices. Alternatively, the PC can hold “GCC registrable assets,” such as real estate or shares in local companies, or it can exist for a “qualifying purpose” like aviation, maritime, structured finance, or IP holding. As a final route, if none of these conditions apply, a prospective owner can use a DIFC-registered CSP, which takes on certain compliance obligations.
No single route is inherently superior, but foreign owners often rely on the CSP path, especially if they have no direct presence in the GCC. They can then form a PC for cross-border investments, ring-fencing intangible IP, or facilitating multi-jurisdictional crowdfunding.
Process of forming a DIFC prescribed company
Establishing a prescribed company typically involves:
Gathering documents
The DIFC Registrar of Companies (ROC) requires thorough KYC on directors, beneficial owners, and controlling parties.
Securing a registered address
The PC can either share an office with a DIFC affiliate, lease its own space, or appoint a CSP.
Initial submission
The application is sent to the ROC, detailing the controlling shareholders, the chosen qualifying route, and the PC’s proposed Articles of Association or constitutional documents.
Review period
The ROC may ask for clarifications or additional proof that the PC meets the relevant criteria. For instance, if the PC is formed to hold a building in Dubai, you might show a memorandum of how the property will be transferred.
Preparation of legal documents
The firm finalises its incorporation forms and any required shareholder resolutions, plus the Articles of Association.
Final approval
Once the ROC grants in-principle acceptance, the PC can pay the requisite fees, obtain its commercial licence, and begin operations, albeit purely in a passive sense.
"The process of forming a DIFC prescribed company often concludes in a few working days once clarifications are complete, making it relatively swift for a major onshore jurisdiction."
Annual accounts and record-keeping
Although a PC is not an active trading entity, the DIFC still expects annual accounts to be prepared. The exact requirement to audit them depends on the PC’s purpose. For instance, a structured finance PC might be exempt from filing accounts with the ROC or from having them audited if it purely holds securitised or ring-fenced assets. Alternatively, a PC tied to a crowdfunding arrangement might be exempt from auditing if turnover is below five million US dollars but it has more than twenty shareholders. In general, the best approach is to confirm with the ROC.
These rules reflect the DFSA’s principle-based approach: if the PC is truly passive, minimal overhead is required, but if it engages in complex transactions or large public involvement, the rules tighten accordingly.
How long can a PC exist?
Prescribed companies do not face an automatic sunset clause. They can continue in perpetuity until the shareholders decide to wind them up. However, if the PC is formed specifically to hold or manage GCC-registrable assets or for a “qualifying purpose,” it has six months from licence issuance to prove that it holds or controls at least one relevant asset or has started to carry out that purpose. If the PC misses this deadline, it risks losing prescribed status, although the ROC may offer extensions if the owners provide legitimate reasons.
No employees, but a registered agent
Prescribed companies are not allowed to hire staff. They must remain passive, focusing on asset holding or relevant structured finance tasks. Instead, a PC either shares an affiliate’s office or uses a CSP arrangement for day-to-day requirements, including receiving official communications.
Many owners opt for a CSP, especially if their parent company or controlling individuals are based abroad, as the CSP stands in as the local point of contact, assisting with administrative tasks, compliance checks, or annual filings.
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Setting up a prescribed company is fast and inexpensive, with a $100 application fee, $1,000 annual licence, and formation possible in as little as 3–5 working days.
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Annual account requirements vary, but most purely passive PCs enjoy relaxed compliance, while those handling crowdfunding or structured finance may need additional disclosures or audits.
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Aston VIP supports every step of the process, including qualifying condition assessments, document drafting, and long-term compliance—ensuring a streamlined and compliant setup.
Typical costs and timeline
Setting up a PC is fairly cost-effective in the DIFC. The one-time application fee is about 100 US dollars, with an annual licence fee around 1,000. The annual confirmation statement costs 300, plus any CSP fees if one is used. These numbers are in stark contrast with the cost of forming a fully operational company. The timeline for forming the PC can be as short as three working days for in-principle approval and a further three to five days for final establishment.
For owners not physically present, the DIFC’s digital onboarding system can expedite procedures. A corporate or individual from abroad might never need to travel to Dubai if they are comfortable working with an authorised CSP, who collects and notarises the required KYC or powers of attorney.
Aston VIP’s role in your licensing journey
Whether you aim to shield assets from risk, hold property, or facilitate complex financing, establishing a DIFC prescribed company can be a highly efficient solution. Yet ensuring compliance with all criteria, picking the right route for qualification, and managing your ongoing obligations can be intricate. Aston VIP offers end-to-end support, from evaluating whether you meet the “qualifying purpose” or “CSP arrangement” conditions, to drafting the necessary Articles of Association or property transfer documents. We provide expert guidance on cost structures, legal forms, and all subsequent filings, letting you focus on your strategic goals.
If you want to proceed with a streamlined PC or have questions about ring-fencing your assets in a top global centre, speak to us. We will tailor a roadmap that aligns with your unique needs and context. Contact Aston VIP today to ensure a clear and hassle-free route to forming a prescribed company in the DIFC.
