Dubai Multi Commodities Centre (DMCC) was established in the year 2002 as flagship hub for global commodities trade providing state-of-the art physical, financial and market infrastructure. DMCC released its new regulations viz. DMCC Company Regulations 2020 pertaining to company formation as well as operation for new and existing entities in the freezone.
The outline of the new rules and regulations are as follows:
- Articles of Association (AoA): The Section 3 of the new regulations laying down company registration, branch establishment and licensing procedure provide flexibility to the entities to adopt template Articles prescribed by the DMCC Authority or customize the clauses within the ambit of the template of the Articles of DMCC. The company also has freedom to adopt their unique Articles but for this they have to present a memo to the Registrar citing the reason of the same and a legal opinion that states that such Article shall be in compliance with the standard articles. In case Registrar does not accept it then the company shall be given 20 days to amend them.
- Shares: The Section 6 of the new rules pertaining to share capital, shareholder, and share capital reduction, lays down that the share capital shall be denominated in UAE Dirhams and be sufficient for pursuing the activities that entity is licensed for. Also, Registrar is empowered to specify the minimum share capital for the entities as per the sector/industry.
Moreover, the entities at DMCC are permitted to issue different classes of shares stipulated in the AoA and also acquire treasury shares.
- Corporate Personnel: The new provisions mentions under the new rules that Registrar shall at all times Register of entities at DMCC with details such as names and addresses of Directors, Secretary and Manager. Moreover, the rules elaborate the details of the role that need to be performed by them.
- Dividends: Section 8 of the rules discusses about the provisions regarding dividends and distributions and in-depth deals with distributable and undistributable dividends and restrictions on distribution. Further, it also mentions the consequences of an unlawful distribution such as shareholder liable to repay it back to the company.
- Dormancy: The new provision related to dormant company has been introduced in the new DMCC Rules under Section 23 which enable the voluntary suspension of a commercial licence for period upto 12 months following an ordinary resolution and acceptance of the Registrar.
- Winding-up: The new regulations from Section 14 to 21 deal with detailed provisions related to winding-up either on voluntary basis or during insolvency.
- Penalties: Section 22 deals with issue of penalties and explicitly mention that punishing the contravention shall be at absolute discretion of DMCCA. The penalties enlisted in the new rules are strike-off, terminating licence and fines.
The formulation of new rules by DMCC has increased its attraction as DMCC is Rated “A” at Standard & Poor’s (S&P) Ratings Services. Also, DMCC is Dubai’s 1st entity and the second in entire UAE to receive a perfect rating from leading independent credit rating agency.
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