DIFC law amended to ensure greater clarity

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DUBAI - Dubai has unveiled key legislative changes aimed at ensuring greater legal clarity and improved corporate governance for Dubai International Financial Centre, or DIFC.

By Issac John

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Published: Sun 24 Apr 2011, 11:16 PM

Last updated: Thu 23 May 2024, 11:40 AM

Under the new law of amendments issued by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, the region’s most sought-after financial and business gateway will have a new Higher Board.

The Higher Board will comprise representatives of the three bodies under the DIFC — DIFC Authority, Dubai Financial Services Authority (DFSA) and DIFC Courts. The amendments made to the original law of 2004 establishing DIFC will be enforced with immediate effect. The changes seek to provide “greater legal clarity and transparency, and provide stronger support to DIFC’s drive to become a global financial centre, complying with the highest levels of good governance and best practices,” a DIFC statement said.

The DIFC President Shaikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, will preside over the Higher Board. The board will be invited to meet at least twice a year. “The DIFC Higher Board will ensure that the three DIFC bodies operate in harmony and unity of purpose by strengthening the levels of coordination without affecting their independence,” the statement said.

The new law defines the manner of appointment and the role of the Governor of DIFC. “The Governor is appointed by the Ruler of Dubai upon the proposal of the DIFC President for a four-year term that may be renewed,” it said.

The new law also clarifies the application of all Dubai laws to DIFC including governmental, financial and legal arrangements. “This clarification creates many opportunities for future collaboration between DIFC and other government bodies, fostering cooperation and open dialogue thus enhancing the growth of banking and financial services, ancillary services and commercial and financial activities and strengthens its role in the region.”

The amendments (Law No 7) are the first ever made to the original Law No 9 of 2004, incorporating the DIFC.

The new law comes as part of Dubai’s ongoing strategic commitment to diversify the Emirate’s economy by supporting the growth of the banking and financial services sector through DIFC.

“The amendments provide greater legal clarity and improve the corporate governance of DIFC. These changes further strengthen DIFC’s legal and financial infrastructure as a whole, and reinforce the Government’s commitment to the independence of each of the Centre’s bodies,” said Ahmed Humaid Al Tayer, Governor of the DIFC.

He said the new law marked an important step forward in the growth of DIFC as a global financial hub and complements the Centre’s continuous efforts to develop its services and increase its contribution to the UAE’s economy.”

The new law confirms the DIFC Authority’s independence and put into place a corporate structure of a Board, CEO and executive body. The board will be responsible to the DIFC President. The DIFCA “is now responsible for establishing, regulating and developing the Centre’s payment systems. DIFCA will coordinate with the Central Bank of the UAE in regulating, supervising, operating and using wholesale, large-value payment systems, including a multi-country, multi-currency Real Time Gross Settlement System, allowing the clearing and settlement of payments in foreign currencies in the DIFC.”

“The new law assures companies looking to establish a presence in the region that DIFC offers both a modern infrastructure and a world-class business environment,” said David Eldon, Chairman of DIFCA.

The new legislation also clarifies the roles and powers of the DFSA’s Board and CEO, reinforcing the autonomy and authority of the DFSA’s board. “The new law is a further positive step in the development of the Centre. DFSA will continue its commitment to protect the integrity of DIFC,” said Abdullah M Saleh, Chairman of the DFSA Board of Directors.

The amendments also seek to further reinforce the Government of Dubai’s commitment to the independence of DIFC Courts, by guaranteeing its funding and authorising the Chief Justice to determine the Courts’ rules, procedures, staffing and operation.

“A fair, efficient and transparent judicial system operating independently is a critical component of DIFC’s offering as a world-class financial centre.

We remain committed to uphold the laws of DIFC to the highest international standards, and the new law supports this commitment,” said Michael Hwang, Chief Justice of DIFC Courts.

The DIFC has a current client base of 792 firms, which have registered at the Centre, including 16 of the world’s largest 20 banking institutions.


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