Dubai’s DFSA rolls out relief package for new and existing DIFC firms

The measures are designed to ease economic and administrative strains, allowing companies to support their staff and clients

Dubai International Financial Centre aims to triple its size by 2024. Sarah Dea / The National

The Dubai Financial Services Authority (DFSA), regulator of Dubai’s onshore financial hub, on Tuesday rolled out a relief package for firms based in the Dubai International Financial Centre that includes fee waivers and reduced capital requirements.

These initiatives will reduce financial stress on new and existing firms, allowing them to cope with the economic fallout of the coronavirus pandemic, the DFSA said in a statement. The measures will help firms to protect staff and support clients during this period of uncertainty.

The regulator is “closely monitoring the financial and operational impacts of the current environment” and will take necessary steps to maintain the “integrity of financial services and markets", the DFSA said.

“We want to help all regulated firms and related businesses in the DIFC to manage their operations and protect their staff through the temporary challenges and uncertainties we are currently facing," Bryan Stirewalt, chief executive of the DFSA, said.

“We are committed to supporting businesses and their customers,” he said, adding that the regulator is ready to consider any “reasonable requests for regulatory relief”.

New firms coming into the DIFC will pay only half the application fee for the remainder of 2020 and will be given more time to complete the application and authorisation processes. New domestic funds will receive a waiver of registration fees in 2020.

Existing authorised firms in the DIFC will receive fee waivers for applications relating to “authorised individuals”. The regulator also extended temporary relief for capital requirements for firms that do not hold or control client assets or hold insurance monies, according to the DFSA statement.

DIFC companies will also get an extension of time to file various returns and reports, including their annual report of the Sharia supervisory board, where applicable. Additional time, where reasonable, will also be allowed for submitting annual accounts and financial statements and auditor reports, with the exception of “reporting entities", the DFSA said.

The move follows the joint regulatory guidance released on Sunday for banks and financial institutions on how to handle potential bad loans during the coronavirus outbreak that has affected economic activity.

Lenders were advised by the central bank and regulators of the DIFC and Abu Dhabi Global Market to divide those struggling to repay into two categories, those temporarily and mildly affected by the crisis, whose loans should not be reclassified as problem loans, and those more severely affected. Escalating problems even for those severely affected is also discouraged during the running of the Central Bank's Targeted Economic Support Scheme (Tess).

The scheme, which was boosted to Dh256 billion on Sunday, includes the easing of capital buffers that banks are required to hold when extending loans to businesses.

The DIFC is home to some of the world’s biggest financial institutions, banks, investment firms, wealth managers and insurers. Last year AntFinancial’s payment firm WorldFirst, Malaysia’s Maybank, US financial services firm Cantor Fitzgerald and Mauritius Commercial Bank were among the companies that set up a base in the emirate’s financial hub.

As part of the Dubai Free Zone Council's economic relief package, the DIFC on March 28 introduced five initiatives over the next three months including waiving annual licence fees for new companies and a 10 per cent discount on renewal fees for existing licences. Companies were allowed deferred payment plans for all commercial properties owned by DIFC Investments for a period of six months, it said at the time.

The onshore financial hub is also reducing its ownership transfer fees to 4 per cent, from 5 per cent, for any property sale that happens within the three-month period.

"We are committed to supporting our community during these unprecedented times," Essa Kazim, governor of DIFC said at the time. "The new economic stimulus package [by the DIFC] shows its continued dedication to implementing comprehensive measures to support businesses and enable companies to continue their operations easily and flexibly."