In brief:
• Looking at the use and consequences of the new one-day misdemeanor court for low-value cheque-based crimes, based at police stations.
• Considering the new Dubai Law on Criminal Orders that allows public prosecutors to directly issue judgments on defendants by imposing a fine, without needing to refer the matter to the relevant court.
The Emirate of Dubai has recently launched two new regulations in an attempt to make the criminal legal system more efficient and to expedite smaller cases. Those are:-
1) The Dubai initiative for one day misdemeanor court proceedings.
2) Dubai Law No. 1 of 2017 on Criminal Orders [judgments].
1) The Dubai initiative for one day misdemeanor court proceedings.
In March 2017, Dubai adopted a new initiative for one day court proceedings, which is a new process whereby some of the police stations would have presiding judges to review and apply rules on specific minor cases in just one day.
While this is currently being implemented in the Barsha and Muraqabat police stations, we understand that the aim is to expand this initiative to other police stations.
The initiative is aimed toward the review of simple cases and to ruling on them in an expedited matter (i.e. within one day) which should help reduce the backlog of cases in the courts, and make the costs of dealing with smaller cases more affordable.
Among the types of cases that are currently being reviewed are the following:-
Issuing a cheque in bad faith.
Endorsing a cheque in bad faith.
Additional cases that are dealt with, include drinking alcohol without a licence, driving while under the influence, being an unlicensed street vendor, street begging and the non-payment of outstanding fees.
The defendants can face a fine or imprisonment, but they are still able to file an appeal. If the defendants deny the charges or request a lawyer then the case can take longer than a day.
The initiative is currently being reviewed and assessed with the aim of further refining and improving it.
It appears that the primary purpose of such an initiative in relation to cheque cases is to handle cases for relatively small sums, where the defendants have admitted liability.
It remains to be seen if there are specific amounts for cheques that will render the matter subject to such a summary review, or whether all cheques will fall within that new initiative.
2) Dubai Law No. 1 of 2017 on Criminal Orders [judgments].
Similarly to the above initiative, Dubai Law No. 1 of 2017 addresses the ability of Public Prosecutors to issue “Criminal orders” [judgments].
The law was issued on 30 January 2017, published on 20 February 2017 and comes into effect 3 months after publication.
The law provides public prosecutors with the ability to directly issue judgments on defendants by imposing a fine, without needing to refer the matter to the relevant court.
Article 2 of the law clarifies that it applies to misdemeanors that are punishable only by a fine, or by a fine or incarceration.
Article 4 of the law states that that the public prosecutor in those cases is entitled to issue the “Criminal Order” [judgment] against a defendant who is proven to have committed the crime, subject to the fact that the fine imposed not exceeding 50% of the amount prescribed in the relevant law.
The defendant is then entitled to object within 7 days of the date of the “Criminal Order” [judgment], upon which the public prosecutor’s order shall be considered as null and void and the matter shall be referred to the relevant court.
The “Criminal Order” [judgment] becomes final and binding upon the expiration of the objection period or upon the payment of the fine.
Conclusion
It would appear that the obvious benefit of adopting such new systems is providing a fast track process that resolves minor cases that may not justify lengthy waiting times and proceedings.
This system should reduce the load of the regular courts, thus enhancing the efficiently of the entire system
This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.
In brief:
A Working Group was set up in the DIFC to consider changes to the way the wealth management industry is administered in the DIFC
Various recommendations were made, including changing the requirements on leasing office space, simplifying the application for a Licence for Non-Regulated Holding Entities, and allowing for the recording of joint ownership of shares
This is the first part of a two-part series looking at proposed changes to DIFC administration.
Members of the Hadef Corporate team were recently asked to join a working group commissioned by the Governor of the Dubai International Financial Centre (“DIFC”). The Wealth Management Working Group’s (the “Working Group”) primary purpose was to consider the present status of the wealth management industry and the legislation and regulation in in the DIFC relating to it. The Working Group was requested to formulate and propose strategies, policies and objectives relating to the wealth management industry in the DIFC, and submit these to the DIFC Authority (‘DIFCA”) by way of a white paper for consideration.
Highlighted below are some of the Working Group’s key findings in relation to factors inhibiting potential new clients to the DIFC:
1. Office Space Lease Requirements
Applicants for a licence in the DIFC are required to rent office space suitable for the operations of the company to be incorporated. This requirement applies to all licence applicants other than (i) entities that share ownership control with an entity that already has a lease in the DIFC; (ii) Intermediate Special Purpose Vehicles; and (iii) Special Purpose Companies.
Typically, the minimum size of the office space to be rented depends on the number of employees the applicant wishes to hire.
The Working Group found that the requirement to lease office space in the DIFC can act as a deterrent, because DIFC office rents are relatively high in the Dubai market; common laws offshore jurisdictions usually don’t require office leases; and the ADGM does not require office leases in some instances.
The Working Group recommended that the DIFC Authority (“DIFCA”) take the following steps:
a. Consider making a ‘virtual office’ solution available to applicants for a limited period of time, in situations where DIFCA may want to encourage growth in particular industries; and
a. Publication of clear guidance on the DIFC website as to the requirements for DIFC establishments sharing offices, and the application process regarding obtaining a no-objection letter from DIFCA in this circumstance.
1. Requirements for a Licence for Non-Regulated Holding Entities
Under the current DIFCA/DIFC Registrar of Companies (“ROC”) regime, the guidelines for the application process to establish or register vehicles in the DIFC is not always clear. Feedback received from Working Group members indicated that the process can be perceived as subjective, and the application criteria vague. This may deter decision makers when assessing whether a DIFC licence application is a viable path forward for the legal structure of their business.
The requirement to submit a detailed business plan for licence applications in the DIFC was also identified as a potential source of frustration.
The Working Group recommended that ROC and DIFCA simplify the application process and introduce more transparency by:
a. formulating a detailed set of criteria for application and licence approvals, and publishing them on the DIFCA website;
b. reconsidering the requirements for the business plan and attempting to streamline these; and
c. permitting a single business plan to be utilised if trying to establish more than one entity.
1. Initial Articles of Association – Execution Mode
In order to execute the articles of association at the time of incorporation, the ROC currently requires the shareholders to attend in person to sign two sets of the articles before an officer at the DIFC Registries’ services department. If the shareholders are unable to attend in person, they may nominate an authorised person through a power of attorney to attend on their behalf. The ROC requires that this power of attorney be duly stamped and notarised by a Court notary public in the UAE, or by way of legalised and notarised documents from the jurisdiction where the shareholders are situated.
While the option to delegate responsibility for executing the articles of association to a person located in the UAE through a shareholder resolution is adequate, the ROC’s views on the acceptable format for this delegation of authority are not clear. The ROC typically does not accept a shareholder resolution on its own, and requires a power of attorney attested by the UAE Department of Foreign Affairs in addition. Although this requirement is not unique to the DIFC, it can lead to a costly, protracted and inconvenient establishment process.
The Working Group recommended that the ROC utilise the provisions of the pending DIFC Electronic Transactions Law to have the articles of association of companies executed electronically. In addition, it recommended that the ROC follow the common law principle of accepting documents in good faith, as opposed to acting as the verifier of documents, which is more in line with practice in civil law jurisdictions.
1. Joint Ownership of Shares
Under common law principles, shares can be held jointly by more than one shareholder. The DIFC Registrar of Companies has recognised this principle (referred to in the DIFC Companies Law) in relation to existing DIFC companies. However, for new incorporations, the DIFC Registrar of Companies’ practice has been to only allow sole shareholdings.
The DIFC Portal does not allow registration of jointly owned shares. Instead of, for example, allowing 100 shares to be jointly owned by A and B, the DIFC Portal will record that 50 shares are held by A solely and that 50 are held by B solely.
As a result of the Registry practice not to permit joint ownership of shares upon incorporation and the DIFC Portal software limitation under which the joint ownership of shares cannot be reflected, shareholding structure details may be inaccurate.
The Working Group recommended that the DIFC recognise joint ownership of shares in a company from the point of incorporation, and also upgrade the DIFC Portal software to enable recording of joint ownership of shares.
1. Allotment of Authorised Shares
It is currently unclear from DIFC Companies Law whether shareholders or directors are the appropriate organ of a company empowered to allot shares within the authorised share capital. The DIFC standard Articles provide that shares can be issued by ordinary resolution of the shareholders. Therefore, the Working Group recommended that the DIFC permit boards of companies to allot and issue shares within the authorised capital by ordinary resolution, subject to any contrary provisions in the articles of association.
1. Dividend Declaration
In common law jurisdictions, an interim dividend may usually be declared by the board of directors and the final dividend is recommended by the board to the shareholders who then resolve to declare it. Common law gives companies (acting through the board) an implied power to distribute profits to shareholders. The current DIFC standard articles reflect this position but it is contradicted by the provisions in the DIFC Companies Law.
The Working Group recommended that the requirements for interim and final dividend declarations be clarified in the law and that the standard DIFC articles be amended to clarify the position as to whether both interim and final dividends may be declared by the Board (currently the shareholders can resolve to declare any dividend, but the directors can declare an interim dividend).
1. No Clarity on the Format of Documents Required
The requirements in the DIFC Client Handbook for providing documents or copies of documents to the ROC does not specify if the document in question needs to be translated into English by a sworn translator, legalised, attested, if a copy or an original is required, etc.
The Working Group recommended that the DIFC Client Handbook be updated to specifically state in what format the documents are required.
1. Licence Renewal Submission
When a DIFC company’s commercial licence is up for renewal, the entity is required to attach a copy of its renewed and registered lease contract to its DIFC Portal submission. However, in order to register a renewed lease contract, a company is required to upload a renewed licence to the DIFC Portal. This circularity is a cause of frustration.
The lack of a registered renewed lease contract prevents an entity from submitting an application for a new licence. The Working Group recommended that the DIFC revise its procedures so that a new lease contract can be registered without the need to submit a renewed license.
1. Class of Shares Registration
Under DIFC law, a company limited by shares is permitted to have more than one class of shares. However, if a company wishes to register a new class of shares that the shareholders have resolved to establish, the DIFC Portal rejects the submission. The effect of the DIFC Portal’s current limitation is that a DIFC company limited by shares is not able to register more than one class of shares in its issued capital.
The Working Group recommended that the DIFC Portal form on share capital amendments be modified to allow issued capital shares of more than one class.
This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.