Modifications were implemented across such sectors as Employment Rules, Officers Rules, Memorandum and Articles of Association, Licensing Rules, and other sectors. 

As of the moment of this article publication, the number of registered companies in DMCC exceeds 19,000. The authorities took the initiative to improve its regulations and incorporate best practices worldwide. 

In this article, we would like to highlight new key amendments, which were introduced in New Regulations, outlining their benefits in operating a company under the DMCC jurisdiction.

Key outlines of DMCCA Company Regulations 2020

Share Capital

As stated in Article 23 of the Old Regulations, the minimum required share capital was AED50,000 with nominal value of not less than AED1,000 per share. Whereas Article 26 of the New Regulations, states that the minimum required value was removed. 

However, some activities in DMCC still require the minimum amount of the share capital, which is specified in the DMCC Registrar of Companies (Registrar).

Articles of Association

As per the New Regulations, the MOA will no longer be issued together with the AOA. For adopting Articles, companies have several options available:

1. To adopt the Standard Articles, developed by DMCCA. The procedure became more simplified.
2. To adopt a non-standard template of an AOA, which eventually can be modified as per the company’s needs. In this case, the company must present the Registrar with a legal opinion, which would state that no clauses, contradicting Company’s Regulations, were adopted.

Classes of Shares

Before the amendments to the Old Regulations, only DIFC, ADGM, RAKICC, JAFZA, and AFZA were the jurisdictions for companies wishing to appoint a range of specific rights and obligations to different classes of shares in the context of company incorporation. As per the New Regulations, DMCC provides the possibility to appoint different types of shares, depending on the shareholders’ goals. 

Article 27 of the New Regulations states that shares may be issued under different classes, as long as rights of each type or class of shares are stipulated in the Articles. Additionally to the standard class of shares, known as Ordinary Shares, some other classes became available. They are Treasury Shares, Non-voting Shares, and Preference Shares. The essential fact is that the total number of Ordinary Shares shall not be less than 80%, while the remaining 20% can be distributed across different classes.

Dormant status

The concept of a company’s dormant status was introduced by the New Regulations. It means that a company may now have an opportunity to apply to the Registrar for the suspension of its license. The dormancy period might be up to 12 months or longer, depending on the approval. It is important to note that during this period, a company shall not run any business activities, till further reactivation of the license.

Corporate Governance

While the Old Regulations allowed a maximum of 6 directors in the company, the New Regulations are more flexible in terms of the maximum accepted number. As per Article 54 of the New Regulations, it is acceptable that the secretary position might be absent as an internal appointment within the company, while this position can be appointed as an outsourced function. Director and the manager, on the other hand, must be available and present within the company, by internal appointment. The duties of the manager are provided in details in Article 55 of the New Regulations. The responsibilities of the director are described in Article 49. 

Moreover, the New Regulations made amendments in regards to company officer positions. Before, company’s officers were considered to be its directors, managers, HR signatories, legal representatives, and secretaries. Now a legal representative is no longer considered a company officer.

All existing DMCC companies must adopt the Standard Articles within twenty-four (24) months from the date of ratification of the New Regulations.

If you would like advice or assistance concerning the New Regulations, kindly contact us. 

Marsel Shadmanov

Head of Corporate Services at Garant Business Consultancy DMCC

Phone +971 4 421 4335

Email info@garant.ae