Companies with individual shareholders that are registered in the Ras Al Khaimah Economic Zone (RAKEZ) or Ras Al Khaimah International Corporate Centre (RAKICC) are now permitted to own properties in the freehold areas of Dubai without obtaining a Dubai trade licence.
The change follows the signing of Memorandums of Understanding (MoUs) between RAKEZ and RAKICC and the Dubai Land Department (DLD) on 16 July.
Freehold areas are defined as areas in Dubai where non-UAE citizens can buy properties. Those areas are mentioned in Article 4. of Regulation No. (3) of 2006 Determining Areas for Ownership by Non-UAE Nationals of Real Property in the Emirate of Dubai.
Under the MoU, the DLD will accept the registration of freehold properties and all rights granted with it. To gain DLD approval, the company must submit a ‘No Objection Letter’ (NOC) from RAKICC or RAKEZ, which will be issued if the company is in a good standing, is duly registered and has only individual shareholder(s). A company must also file a resolution to RAKICC detailing the registration of the property.
The DLD has a right to reject an application if the procedure does not comply with DLD rules and regulations. According to the existing rules applying to Jebel Ali Free Zone (JAFZA) offshore companies (which have already been granted the right to hold freehold properties in Dubai), the DLD requires the following documents, which must be translated into Arabic:
- An NOC from the developer that is valid for at least one month
- A valid trade licence and incorporation certificate
- A certificate of incumbency that is valid for six months
- A certificate of Good Standing
- A current Memorandum and Articles of Association for the company, with all amendments
- ID documents for the authorised person
The MoU is not a legally binding document and the rules and regulations of the concerned free zones have not been amended, so it is not yet clear how RAKICC and RAKEZ companies will be able to dispose of the registered properties.
JAFZA introduced new Offshore Companies Regulations in 2018, which clearly define that offshore companies can hold a lease of property for use as a registered office and own a property in any designated freehold area in the UAE approved by the Authority.
The assumption is that either the DLD or RAKICC/RAKEZ will shortly issue guidance on this matter. The DLD applies a transfer rate of 4% for any sales or purchase of property and 0.125% for gifting so, unless the MoU provides differently, these rates should also apply for RAKICC or RAKEZ companies.