Why do you think operating in DIFC is attractive?

ddddddInstitutions and investors across the globe are attracted to operate out of DIFC owing to its highly attractive investment environment including,

         100 per cent foreign ownership and zero per cent tax rate on income and profits

         Strict supervision and enforcement of money laundering laws

         Ultra modern office accommodation, state-of-the-art technology, sophisticated infrastructure, data protection/security,   operational support and business continuity facilities of uncompromisingly high standards.

What are the key components of the DIFC Regime?

For prospective entrepreneurs around the world who would like to operate from the DIFC it is important to understand the unique characteristics of the regime, which comprises of three independent bodies

DIFC authority, which develops strategies, provides direction and creates laws and regulations that govern non- financial services activities including employment law, companies and commercial law and real estate law. It is also responsible to attract licensees to operate in the DIFC.

The Dubai Financial Services Authority (DFSA) which creates regulatory and legal framework built on the best practices of leading jurisdictions in Europe, North America and the Far East.  The DFSA's guiding principles have been: integrity, transparency and efficiency. After reviewing the laws and regulations of the world's major financial centres, only the best rules have been considered and enhanced to produce a clear and flexible regulatory framework.

DIFC Courts are an independent judicial system, which will deal with matters arising from and within the DIFC.

Then, what about, DIFX?

It is has been commonly mis-understood that DIFX is a regulatory body like DFSA. It is wrong. DIFX is one of the two subsidiaries of DIFC. The other one is Hawkamah Corporate Governance Institute

Hawkamah Corporate Governance Institute: is an autonomous international association whose mission is to assist the countries and companies of the region to develop and implement sound and globally well-integrated corporate governance frameworks

Dubai International Financial Exchange: is an Authorized Market Institution (AMI) which intends to provide a platform for listing and trading in variety of financial instruments.

It is very important to note here that DIFX is like any other Authorized firm, and is subject to regulation and supervision by DFSA. In the future there may be several other AMIs which may compete with DIFX.  For example Dubai Merchantile Exchange is also an AMI which intends to provide a platform for trading energy futures contracts.


What are the requirements for ‘Getting Licensed’ in DIFC?

Firms desirous of carrying out financial services from DIFC needs to be authorized by the DFSA, which requires demonstration of ‘fitness and propriety’.  Applicant’s relationship with the group entities, and the regulatory history of the group will play a key role in the application review process.  Firms, which are subject to regulatory supervision in other comparable jurisdiction, will be in a better position to demonstrate their ability to comply with the stringent regulatory requirements of the DIFC regime. A sound business plan, experience and qualification of the promoters and the key personnel, ability and willingness to comply with all the prudential rules including the capital adequacy high standard of business conduct and robust risk management system are some of the key aspects which DFSA would like the applicant to demonstrate.

What are the Capital Requirements? 

While the base capital requirements are straightforward the actual ongoing capital requirement will depend on the nature, size, volume and complexities of the business and the exposure of the Authorized firm to various forms of risk including credit risk, market risk, liquidity risk etc. The capital requirement can range from US $ 10,000 for a category 4 firm, which is licensed to provide generic advice on financial instruments, to US $ 100,000,000 for a reinsurance firm.

What are the Ongoing Supervision and Reporting Requirements?

DFSA will review and test compliance on ongoing basis, which entails the timely submission of various reports and notifications as prescribed in Supervision (SUP) and Prudential (PIB and PIN) modules.  The rules become increasingly complex as the firm’s activities become more complex.

What is compliance? Can it be outsourced?

An applicant applying for authorization and also an already authorized firm conducting business in DIFC needs to have the appropriate expertise and experience to understand and comply with the relevant applicable rules and to keep abreast of the changes in the applicable rules.  It is possible for the authorized firms to outsource the compliance process to external consultants such as ‘Morison Menon Limited’.