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DIFC Issues Special Purpose Company Regulations

by Lorys Charalambous,, Cyprus

11 November 2008

The Dubai International Financial Centre (DIFC) announced last week that it has enacted new regulations that enable companies within the financial district to quickly form Special Purpose Company (SPC) structures.

The new regulations allow companies to create SPCs for facilitating both Islamic and conventional transactions as well as vessel registrations. Transactions that can be facilitated by the new law include acquisitions and financings.

Under the law, Special Purpose Companies can be easily structured and incorporated, while enjoying exemptions from some filing and disclosure rules relating to conventional companies in DIFC. For example, they are not required to hold annual shareholder meetings, can be administered by a corporate service provider and are not required to file annual returns.

Dr. Omar Bin Sulaiman, Governor of the DIFC said:

"The SPC Regulations form part of DIFC's constantly evolving legal framework that aims to provide a supportive environment for financial services companies. DIFC is committed to providing a world-class regulatory framework that offers companies the flexibility necessary to structure a range of financing transactions. At the same time, our regulations ensure that we retain our strong focus on integrity, transparency and efficiency. The enactment of the SPC Regulations will provide a great boost for conventional and Islamic acquisitions and financings in the region."

The SPC Regulations further enhance the position of DIFC as a jurisdiction having a wide breadth of laws where all facets of commercial transactions can be conducted. They also put DIFC on a par with key offshore jurisdictions that offer the ability to establish Special Purpose Companies.

The procedures for setting up an SPC under the DIFC Registrar of Companies are quick and straightforward. The process involves inexpensive fees and minimal annual reporting requirements.

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