DIRECTORS’ DUTIES IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE
Since its inception in 2004 as a key strategic component of the long-term economic growth strategy of Dubai, the Dubai International Financial Centre (DIFC) has established itself as one of the world’s leading financial centres. The DIFC is now home to most of the world’s top 25 banks, seven of the top 10 insurance companies and nearly all of the top 10 global law firms.
This growth lends itself in part to the fact that the DIFC offers the safeguards of a world-class regulatory and legal framework, combined with favourable commercial aspects such as 100 percent foreign ownership and a 50-year guarantee of zero taxes on capital and profit repatriation. With an increasing number of companies being established in the DIFC, it is important that the directors of such companies have a clear understanding of their duties and obligations.
This article provides a brief overview of certain key duties of directors of companies incorporated in the DIFC. While the duties of directors are not codified in a single consolidated piece of legislation, there are several provisions in certain DIFC laws and regulations which are applicable to directors. The DIFC is subject to its own laws and regulations and has its own court system which is generally outside the purview of the local United Arab Emirate (UAE) courts and regulators.
However, there are certain key provisions of UAE federal law which are relevant to directors of DIFC companies (specifically Federal Law No. 3 of 1987 ‘Promulgating the Penal Code’ (the Federal Penal Code)). A breach of a director’s duties may expose such director to personal liability, in some cases in the form of civil liability to the company or other persons, and in other cases, criminal liability.
Jan-Mar 2017 Issue
King & Spalding LLP