Prescribed company status to be broadened in the DIFC

Prescribed companies are a type of corporate vehicle available in the DIFC, commonly used as a holding company to isolate and protect assets and liabilities from financial and legal risk. They benefit from lower incorporation and licensing fees, and are exempt from certain regulatory requirements, which would ordinarily be applied to private companies under the financial zone’s companies law. Businesses and investors typically use this corporate vehicle to hold a variety of assets such as real estate, private and public shares and investments, aviation and maritime structures in addition to structured financing.

Last week, the DIFC Authority opened a consultation on proposals to amend the Prescribed Company (PC) Regulations (7-page / 148KB PDF). The plans would expand access to the PC regime and reshape the compliance architecture supporting it, by shifting ongoing compliance responsibility to DFSA‑regulated Corporate Service Providers (CSPs), rather than relying on entry‑level eligibility restrictions. The consultation is relevant to existing PCs, corporates and family businesses considering DIFC structuring options, as well as CSPs.

The PC Regulations were last revised in 2024. At that time, the regime was opened up to international businesses, but certain eligibility requirements, including restrictions around the purposes PCs could serve, as well as around their control and establishment, were retained.

Under the new proposals being consulted on by the DIFC Authority, “the remaining qualifying purpose, applicant and nexus based eligibility requirements in the existing legislation” would be removed completely.

UAE-based Marie Chowdhry of Pinsent Masons said: “These proposals suggest the DIFC is becoming more comfortable with broad access to structuring vehicles, provided there is a credible compliance infrastructure around them. The important point is that regulatory comfort is being built through supervised intermediaries and enforceable obligations, rather than by keeping the regime available only to a narrow category of applicants. That is a meaningful development for investors and businesses looking for more practical holding structures in the DIFC.”

“What is notable about these proposals is not just that more businesses may be able to use the prescribed company regime, but how the DIFC is choosing to widen access. The emphasis is moving away from narrow gateway tests and towards ongoing accountability through regulated corporate service providers. This mirrors the approach recently adopted under the DIFC’s Variable Capital Company Regulations and signals a coherent policy direction across the DIFC’s structuring regimes,” she said.

Under the DIFC Authority’s plans, CSPs would act as the primary administrative and compliance interface with the DIFC Registrar of Companies. Detailed statutory duties for CSPs are envisaged. For example, they would be responsible for incorporation filings, ongoing regulatory submissions, record‑keeping, and responding to information requests from the Registrar of Companies. The regime would be underpinned by enhanced enforcement powers and administrative penalties, including fines of up to $100,000.

The DIFC Authority’s proposals provide for exemptions from the CSP requirements for some existing PCs operating in the DIFC. For example, PCs controlled by DIFC registered persons, authorised firms, government entities or publicly listed companies would not be required to appoint a CSP, although they may elect to do so. Existing non‑exempt PCs would be given a six‑month transitional period from the date the amended regulations come into force to comply with the new CSP requirements.

Jessa White of Pinsent Masons in the UAE said the reforms, which are open to consultation until 2 June 2026, creates both opportunity and obligation for businesses contemplating PC status in the DIFC.

White said: “The expanded eligibility significantly increases structuring flexibility in DIFC, but existing PCs will need to assess whether they fall within the ‘Exempt PC’ criteria and, if not, prepare to appoint a suitable CSP within the six‑month transition period failing which they may be subject to administrative penalties of up to $20,000. CSPs, in turn, will face an expanded and more formalised compliance role. The consultation provides an important opportunity for market participants to engage with the DIFC Authority on how the expanded regime should operate in practice and to ensure that the balance between accessibility, compliance and cost is appropriately calibrated.”

Similar to what has been proposed with the PC regime, the Variable Capital Company (VCC) Regulations similarly permit broad access to the VCC regime, while embedding compliance oversight through regulated CSPs. Chowdhry and White said that, taken together, these developments point to a deliberate policy shift away from restrictive entry criteria towards a model centred on expanded market access coupled with enhanced regulatory oversight via regulated intermediaries. They said the consultation on the PC reforms provides an opportunity for corporates, CSPs and other stakeholders to engage with the DIFC Authority on how the expanded regime should operate in practice.