DIFC enacts new Family Arrangement Regulation
In December 2022, Dubai International Financial Center (the “DIFC”) launched a consultation paper proposing the new DIFC Family Arrangement Regulation (the “Regulation”). Following the consultation period, the DIFC issued the Regulation which became effective as of 31 January 2023.
The Regulation aims to issue legislation in line with recent initiatives from the UAE federal government and issuance of Federal Decree-Law No. 37 of 2022 (“UAE Family Business Law”) on family business structures in the free zones and the mainland. One of the objectives of the Regulation is to ensure the better operation of family businesses, succession and legacy planning and preservation of wealth.
In summary, here are the highlights of the Regulation as enacted in the DIFC:
The Regulation repealed the existing Single-Family Office Regulations (the “SFO Regulation”) and DIFC Single Family Office Regime;
The Regulation now permits licensing of a new Family Office regime that can serve one or more families;
Multi-family office activities do require specialized authorization and licensing from the Dubai Financial Services Authority (DFSA), if the intention is to provide financial services to multiple families as a business activity.
In addition, the Regulation provides certification and accreditation mechanisms that will enable the family businesses and their advisors to support benefits and incentives planned for family businesses in accordance with the UAE Family Business Law. Furthermore, the certification mechanism promotes adherence to principles of good conduct and governance, meanwhile, the accreditation mechanism enables the advisors of the family businesses to maintain due diligence in the performance of their responsibilities.
Enactment of this Regulation follows the recent inauguration of the DIFC Family Business Centre and introduces new mechanisms that will enhance the operation of family businesses in the DIFC. The change is a much anticipated update to the regime and is expected to further enhance DIFC’s position as a hub for global and regional family owned businesses, ultra-high network individuals and private wealth.