The recent establishment of the Ras Al Khaimah International Corporate Centre (RAKICC) will be the sole authority responsible for the incorporation of international business companies in the U.A.E
The RAKICC was formed pursuant to Decree 12/2015 and Decree 4/2016, by way of the merger of two existing offshore registries in Ras Al Khaimah:
- RAK Offshore, part of the Ras Al Khaimah Investment Authority (RAKIA)
- RAK International Companies, part of the RAK Free Trade Zone Authority (RAKFTZ).
As such, existing and new IBCs will now be governed by the newly introduced RAKICC regulations of 2016.
Apart from the incorporation of a company limited by shares as in the former regime, the RAKICC now offers the possibility of new types of business vehicle, some of which are borrowed from other offshore jurisdictions, as described below:
- Companies limited by guarantee – in this legal form, the members undertake to contribute a nominal amount if the company is wound up and there is a deficit in the company’s assets which makes it unable to settle its debts. The liability of a guarantee member is thus limited to the amount that the member is liable to contribute as specified in the memorandum of agreement. Non-profit organisations, charities, clubs and similar bodies widely use this legal structure. As such, the widespread practice among these entities is to retain their profits to reinvest in their operations, rather than distribute profits to their members.
- Unlimited companies– in unlimited companies, the members have a joint, several and non-limited obligation to meet any insufficiency in the assets of the company in order to settle any outstanding financial liability in the event of the company’s formal liquidation.
- Segregated portfolio companies – this legal structure (also known as a ‘protected cell company’) is widely used in many offshore jurisdictions and refers to a single legal entity which segregates the assets and liabilities of different classes (or sometimes series) of shares from each other and from the general assets of the segregated portfolio company. As such, assets allocated to a particular segregated portfolio are not available to meet the liabilities of any of other segregated portfolios or that of the segregated portfolio company in general. This vehicle can be used for:
- investment funds;
- collective investment schemes; and
- holding different assets in a single company.
- Restricted purposes companies – this legal form has limited corporate capacity and can undertake only certain specific purposes, as are set out in its memorandum of association. Any activity out of that scope is void. This vehicle is especially popular for securitisations and other transactions where a bankruptcy remote company is required.
The RAKICC regulations introduce the concept of the re-domiciliation of foreign companies into the RAKICC. Thus, a foreign company can migrate and continue as a RAKICC company, provided that the laws of the jurisdiction in which it is registered allow it to continue in another jurisdiction. The registrar will issue a certificate of continuation and the company will be considered incorporated in the RAKICC under the name designated in its memorandum of agreement on the date specified in the certificate of continuation.
This solution permits a company to transfer its domicile to the United Arab Emirates easily, to take advantage of the tax neutral environment while maintaining the same legal identity, its history and without affecting its assets, obligations and liabilities.