Monthly Archives: January 2017

New JAFZA Regulations to Encourage Foreign Direct Investment in Dubai

Top Dubai Law Firm in UAE - JAFZA NEW PLC & Foreign Direct Investment Regulations

The Jebel Ali Free Zone (JAFZA) connects the continents of Asia, Europe and Africa. JAFZA just broke the most exciting news for the investors in the beginning of 2017.

The Free Zone has issued a new set of guidelines Jebel Ali Free Zone Companies Implementing Regulations 2016. Foreign companies no longer need to establish legal entities such as a branch or a new company altogether.

The guidelines aim to simplify the existing regulations for Foreign investors to incorporate new companies, by allowing the foreign companies to easily transfer to the Free Zone instead of setting up branches or subsidiaries for their business. Free Zone Entities and Free Zone Companies will further be allowed under the new regulations to be listed on the stock exchange as Public Listed Companies.

In fact JAFZA has now introduced for the first time a new legal entity type “Public Listed Companies (PLC)”. All legal entities such as the Free Zone Establishment (FZE), Free Zone Company (FZCO) and Branches are brought now under one structure of PLC. Restructuring of businesses from FZE or FZCO to PLC is possible and so is the vice-versa. In doing so, Jafza intends to bolster the business continuity in the Free Zone. Moreover, the foreign companies can easily transfer to the Free Zone whilst all their commitments remain valid. This will ensure international businesses find the Free Zone conducive for foreign investments.

With a more forward approach, Jafza has struck the blanket minimum capital requirement provision. Now, businesses ca be set-up with capital sufficient for the activities applied for. Also, the minimum requirement of shareholders now in an FZCO will be two and maximum will be fifty.

Shares will now be differentiated into various classes. This will provide flexibility to owners to provide voting rights to shares. Owners can now raise equity while retaining management over the company by providing management rights shares to the incumbent management.

Sultan Ahmed bin Sulayem, Group Chairman and Chief Executive Officer of DP World and Chairman of Ports, Customs and Free Zone Corporation, said: “The new regulations streamline all the mandatory legalities related to the registration, administration, legal benefits and obligations of organizations in the free zone. These changes reflect the needs of an ever-evolving market in terms of providing facilities that are prompt, secure and form the best international practice.”

The new regulations will allow FZE and FZCO to be listed on the stock exchange as PLC. Thus, these PLCs can now access capital through capital markets subject to relevant Markets Laws in the UAE.

Article by ProConsult Advocates & Legal Consultants the Leading Dubai Law Firm providing full legal services & legal representation in UAE courts

FNC committee for financial affairs examines the UAE central bank national policies

The UAE Federal National Council

The UAE Federal National Council Committee for financial affairs examined the UAE Central Bank’s policies on Sunday in Dubai. The head of the committee emphasized upon the importance of the Authorities’ opinion and its inclusion in the committee’s report, in compliance with the laws and regulations regulating the activityof the central bank, particularly the central bank’s policy in promoting the employment of UAE Nationals, regulating the financial sector and the organization and planning of the monetary, credit and banking policies. The committee decided to invite representatives of the UAE banks and the Central Bank to attend the upcoming meeting, in an effort to communicate with different sectors of society, particularly the financial sector, during discussions of major issues.

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UAE Government enacts legal system for venture capital funds

The UAE government established a new legal system for venture capital funds, as part of the projects dedicated to government accelerators launched by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

The move aims to setting the controls and obligations governing the venture capital fund, rooted in a solid cooperation and partnership based model between the public and private sector, with an aim to expand the scope of funding innovation-based projects in the UAE.

this will help promote the competitiveness of small and medium-sized businesses in innovation and technology-based areas.

A venture capital fund is a special fund that invests in high-risk investments such as new technologies based projects and troubled projects, as well as in businesses with new and innovative ideas.

Under the new legal system, if the value of assets under management exceeds AED180 million, it is obligatory for the business to issue an annual report according to IFRS standards, appoint a risk management officer. The business exposure to risk should not exceed the fund’s net asset value.

Pursuant to Article [3] of the decision, the venture capital fund has 3 obligations. The first obligation is that the fund should invest not less than 70 per cent of its assets in one or more of the following fields:

1-Lending new or troubled projects or participating in these projects by not more than 30% (thirty per cent) of its assets.

2-Instruments issued by unlisted companies in the market.

3-Units of other venture capital not exceeding 10% (ten per cent) of its assets.

4-Lending businesses mentioned above by not more than 30% (thirty per cent) of its assets provided that the fund should be an investor in the same field of business.

The second obligation is that the fund’s investments should not exceed 30% (thirty per cent) of its assets in the investments that the Emirates Open public investment fund (Emirates UCITS) is allowed to invest in. In case of investing abroad, the fund should commit to the above mentioned obligations.

Article [4] of the decision stipulates further 3 obligations on the fund, including conducting regular evaluation of its assets and units at least one time per year, issuing an annual report that details the fund’s investments, activities, profits and losses, and the percentage of fund’s borrowing or collateral should not exceed its assets.