Ten-article implementing regulation setting how financial free zones are established, which banking, insurance, securities and market activities they may host, licensing conditions, limits on dealing with the UAE domestic market, and the zones' reporting and cooperation duties towards federal authorities.
Cabinet Resolution No. 28 of 2007 contains the Implementing Regulations of Federal Law No. 8 of 2004 Concerning Financial Free Zones. Issued by the Chairman of the Ministerial Council on 30 July 2007 on the proposal of the Minister of Finance and Industry, it came into effect on publication in the Official Gazette (Article 10). It is a ten-article instrument that tracks the structure of the parent Law and adds the detail that matters for firms operating in the DIFC and ADGM. The text read is the English version published by ADGM; it does not show the amendment by Cabinet Resolution No. 19 of 2018 recorded in the index.
Article 1 defines Financial Activities to include banking, insurance, reinsurance, financial markets and brokerage with licensed supporting services. Article 2 repeats that a zone is established by federal decree with its own body corporate, and adds that the Chairman of the Cabinet may fix or change a zone's location and area on its application.
Article 3 restates the legal carve-out and adds the key clarification. The zones and all operations in them are subject to the federal anti-money-laundering and anti-terrorism-finance laws and to all federal laws except federal civil and commercial laws, but Article 3(3) provides that companies and establishments wishing to carry on their activities within the UAE outside the borders of the zone are subject to the federal laws applicable in the State, including the civil and commercial laws and their implementing resolutions. That sentence is the legal reason a zone entity cannot simply trade onshore.
Article 4 sets the operating limits: banking licences only for branches, joint ventures and subsidiaries of sound institutions; no deposit-taking from the UAE market and no dealing in the UAE Dirham; SCA approval before UAE-licensed brokers or UAE-listed companies enter a zone market; insurance activity in the UAE from a zone limited to reinsurance and reinsurance brokerage; and physical presence of licensed firms within the zone. Article 4(5) then confirms that zone companies may establish subsidiaries and branches in the UAE and may own companies or shares in companies operating in the UAE in accordance with onshore rules, and Article 4(6) provides that companies established in a zone are treated as national companies if they meet the requirements of the laws applicable in the State.
Article 7 requires semi-annual reports to the Cabinet, provides for inspections through a Ministerial Committee, and lets the concerned Emirate legislate for the zone subject to Article 3. Article 9 obliges the zones to sign memoranda of understanding with the Central Bank, the Ministry of Economy, the Securities and Commodities Authority and the Insurance Authority. The Resolution is in force.
The DIFC and ADGM as financial free zones and their boards and regulators; every company, branch and establishment licensed to operate through them, especially banks, brokers, insurers and reinsurers; zone entities that set up subsidiaries, branches or shareholdings in the UAE onshore market; and the federal authorities named for coordination, inspection and approval.
| Article 1 | Defines Financial Activities to include banking, insurance, reinsurance, financial markets and financial and currency brokerage with licensed supporting services, and Supporting Activities as brokerage, consultancy and the supply of goods and services to companies and individuals in the zone. |
| Article 2 | A zone is established by federal decree, has a body corporate represented by the Chairman of its Board and is solely responsible for its obligations; the Chairman of the Cabinet may specify, add to or change its location and area on the zone's reasoned application. |
| Article 3(1)–(2) | The zones and all operations in them are subject to the federal laws on criminalisation of money laundering and anti-terrorism finance and to all federal laws except the federal civil and commercial laws. |
| Article 3(3) | Companies and establishments wishing to carry on their activities within the UAE but outside the borders of the zone are subject to the federal laws applicable in the State, including the civil and commercial laws, their implementing resolutions and the applicable procedures. |
| Article 4(1) | Banking licences are limited to branches, joint ventures and wholly owned subsidiaries of institutions with strong financial positions, systems and expert management; licensed firms may not take deposits from the UAE market or deal in the UAE Dirham, and licensing standards may not fall below those onshore. |
| Article 4(2)–(4) | UAE-licensed brokers may be licensed in a zone market, and UAE-listed companies listed there, only with Securities and Commodities Authority approval, brokers needing no physical presence in the zone; insurance activity in the UAE from a zone is limited to reinsurance and reinsurance brokerage without a physical presence requirement onshore. |
| Article 4(5) | Licensed companies must be physically present within the zone, but may establish subsidiaries and branches in the UAE and own companies or shares in companies operating in the UAE in accordance with onshore rules, and the zone may license them to operate outside the UAE. |
| Article 4(6) | Companies established in a financial free zone are treated as national companies provided they meet the requirements of the laws applicable in the State. |
| Article 7 | Zones submit semi-annual reports on activities and compliance to the Cabinet, are inspected through the Ministerial Committee formed by Cabinet Resolution No. 44/12 of 2007 with results referred to the Cabinet, and the concerned Emirate may legislate for the zone subject to Article 3. |
| Article 9 | The zones, directly or through their authorities, must enter into memoranda of understanding with the Central Bank, the Ministry of Economy, the Securities and Commodities Authority and the Insurance Authority for coordination, cooperation and control. |
This Resolution fixes the line between what a DIFC or ADGM entity may do inside the zone and what reaches the UAE onshore market, a question every client raises when they plan to serve UAE customers. Two provisions do the work. Article 3(3) tells us that the moment a zone company carries on its activity onshore it falls under federal civil and commercial law and the onshore licensing procedures, so the zone entity needs a mainland or other free-zone operating company, or a branch, for that business. Article 4(5) tells us the zone company may own that onshore company or branch, and Article 4(6) that a zone company counts as a national company if it meets onshore requirements, which matters when a client's DIFC or ADGM holding company takes a stake in a mainland LLC. For regulated clients we also apply the Article 4 bank, broker and insurance limits before they approach the DFSA or FSRA.
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