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| Introduction to DIFC for Alternative Investment Funds |
The Dubai International Financial
Centre (DIFC) is a top financial hub in Dubai, known for business, fintech, and
lifestyle. Established in 2004, it ranks among the top 10 global financial
centers. DIFC is unique because it operates under a Common Law framework with
its independent regulator, the DFSA, and a separate judiciary, DIFC Courts.
Besides business, DIFC is also a lifestyle destination, offering shops, cafes,
restaurants, art galleries, apartments, parks, and hotels.
Strong India-UAE Ties
India and the UAE share a close
relationship that goes back centuries. High-level visits by leaders from both
countries highlight this strong bond. In 2015, the Indian Prime Minister and
the UAE's leader announced a $75 billion fund to boost ties further. With 3.2 million
Indians living in the UAE, they form the largest expat community in the
country. The trade between India and the UAE has grown significantly, with
bilateral trade crossing $52 billion in 2016-17. India is the third-largest
foreign direct investor in the UAE, with $6.5 billion invested, and Indians are
the largest foreign buyers of Dubai real estate.
Why Choose DIFC for Business Setup in Dubai?
DIFC is one of the only two
financial free zones in the UAE, offering 100% foreign ownership, unlike the Dubai
mainland, where full foreign ownership is restricted. For Indian investors,
DIFC is a gateway to markets in the Middle East, Africa, South Asia (MEASA),
Europe, Asia, and the Americas—a region with an estimated $7.4 trillion in
annual trade.
Indian Companies and DIFC
DIFC has a strong track record of
attracting Indian companies, especially in wealth management, banking, and
legal services. Indian companies are a key part of DIFC's strategy, with plans
to triple its operations by 2025. Major Indian banks like SBI, ICICI, and Axis
Bank have set up in DIFC, benefiting from its robust business infrastructure
and access to a large non-resident Indian community of 3.3 million.
Advantages of Setting Up in DIFC
- Legal and Regulatory Benefits
- 100% foreign ownership allowed
- No restrictions on hiring foreign employees
- Free capital repatriation
- Tax Advantages
- Zero tax on profits, capital, or assets for 50 years
- No tax on employee income
- Trust and Confidence
- Independent regulator (DFSA)
- Common law judicial system, distinct from UAE's legal
system
- Thriving Ecosystem
- Hub for international firms, investment funds, banks,
and financial institutions
- Home to top law and auditing firms
- Strategic Location
- Positioned to benefit from the growing South-South
trade between Asia and Africa
- Central to the global economy with a focus on emerging
markets
Category 3C – Asset Management and Fund Management
- Base Capital Requirement: USD 500,000
- Base Capital for Exempt and Qualified Investment Fund Managers: USD 70,000
- Main Activities: Managing assets, providing custody, issuing stored value for money services.
Category
3C licenses are for companies involved in managing assets, funds, or
providing other financial services like trust services or custody. Asset
managers under this category can apply for a modification of the rules
depending on their activities.
How Can Indian Fund Managers Set Up
in DIFC?
Indian Fund Managers have two
primary options:
- External Fund Manager
- Recognized by DIFC if regulated by SEBI, India's
financial regulator
- Can manage domestic funds like DIFC Exempt Funds and
Qualified Investor Funds
- Domestic Fund Manager
- Fast-track option available for setting up under a
Category 3C license
Types of Funds in DIFC
- Exempt Funds
- Minimum subscription of $50,000
- Limited to 100 unit-holders
- Offered via Private Placement
- Qualified Investor Funds
- Minimum subscription of $500,000
- Limited to 50 unit-holders
- Offered via Private Placement
Office spaces
Every entity registered in the DIFC is required to lease a physical
office. You can choose from the Gate and surrounding buildings, or other
buildings within the DIFC, such as Emirates Financial Towers, Central
Park, Park Avenue, Burj Daman, and Currency House.
Prices vary, depending on the space availed and the building. Here is an indication of the prevailing rates:
DIFC Business Centre – from a two-desk office at US$ 35,000.
DIFC Fitted Offices – from US$ 55 per square foot.
Other buildings – from US$ 32,000 per annum
Required appointments (In Detail)
As
with other category firms, the DFSA expects that the firm be adequately
staffed depending on the scale, scope and nature of the product
portfolio that is proposed to be offered from the DIFC. At a minimum,
the DFSA would like to see the following appointments:
Board of Directors –
a well-organized, diverse Board with Independent Directors and robust
governance policies. The Chair would have to be a non-executive
Director.
Senior Executive Officer (SEO) – Senior banking professional with over 10-15 years of experience, ordinarily resident in the UAE.
Finance Officer (FO)
– Senior and suitably-qualified finance professional. In case of a
group, the FO can be from the parent company and does not have to be
resident in the UAE. This role can be outsourced to us.
Risk Officer – Senior risk professional, can be from the parent entity in case of a group.
Compliance Officer (CO)
- Senior compliance professional with over 10 years of experience,
ordinarily resident in the UAE. This role can be outsourced to us.
Money-Laundering Reporting Officer –
Senior AML professional with over 10 years of experience, ordinarily
resident in the UAE. This function can be combined with Compliance and
one individual can carry out both responsibilities.
Internal Auditor - Senior and suitably qualified internal audit professional. Usually outsourced to a professional firm.
External Auditor - Senior and suitably qualified external audit firm. The DFSA maintains a list of recognised auditors, and there are 15 such firms at present.
Total
cost Bifercation = Annual License Fees + One Time Registration /
Application Fees + Hiring of Required Appointments + Annual Office Lease
+ Annual Visa Cost + One Time T&T Consultancy & Service Fees
Conclusion
DIFC is an ideal location for Indian
Fund Managers looking to expand into the MENASA region. With a strong
regulatory framework, tax advantages, and a vibrant ecosystem, DIFC offers a
solid base in Dubai for financial companies to grow and serve the large Indian
community in the UAE.
Frequently Asked Questions
- What are the benefits of setting up a company in DIFC?
- 100% foreign ownership, zero taxes, and a supportive
legal framework.
- Can Indian Fund Managers operate in DIFC?
- Yes, they can set up as External or Domestic Fund Managers,
with DIFC recognizing SEBI as a comparable authority.
- What types of funds can be established in DIFC?
- DIFC offers Exempt Funds and Qualified Investor Funds,
catering to Professional Clients.
- Why is DIFC a preferred location for Indian companies?
- DIFC provides access to the MENASA markets, a strong
regulatory environment, and a large Indian expatriate community.
Our Services
Talreja & Talreja LLC assists
with:
- Reviewing fund structures and advising on regulatory
frameworks
- Preparing Regulatory Business Plans and financial
projections
- Providing outsourced compliance and finance officer
services
- Setting up legal structures and fund documentation
- Assisting with bank account opening and obtaining
necessary permissions
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For more information or assistance with your business setup, contact us on WhatsApp at +971 50 475 7239 or email us at info@talrejaandtalreja.com
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