DIFC has adopted a new regulation that provides a legal framework for venture building

The main points of the Regulation are the following:

Venture Studio: Venture Studio is a company whose sole purpose is to sponsor start-ups (Ventures) and to establish Venture Studio Companies. Venture Studio and Venture Studio Company are formed as a Prescribed Company under DIFC Company Law.

Venture Studio and Venture Studio Company may not provide financial services.

Ventures: Ventures are start-ups business that a Venture Studio sponsors under a Venture Sponsorship Agreement entered with start-ups founders (Entrepreneurs). Ventures do not have legal personality and operate under the permission issued by the Register for a period of up to 24 months (that may be extended for additional 12 months).

Ventures (Regulation): Venture Studio is responsible for Venture’s compliance with laws and regulations and agreements entered by a Venture with third parties. Each Venture Studio may sponsor only up to 20 Ventures.

Venture Studio may sponsor up to ten Entrepreneurs associated with a particular Venture for UAE residency sponsorship purposes.

Venture Studio Company: Venture Studio may create new start-ups as a Venture Studio Company or may convert existing Venture into a Venture Studio Company (this is one of the options after the expiration of the term of a Venture).

Venture Studio Company (Regulation): Venture Studio is responsible for its Venture Studio Company’s compliance with applicable laws and regulations and it may not have such responsibility for more than 10 Venture Studio Companies.

The term of a Venture Studio Company should be not more than 24 months (after that it is automatically converted into a Private Company), it should have no more than 10 shareholders and 20 employees (unless exemption is granted).

Capital Raising: The maximum amount of Capital Raising for each Venture and Venture Studio Company is USD 10 million and USD 20 million accordingly (unless exemption is granted).

Fees: The fee for an application for incorporation is USD 100 for both Venture Studio and Venture Studio Company. The Annual license fee is USD 12,000 for Venture Studio and USD 1,300 for Venture Studio Company. Additionally, there is a fee of USD 300 for lodgement of a Confirmation Statement.

In summary, the Regulation creates a business-friendly regulatory regime with fast and inexpensive options for fundraising start-ups.