The past couple of years have seen an increase in the number of body corporates headquartered in foreign jurisdictions taking the decision to move their operations to the UAE, in particular the financial freezones, such as the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC).
With the changing geo-political landscape across the globe, UAE has increasingly become an attractive jurisdiction, offering stability and security, familiarity of common law principles (in certain cases), and standards which are at par with international level.
What is Redomiciliation?
Re-domiciliation or “Continuance” is a legal process by which a company incorporated in its original jurisdiction transfers its domicile to another jurisdiction while retaining its legal status, history, and track record. Once the redomiciliation process is completed, the company is struck off the register in its original jurisdiction, and becomes a company regulated under the new jurisdiction.
How Do UAE Laws Incorporate Redomiciliation?
While the federal laws of the UAE do not provide for redomiciliation into the UAE, several freezones permit the migration into those specific freezones. It is important to understand that the UAE is a federal state, with overarching federal laws applicable across the country. There are also local laws which apply to the respective Emirates in addition to the federal laws. Additionally, several freezones (including financial freezones such as DIFC and ADGM) have been established with their own commercial regulations. These freezones specifically organise redomiciliation into their respective commercial laws.
Based on the requirements of the company proposing to migrate, it would need to assess which jurisdiction would be most suited and accommodating to the company’s business and future plans. Of course, DIFC and ADGM, being financial free zones, are often considered as optimal jurisdictions, given that both are common law-based, having well established rules and regulations, allowing for classes of shares, with both DIFC and ADGM having their own courts. These aspects do have an impact on a foreign company’s decision to migrate, in particular, a company seeking to move to a jurisdiction, whose norms resemble those which the company is used to historically. Of course, redomiciliation or continuation into these jurisdictions is subject to the foreign entity being able to meet the requisite conditions and requirements. The approval for redomiciliation by the relevant authority is discretionary, subject to compliance with internal rules and procedures.
In addition to DIFC and ADGM, other free zones such as Dubai Multi Commodities Centre (DMCC), Jebel Ali Free Zone (JAFZA), RAK International Corporate Centre (RAKICC), and Ras Al Khaimah Economic Zone (RAKEZ), amongst others, also permit migration of companies from foreign jurisdictions into these jurisdictions, subject to meeting the specified conditions.
We will explore each of these jurisdictions in the next part of our series on redomiciliation into UAE.
Authors: Malack El Masry (Partner, Corporate Commercial and M&A Practice) and Maryam Quadri (Associate, Corporate Commercial and M&A Practice)