Difc Tech Startup License - 10 Leaves

By Author: Himaja Teki
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DIFC Tech Startup License:

The Middle East has seen a flurry of tech-related activity in the recent years. Tech companies are characterized by rapid ideation followed by implementation at an equally rapid pace. Another commonality is that most tech companies start small, and then ramp up quickly upon securing funding. However, managing costs at the onset is critical, especially in the first year, so as to ensure that the tech startup does not fold before it manages to attract its first round of seed/angel investments.

A fledgling tech ecosystem needs good support from all quarters, and here is where the Dubai International Financial Centre has come to play an important part. Recognising the difficulties faced by early stage technology companies, the DIFC made a lot of changes to create and accommodate a startup ecosystem in its award-winning onshore financial centre.

What is the DIFC?

The Dubai International Financial Centre, or DIFC, is a leading financial hub in the region for business, fintech, and lifestyle. Setup in 2004, the DIFC has grown to be one of the top 10 onshore financial centres in ...
... the world. It brought in a paradigm change in the region, by adopting a Common Law framework, with an independent regulator (DFSA) and an independent English language Common Law judiciary – DIFC Courts.

Since then, the DIFC District has matured into more than just a place to work – it is now a lifestyle destination, with retail outlets, cafes and restaurants, art galleries, residential apartments, public green areas and hotels dotting the landscape.

What is a DIFC Technology Startup License?

The DIFC started by attracting financial technology, or Fintech players into its DIFC Fintech Hive, which is an accelerator that just completed its third cohort, with over 30 fintech companies. It quickly extended the benefits of a startup license to all kinds of tech startups – fintech, edutech, regtech, and all technology-based startups that wish to cater to the region.

The DIFC tech startup license offers heavily discounted initial and ongoing fees, world-class co-working spaces at low costs, and an ecosystem of fellow technology firms, seed and angel investors, and access to the leading venture capital firms in the region.

Benefits offered to tech startup licenses in the DIFC:

1. Well-subsidised license fee of US$ 1,500 per year, for upto 4 years
2. Zero incorporation and registration fees
3. Waiver of the minimum share capital requirement of US$ 50,000
4. Minimum co-working desk space at US$ 500 per month, payable monthly or annually
5. Upto 4 visas approved on the minimum co-working desk space
6. Reduced visa costs of upto 50%

Why setup a technology startup in the DIFC?

The DIFC is a leading financial hub in the region for business, fintech, and lifestyle. DIFC holding companies can be used to hold assets within the UAE, the GCC, or anywhere else in the world. These include real property and shares in other companies in the UAE and worldwide. Here are some reasons why setting up a holding company in the DIFC makes sense.

Codified English Common Law: The DIFC offers a modified version of the English Common Law, which gives foreign investors an additional sense of security and stability. In partnership with the common law framework, the Dubai Financial Services Authority (DFSA) functions as the DIFC’s regulatory body and plays a crucial role in providing as well as enforcing the international regulatory standards that make the financial hub a popular destination for international businesses. While a DIFC tech startup company is not regulated by the DFSA, the robust regulatory structure of the Authority gives comfort to investors.

Premium Jurisdiction:

The DIFC is well regarded in the international community, being voted among the top 8 onshore financial centers worldwide. It’s emphasis on regulation, and visibility in the investor community also helps to attract further investments down the road.

DIFC Courts:

The DIFC Courts initiative was the first of its kind in the region, and the laws establishing the DIFC Courts were designed to ensure the highest international standards.The DIFC Wills & Probate Registry allows eligible individuals the ability to register their wills under Common Law, and hence providing the ability for legacy planning within the center.

Visa Services:

Tech startup companies in the DIFC can apply for visas for their staff and their families.
The Government Services Office in the DIFC is dedicated to providing a wide range of administrative services, and one of these is the issue and renewal of employment visas. For tech startups, the DIFC offers upto 4 visas on the minimum co-working space that they have earmarked at the Fintech Hive.

DIFC 2.0:

The DIFC is set to undergo significant expansion and plans to use the additional space to construct more office and creative spaces, residences, retail spaces, and entertainment. That’s 13 million square feet of space dedicated to the pursuit of fintech and innovation and designed to accommodate the needs of professionals from around the world.

Such an environment helps attract good talent from the world over. Over 23,000 professionals already live and work in the DIFC. Technology companies in the DIFC are able to source better talent and access a pool of premium service providers within the center, thus making it a self-containing ecosystem.

Specific Advantages:

Here are some specific advantages of establishing in the Dubai International Financial Centre.

LEGAL AND REGULATORY FRAMEWORK:

The legal framework supports cross-border activities
100% foreign ownership permitted
No restriction on foreign talent or employees
No restrictions on capital repatriation

TAX BENEFITS:

Zero tax for 50 years on profits, capital or assets from 2004 • Zero tax on employee income

COUNTERPARTY CONFIDENCE:

Highly regarded, independent regulator
Independent, English-speaking, common law judicial system
Distinct from the UAE legal system
Risk-based regulatory approach

DIVERSE ECOSYSTEM:

Central to regional deal making
High concentration of international firms, investment funds, wealth management firms, banks, and financial institutions
World-class regional and international law and auditing firms, and other professional services
The largest fund domicile in the region

GEOGRAPHIC EPICENTRE:

Management offices, holding companies and family offices are located closer to the assets they own or manage
The Middle East, Africa and South Asia (MEASA) is increasingly the center of gravity for the global economy
Dubai plays a central role in the growing South-South trade, principally between Asia and Africa
Well-positioned to harness the potential of emerging markets

What is the process for registering a Tech Startup License in the DIFC?

The process comprises the following steps:

Submission of application, including a detailed business plan and KYC
Pre-screening and issuance of approvals
Completion of the registration of the legal structure at the Registrar of Companies
Issuance of license
Establishment card issuance for visa processing

What is the role of 10 Leaves in this process?
Services of 10 Leaves as a corporate service provider include the following:

Provision of incorporation services – a one-time service, that involves a complete review of the DIFC Tech Startup License application, submission, and followup until receipt of the license.
Assistance in bank account opening – with all major banks in the UAE
Accounting and bookkeeping – Outsourced accounting services to further help reduce costs, with no compromise on the quality of financial information.

Corporate secretarial services – Company secretarial services cover the mandatory annual general meeting (AGM) and submission of annual returns. Other services include ongoing maintenance of the shareholding and directorship registers, drafting of resolutions and powers of attorney, etc.

Our Additional Services:
1. Structuring your Tech Startup company - designing the optimum structure, including multi-class vehicles to protect founder interests, ESOP plans, share vesting plans and investor on-boarding options
2. Legal agreements - Shareholder agreements, JV agreements, IP assignment agreements, basic legal toolkit (including privacy policies, GDPR and Terms of Services)
3. Market entry services - Options for market entry into Europe, India and Saudi Arabia.

Are you looking to set up a Tech Startup License at the DIFC? Contact us at: +97142445057

I am Himaja Teki From Bangalore, India. Working as a Content Writer.