Companies Law

DIFC Law No. 5 of 2018 • Enacted: 12 Nov 2018 • Status: Consolidated/Active

The primary statute governing the incorporation, registration, and management of companies within the DIFC.

Part 3: Incorporation & Registration

Types of Companies Article 8
"The following types of Companies may be incorporated under this Law: (a) a Private Company; (b) a Public Company; or (c) a Recognised Company."

Plain Explanation

This article restricts legal structures to three specific types. A Private Company (Ltd) is standard for most businesses (max 50 shareholders). A Public Company (PLC) is required if the entity intends to list on an exchange or offer securities to the public. A Recognised Company is a branch of a foreign existing company.

Type Suffix (Art 34) Minimum Share Capital (Art 31) Shareholder Limit
Private Company "Limited" or "Ltd" None prescribed (per Regs) Max 50 (Art 27)
Public Company "Public Limited Company" or "PLC" $100,000 (Art 31(2)) No Limit
Articles of Association Article 11-12
"A Company may: (a) adopt the Standard Articles; or (b) adopt Articles ... which modify or exclude the Standard Articles." (Art 12)

Plain Explanation

Every company must have a constitution (Articles). You can either use the default template provided by DIFC (Standard Articles) or draft your own (Bespoke Articles). If you provide no Articles, the Standard Articles apply by default.

Incorporator Decision
Standard Articles
(Default)
Bespoke Articles
(Must comply with Law)
File with Registrar

Part 7: Directors & Management

Duties of Directors Articles 73-85
"A Director of a Company shall act in the way he considers, in good faith, would be most likely to promote the success of the Company for the benefit of its Shareholders as a whole." (Art 74)
Duty Article Requirement
Act within powers Art 73 Follow the Articles of Association; use powers only for proper purpose.
Promote Success Art 74 Act in good faith for shareholder benefit.
Independent Judgment Art 75 Do not subordinate discretion to others.
Reasonable Care Art 76 Exercise care, skill, and diligence reasonably expected of a person in that role.
Avoid Conflicts Art 77 Avoid situations with direct/indirect interest conflicting with Company.
⚠️ Civil Liability (Art 85): Consequences of breach include:
  • Restoring the Company's property/money.
  • Compensating the Company for damages/loss.
  • Accounting for profits made from the breach.

Part 11: Accounts & Reports

Accounting Records Article 103
"Every Company shall keep Accounting Records which are sufficient to show and explain its transactions... and disclose with reasonable accuracy... the financial position of the Company."

Plain Explanation

Companies must maintain books that allow financial statements to be prepared effectively. These records must be kept at the Registered Office (or other approved place) and preserved for at least 6 years (Art 104).

Practical Example:

A DIFC holding company must keep invoices, receipts, and bank statements. If the records are kept outside the DIFC, returns must be sent to the DIFC office every 6 months to ensure the financial position can be determined at any time.

⚠️ Penalty (Art 103(5)): Fine for contravention (Standard Fine Scale as per Operating Law).

Companies Law Architecture Mindmap

Formation
Art 8-32
  • Incorporation
  • Articles
  • Names
  • Registered Office
Finance
Art 33-52
  • Shares
  • Capital Reduction
  • Distributions
  • Dividends
Governance
Art 53-102
  • Directors' Duties
  • Meetings
  • Resolutions
  • Protection of Minorities
Transparency
Art 103-130
  • Accounts
  • Audits
  • Annual Returns
  • UBO (Regs)