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August 2026 Newsletter

September 7, 2026

1.DIFC’s Reformed Prescribed Company Regime Takes Effect: SPVs Open to All

Overview

The DIFC’s amended Prescribed Company Regulations 2026, enacted on 24 July 2026, came into effect on 2 August 2026, opening the DIFC’s special purpose vehicle regime to any applicant. The reform removes the last of the qualifying purpose, applicant and nexus-based eligibility requirements that had restricted access since 2019, including the previous GCC nexus condition. A Prescribed Company may now be established by any applicant, provided that, where required, a DIFC licensed Corporate Services Provider is appointed as the primary administrative and compliance interface with the Registrar of Companies.

In place of the old eligibility gate, the regime now places the CSP at its centre. CSPs acquire a formal statutory role, responsible for regulatory filings, record keeping and ongoing compliance obligations on behalf of the PC. An Exempt Prescribed Company, broadly one controlled by a DIFC registered person, a DFSA authorised firm, a government entity or a listed company, does not require a CSP. Prescribed Companies remain passive holding vehicles: they cannot employ staff or trade, and while a PC may be used in connection with financial services activity, compliance with DFSA administered legislation remains mandatory. Existing non-compliant companies have a six month transition period.

Conclusion

The removal of the GCC nexus opens a cleaner route into the DIFC for international families and foreign investors with no existing GCC connection, and the DIFC’s H1 2026 growth figures, 1,409 foundations and 1,408 family business related entities, show where the demand is. The tradeoff is that the CSP appointment is now the gating requirement for most structures, so engagement models and client onboarding should be reviewed against the new statutory CSP role.

Emergency Financial Crisis Provisions of the Bankruptcy Law: Director Duties in Focus

On 20 August 2026, LexisNexis Middle East published commentary from Dentons UAE on Cabinet Decision No. 94/2026, which implements Title Five of the Financial Restructuring and Bankruptcy Law. The Decision applies to preventive settlement, financial reorganisation and bankruptcy where the debtor’s business has been affected by the Iranian hostilities in the country, for bankruptcy applications submitted from 28 February 2026. It operationalises the Emergency Financial Crisis regime set out in Articles 251 to 257 of Federal Decree-Law No. 51/2023.

During a declared EFC period, directors gain certain protections. They may initiate preventive settlement or bankruptcy proceedings without a trustee, negotiate settlements permitting cramdowns, and pay unpaid employee salaries without preference concerns, and the risk of criticism for continuing to trade is reduced where they act responsibly and in good faith. Creditors are temporarily prevented from initiating bankruptcy proceedings, and debtors are not required to file. Where a debtor files and can show that its distress resulted from the hostilities, the court may accept the application without appointing a trustee, and a 40-business day window to negotiate a creditor settlement may be granted, with a two thirds majority by value binding all creditors.

Crucially, the protections are not a shield against liability for breaches of fiduciary or statutory duties, fraud, intentional misconduct, gross negligence, misuse or dissipation of assets, or bad faith transactions. Directors must still act in line with the company’s constitutional documents and applicable law.

Conclusion

This is squarely relevant to the firm’s corporate clients, particularly managers of LLCs and boards of joint-stock companies. For any client whose business was affected in the relevant period, the temporary regime creates genuine restructuring options worth considering. But the directors’ duties message should be delivered plainly: the relief is conditional and behavioural, and the ordinary duties, record keeping, equal treatment of creditors, and documented good faith decision making, still govern.

Key Takeaways:

  • Cabinet Decision No. 94/2026 implements Title Five of the Bankruptcy Law (EFC regime)
  • Applies where distress results from the Iranian hostilities, for applications from 28 February 2026
  • Builds on Articles 251 to 257 of Federal Decree-Law No. 51/2023
  • Directors gain protections: no mandatory trustee, cram-downs, salary payments without preference risk
  • Protections do not cover fraud, gross negligence, bad faith or breaches of fiduciary or statutory duty
  • Ordinary director duties and good-faith documentation continue to apply.

FINANCIAL SERVICES REGULATION

2.FSRA Consultation Paper No. 2 of 2026: Enhancements to Transfer Schemes

Overview

On 27 July 2026, the FSRA published Consultation Paper No. 2 of 2026, “Proposed Enhancements to Transfer Schemes”, proposing changes to the regime under Part 7 of the Financial Services and Markets Regulations 2015 that governs the transfer of all or part of the business of an ADGM Authorised Person or Recognised Body. Comments are open until 21 September 2026, so the consultation runs through August.

Currently, all such transfers, other than transfers of Domestic Funds, require Court approval before they take effect. That process allows a transfer to occur without obtaining consent from every affected client or third party, while protecting their interests, but the mandatory Court approval requirement can create significant cost and delay, particularly for smaller and less complex transfers. The FSRA’s proposals aim to narrow the scope of mandatory Court sanction and introduce a new Modified Transfer Scheme regime permitting certain transfers to proceed without Court sanction.

Conclusion

This is relevant to any client contemplating the acquisition or disposal of all or part of a financial services business in the ADGM. If adopted, the reform would materially reduce the cost and timeline for smaller business transfers. Clients currently relying on the Part 7 process, or planning a transaction that would use it, should factor the proposed changes into deal timing.

Key Takeaways:

  • FSRA CP No. 2 of 2026 published 27 July 2026, comments close 21 September 2026
  • Addresses Transfer Schemes under Part 7 of the FSMR
  • Proposes narrowing mandatory Court sanction and a new Modified Transfer Scheme regime
  • Relevant to acquisitions and disposals of ADGM financial services businesses.

AML & FINANCIAL CRIME COMPLIANCE

UAE Publishes Public Edition of the Proliferation Financing National Risk Assessment

Overview

The UAE’s National Committee for Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation Financing has approved and published the public edition of the UAE Proliferation Financing National Risk Assessment, issued pursuant to National Committee Decision No. 13 of 2026. The publication is intended to increase the private sector’s understanding of proliferation financing risk and to enhance the readiness of competent authorities to address evolving risks.

Importantly, the PF NRA does not change the underlying legal framework. What it does is set clearer expectations on what firms must do, and what they must be able to evidence, in assessing and mitigating proliferation financing risk in practice. The recurring theme is that PF risk is a consideration for all Relevant Persons, not only firms that directly handle customer funds, and that regulatory exposure typically arises not from intentional misconduct but from insufficient translation of national risk findings into firm level controls.

Conclusion

For the firm’s AML and compliance clients, this is a documentation and evidencing exercise more than a legal change. Firms should map the PF NRA’s findings into their enterprise risk assessments and be able to show how national level risk translates into their own controls. The absence of a legal change is not a reason to defer: supervisors increasingly test whether NRA findings have actually been operationalised.

Key Takeaways:

    • Public edition of the UAE PF National Risk Assessment approved and published
    • Issued pursuant to National Committee Decision No. 13 of 2026
    • No change to the underlying legal framework, but clearer expectations on assessing and evidencing PF risk
    • PF risk applies to all Relevant Persons, not only those handling customer funds
  • Firms should translate national risk findings into firm level controls

TAX & COMPLIANCE

Corporate Tax: 30 September Filing Deadline Approaches for December Year-Ends

Overview

There was no headline corporate tax legislative change in August, but the month is the practical run up to a hard deadline. For taxable persons with a financial year ending 31 December 2025, the first corporate tax return and any payment are due by 30 September 2026, nine months after the end of the tax period. All mainland UAE companies must file regardless of size or profit level, and a nil liability does not remove the filing obligation.

Two points carry over from the firm’s earlier guidance and remain live through August. Small Business Relief, available to businesses with revenue up to AED 3 million, must be positively elected on the return rather than applied automatically. And free zone status does not by itself deliver a zero rate: qualifying free zone person treatment must be supported by genuine economic substance. The restructured penalty framework under Cabinet Decision No. 129 of 2025, effective 14 April 2026, applies a late payment penalty at an annual rate of 14 per cent.

Conclusion

August is the window to get client filings in order before the September deadline compresses. Clients relying on Small Business Relief or qualifying free zone person status should confirm the election is made and the substance position is documented, rather than discovering the gap at filing.

Key Takeaways:

  • Corporate tax return and payment due 30 September 2026 for 31 December 2025 year-ends
  • All mainland companies must file; a nil liability does not remove the obligation
  • Small Business Relief (revenue up to AED 3 million) must be actively elected
  • Qualifying free zone person status requires evidenced economic substance
  • Late payment penalty runs at 14 per cent per annum under Cabinet Decision No. 129 of 2025.

DISPUTE RESOLUTION

DIFC Arbitration and Mediation Law: Major Reform in Progress

Overview

The DIFC is advancing the most significant overhaul of its arbitration framework since 2008. Following a public consultation launched on 11 June 2026 (DIFCA Consultation Paper No. 2 of 2026), which closed in early July, the DIFC proposes to replace the existing DIFC Arbitration Law (DIFC Law No. 1 of 2008) with a renamed Arbitration and Mediation Law. As at the date of this edition, the reform remains at the post-consultation stage and has not been confirmed as enacted.

The proposed changes are wide-ranging. On the arbitration side, tribunal powers would be expanded to include provisional awards, emergency arbitrators and security for costs, with clarified remedial powers and express provision for partial and separate awards. The window to apply to set aside a DIFC-seated award would be shortened to 30 days from receipt, down from the previous three months, unless the parties agree a longer period in writing. On the mediation side, an entirely new statutory framework would be introduced, covering the conduct of mediation, the role of the DIFC Courts Mediation Centre, confidentiality, and restrictions on a mediator later acting as arbitrator in the same dispute. Most notably, a settlement agreement arising from mediation would be binding and directly enforceable through the DIFC Courts.

Conclusion

For clients using DIFC-seated arbitration, this is a development to track closely rather than act on yet. The compressed 30-day set-aside window is the single most important practical change, and it should feed into how dispute resolution clauses and post-award strategy are approached once the law is enacted. Clients negotiating DIFC arbitration or mediation clauses now should be made aware that the framework is changing, so that agreements drafted today remain fit for purpose under the new regime.

Key Takeaways:

  • DIFC consulted (DIFCA CP No. 2 of 2026) on replacing the Arbitration Law with an Arbitration and Mediation Law; not yet confirmed as enacted
  • Expanded tribunal powers: provisional awards, emergency arbitrators, security for costs
  • Set-aside window shortened to 30 days from receipt (from three months), unless parties agree otherwise in writing
  • New statutory mediation framework, with mediated settlement agreements binding and enforceable through the DIFC Courts
  • Clients drafting DIFC-seated clauses now should anticipate the new regime

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