Cabinet Decision No. (28) of 2007 On the Implementing Regulation of Federal Law No. (8) of 2004 On the Financial Free Zones

Preamble

The Cabinet,

Pursuant to the perusal of the Constitution, and

Federal Law No. (1) of 1972 Regarding the Jurisdictions of the Ministries and the Competences of the Ministers, and the amending laws thereof; and

Federal Law No. (10) of 1980 Regarding the Central Bank, the Monetary System, and the Regulation of the Banking Profession, and the amending laws thereof; and

Federal Law No. (8) of 1984 Regarding the Commercial Companies* and the amending laws thereof; and

*  Superseded by Federal Law No. (2) of 2015 On Commercial Companies 

Federal Law No. (9) of 1984 Regarding Insurance Companies and Agents, and the amending laws thereof; and

Penal Code issued by virtue of Federal Law No. (3) of 1987 and the amending laws thereof; and

Law on Criminal Procedures issued by virtue of Federal Law No. (35) of 1992 and the amending laws thereof; and

Federal Law No. (4) of 2000 Regarding the Emirates Securities and Commodities Market Authority (ESCA); and

Federal Law No. (4) of 2002 Regarding the Incrimination of Money Laundering; and

Federal Law No. (8) of 2004 Regarding the Financial Free Zones; and

Federal Decree-Law No. (1) of 2004 Regarding the Combat of Terrorist Crimes; and

Cabinet Decision No. (19/161) of 2007 Regarding the Consent to the Draft Cabinet Decision Regarding the Implementing Regulation of the Federal Law No. (8) of 2004 Regarding the Financial Free Zones, and

Acting upon the proposal of the Minister of Finance and Industry, and the consent of the Cabinet,

Has decided:

Article (1) Definitions

In the implementation of the provisions hereof, the following terms and phrases shall have the meanings assigned for each of them unless the context requires otherwise:

State: The United Arab Emirates State.

Financial Free Zone: The free zone established in any of the State emirates to practice therethrough the financial activities.

Competent Authorities: Relevant ministries, local entities or departments nominated by the Cabinet.

Board: The Board of Directors of the Financial Free Zone.

Chairman: The Chairman of the Board of Directors of the Financial Free Zone.

Financial Activities: The banking and financial services and activities, insurance and reinsurance, financial markets, monetary and financial brokerage services, and supporting activities licensed to be practised in the financial free zones.

Supporting Activities: Monetary and financial brokerage services, consultations, the provision of services and merchandise to companies, institutions and individuals in the financial free zones.

Financial Banking Activity: Financial and banking activities and banks activities.

Companies and Institutions: Companies and branches thereof, and institutions established or licensed to work in the financial free zones.

Article (2)

1. The financial free zone shall be established by virtue of a federal decree. It shall have a juridical personality and shall be duly represented by the Chairman of the Board of Directors thereof. It shall be solely liable for the commitments resulting from the practice thereby of the activities thereof.

2. By virtue of a decision issued by the Prime Minister, the location and area of the financial free zones may be determined, expanded and changed, upon a request submitted by the pertinent zone, provided that the request includes the suggested location, the required area, the reasons behind the choice or the change of the said location and area, as well as any other required data.

Article (3)

1. The financial free zones and all operations carried out therein shall be subject to the provisions of the federal laws in force in the State regarding the incrimination of money laundering and the combat of terrorist acts.

2. All financial zones and activities shall be subject as well to the provisions of the Federal Laws, with the exception of the civil and commercial federal laws.

3. Companies and institutions wishing to practice the activities thereof outside the borders of the financial free zones yet within the State shall be subject to the federal laws in force in the State, including the civil and commercial federal laws, the implementing decisions thereof and the procedures adopted in this regard.

Article (4)

The financial free zones shall commit to the following:

1) With respect to the financial banking activities:

a) The license shall be restricted to the branches of companies and institutions, participating companies, and companies owned entirely by any thereof, provided that it enjoys a strong financial status and a complete organizational and administrative structure. It shall be managed by experts in such kind of activity.

b) Licensed companies and institutions in the financial free zones must not deal in deposits from the State market or in the Emirati Dirham.

c) Standards of licensing of companies, branches of companies, and institutions must not be lower than the ones applied in the State.

2) Financial brokers licensed in exchange market in the State may not be licensed to practice the activities thereof in the financial free markets unless after the obtainment of the approval of the Emirates Securities and Commodities Market Authority. The existence of an actual headquarters for said brokers in the financial free zones shall not be required.

3) Companies listed in any of the exchange markets in the State may not be listed unless after the obtainment of the approval of the Emirates Securities and Commodities Market Authority.

4) The limitation of the practice of the insurance activity in the State to reinsurance and brokerage in reinsurance by companies licensed by the competent authorities in the financial free zones markets without the need to have a headquarters thereof within the State.

5) The actual presence of the seats of companies and institutions licensed to work through the free zones shall be limited to the scope of such zones. Companies and institutions may establish subsidiaries and branches in the State, and acquire companies operating in the State or shares therein in accordance with the laws and regulations in force in the State. Such companies and institutions may be licensed by the financial free zones to work outside the State.

6) Companies established in the financial free zones shall be treated as national companies should they meet the conditions thereof in accordance with the enforced laws in the State.

Article (5)

The financial free zones shall undertake not to carry out any activity that may lead to any breach of the international conventions ratified or to be ratified by the State.

Article (6)

The financial free zones may conclude memorandums of understanding and cooperation with similar entities and centres via the Chairman of the Board thereof, provided that such memorandums do not contradict the conventions to which the State is a party.

Article (7)

1. The financial free zones shall undertake to submit to the Cabinet bi-annual reports regarding the activities thereof and the abidance thereby by the provision of the Federal Law No. (8) of 2004 On the Financial Free Zones.

2. The financial free zones may be inspected to verify the abidance thereby by the provisions of the law by virtue of a Cabinet decision through a ministerial committee constituted by virtue of the Cabinet Decision No. (12/44) of 2007. Such inspection shall be inspected in cooperation with the financial free zones. The outcome of such inspections shall be submitted to the Cabinet to take adequate action in this regard.

3. Subject to the provisions of Article (3) hereof, the pertinent emirate, within the scope of the purpose behind the establishment of the financial free market, may issue necessary legislations for the performance thereby of the work thereof.

Article (8)

Upon a Cabinet decision, and for a period not exceeding four years from the date of establishment thereof, the financial free zones may grant licenses to companies and institutions to practice the activities thereof outside the administrative and geographical borders of such zones in the State.

Article (9)

The financial free zones may by themselves, or through the competent entities thereof, conclude memorandums of understanding with pertinent authorities such as the Central Bank, the Ministry of Economy, the Securities and Commodities Authority and the Insurance Authority for coordination, cooperation and control.

Article (10)

The present Regulation shall be published in the Official Gazette and shall come into force as of the date of publication thereof.

Promulgated by Us

On 30 July 2007
Corresponding to 16 Rajab 1428 H.

Mohammed Bin Rashid Al Maktoum,
Prime Minister