Additional DIFC laws enacted 2Press Release 26 Sep 2005 01:00 pm
His Highness Sheikh Maktoum Bin Rashid Al Maktoum, Ruler of Dubai, enacted two laws dealing with personal property and the application of other DIFC laws, and the Board of Directors of the DIFCA has issued the regulations dealing with insolvency, collateral security and use of electronic stock instruments.
These laws and regulations are among the body of legislation dealing with non-regulated activities which DIFCA is charged with administering under Law No. 9 of 2004. The Dubai Financial services Authority (DFSA) is charged under Dubai Law No. 9 of 2004 with administering all DIFC legislation concerning the regulation of financial and ancillary services. Prior to the submission of the laws to the DIFCA Board of Directors, the draft laws and regulations were posted on the DIFCA website to solicit comment from the international financial and legal community. In accordance with Dubai Law No. 9 of 2004, these laws and regulations were developed by the DIFCA Legislature, acting through its Legislative Committee, in consultation with the DFSA.
The new laws are:
The Personal Property Law No. 9 of 2005
This law provides defines the rights and obligations of parties in relation to property other than real estate (land and buildings) located in the DIFC and, among other things, segregates property belonging to account holders of the Dubai International Financial Exchange (DIFX) from the property of the DIFX itself.
The Law Relating to the Application of DIFC Laws (Amended and Restated) No. 10 of 2005
This law, initially passed in September of 2004, has been amended to harmonize defined terms appearing in the 2004 version of the law with terms used in the Personal Property Law as relates to DIFX operations.
The regulations consist of the DIFC Dematerialization of Securities Regulations , DIFC Security Regulations and DIFC Insolvency Regulations which are issued by the Board of Directors of the DIFCA pursuant to the authority given to the Board by Law No. 9 of 2004. These regulations, respectively, provide for the issuance, trading and registration of securities in electronic form as required to expedite DIFX operations; the creation, recordation and enforcement of various forms of collateral security as guarantees for the payment of loans and other debt; and the procedures and formalities governing the dissolution and winding up of insolvent companies.
Commenting on the issuance of these laws and regulations, Dr Omar Bin Sulaiman, DIFCA Director General, said,
In preparing these laws for issuance, the drafters worked diligently to remove any doubt regarding the smooth and orderly operation of the DIFX’s trading activities. Similarly, in developing our legal system in general, we continue to seek as we have with the preparation of these laws, the input of leading financial and legal practitioners from around the world so as to ensure that we provide a focused, responsive and reliable legal system on par with those of other global financial centres.”
Dean Ferris, DIFCA Chief Legal Officer and Chairman of the Legislative Committee added:
“The DIFC has decidedly set its policies and procedures in a manner designed to optimize for DIFC securities brokers, traders and investors, as well as for DIFC-based lenders, the realization of their commercial and legal expectation in the context of a coherent and user-friendly legal framework. The confidence which these purpose-built laws and regulations, and correspondingly the DIFC’s robust judicial system promote is an essential factor in attracting world-class financial institutions to establish their regional operations in the Centre.”