For you If:
- You want to benefit from DIFC Infrastructure
- You do not need office space
- You want to hold an asset in any GCC country
- You want an inexpensive vehicle to use in a structured transaction
Special Purpose Companies in DIFC, Dubai
A DIFC Special Purpose Company (SPC) is a private company limited by shares and incorporated under the laws of the DIFC. Special purpose companies in DIFC have access to the DIFC’s advantageous infrastructure including its own court system which is presided over in English. It is specifically designed to be used in structured finance transactions. By virtue of being established in the DIFC, an SPC enjoys numerous unique benefits.
There is no requirement to lease office space in order to incorporate an SPC. Instead, the company is required to maintain a registered office and address within the free zone through a Corporate Service Provider (CSP) such as Alpha Management Limited. With no requirement to lease office space, the formation of an SPC is not expensive yet enjoys the benefits from the DIFC jurisdiction which is world renown as being one of the most respected financial jurisdictions in the region.
Standard process for setting up a DIFC Special Purpose Company
Consultation with Alpha Management; we have the experience and the insight to determine the best structure for DIFC companies.
We will prepare and submit a Transaction Description with details of the proposed structure and obtain provisional approval from DIFC.
Once we have provisional approval, we will prepare and submit the full company application and submit to the DIFC Registrar.
Once we have the final approval, the Shareholders can meet to sign the Articles of Association in front of the Registrar in DIFC, and the company is formed.
The advantages of a DIFC Special Purpose Company
- 100% Foreign Ownership
- 100% Capital Repatriation
- Guarantee under Article 14 of Dubai Law 9 of 2004 for zero taxes for 50 years
- No requirement to lease office space
- Benefit of DIFC Common Law Courts
- No audit / AGM / accounts filing required
- 100% Corporate and Personal Tax exemption
- No withholding tax, inheritance tax or stamp duty
- Liability of shareholders limited to their commitment on the share capital only
- Excellent infrastructure in DIFC
Regulations for DIFC Special Purpose Companies
The SPC Regulations provide that DIFC companies categorised as SPC's must be used to perform “Exempt Activities”. A transaction is defined by the SPC regulations as “an Islamic or conventional structured finance transaction for the benefit of the initiator in connection with which the SPC has been established”. An initiator is defined as being “the entity for whose transaction the SPC has been established.” An SPC cannot be used as general corporate holding DIFC companies or to operate as a trading business. It cannot serve as the general partner of an investment partnership. In addition, any financial services conducted from the DIFC will need to be approved and regulated by the DFSA. An SPC may not be suitable for all types of investors due to the maximum limit of three shareholders allowed. Each shareholder is required to be either; a nominee holding the shares on trust for discretionary purposes, the initiator or another SPC. A minimum of two directors are required and the CSP must provide the majority of the Board. Corporate directors are not permitted. The CSP used to set-up the company must also serve as the Company Secretary.
An SPC is not a typical alternative to other offshore jurisdictions such as BVI or Cayman Island and during the application process, the DIFC Registrar will decide whether it is a correct “fit” for a structured finance transaction. SPC’s do NOT provide the investor with Residency Visas.
An SPC is not a typical alternative to other offshore jurisdictions such as BVI or Cayman Island and during the application process, the DIFC Registrar will decide whether it is a correct “fit” for a structured finance transaction. SPC’s do NOT provide the investor with Residency Visas.CORPORATE SERVICE PROVIDER
Only licensed CSP’s may incorporate an SPC and Alpha Management Limited has been authorised by the DIFC to form such entities. Among other services, a CSP will provide the majority of directors, act as the Company Secretary, and provide administrative services including all company filings and liaise between the SPC and the Registrar of Companies in DIFC. Please consult us if you are interested in learning more about forming an SPC.