DIFC Releases Exempt Company Regulations
The DIFC Authority (DIFCA) on Monday released for public consultation the Exempt Companies
Regulations, a new set of regulations proposed under the Companies Law of 2006
and the Insolvency Law of 2004.
The new regulations are designed to assist financial institutions to carry
out, among other things, securitisation transactions using the existing DIFC
legal and regulatory framework. Commenting on the imminent adoption of these regulations, Dr Omar Bin Sulaiman,
Governor of the DIFC, noted: "With the increasing number and growing sophistication of transactions
taking place in the Dubai International Financial Centre, the DIFC has again
proved its commitment to international best practices - this time in the area
of securitisation and other structured finance transactions." "Through the adoption
of these regulations, the DIFC demonstrates its willingness to support key players
in their sectors of activity and respond to their requirements in a flexible
manner while remaining faithful to its founding principles of integrity, transparency
and efficiency." "The simplicity of these new regulations also demonstrates the
robustness of the existing legislative system, where it is now possible to introduce
new areas of activity with relatively minor changes to our existing framework." Nasser Al Shaali, CEO of the DIFC Authority added: "As the DIFC continues its emergence as a leading international financial
centre we are committed to providing the most mature, sophisticated infrastructure
and legal framework to promote the development of a highly prosperous financial
industry. By proposing the new regulations we aim to encourage securitisation
transactions at the centre and cater and encourage the expansion of the products
and services available at the DIFC." Both Islamic finance and conventional finance transactions in the region often
require the use of special purpose vehicles (SPVs). These SPVs, otherwise known
as transaction-specific companies, are usually incorporated with the intention
of being restricted in their operations, with no employees other than special
directors. The use of SPVs in the DIFC under the new regulations is simply for
the purpose of facilitating sophisticated financing activity. This is likely
to have a favourable impact on the region's increasing demand for SPVs, in both
conventional and Sharia-compliant products. The deadline for commenting on the proposals is March 27th, 2008. A comprehensive report in our Intelligence Report series looking at offshore and onshore corporate structures and their tax implications is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report7.asp
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