Compliance for Representative office
In simple terms, a representative office is an extension of an established company, which may be located domestically in the United Arab Emirates or abroad.
To summarize it simply. A parent firm’s branch office that serves to promote a foreign company in UAE market is called a representative office. In the UAE, a representative office is not permitted to import, export, or sell. A representative office solely engages in marketing activities related to the goods and services of its parent firm.
Permission
- The only financial institution that can apply to operate a Representative office is a regulated institution situated in a jurisdiction that is not the DIFC.
- If a person wants to conduct business as a domestic firm, they cannot seek for a license.
- If the Department of Financial Services Administration (DFSA) is satisfied that an application is qualified to hold a license, then only then will the applicant be permitted to conduct financial operations through representing an office.
When conducting its evaluation, the DFSA might take into
- Does the applicant have to answer to a financial service regulator?
- If the applicant’s home state regulators for its financial servicers grant permission to open a representative office in the DIFC:, and
- The applicant needs to prove that its chief representative is appropriate and suitable to the satisfaction of the DFSA.
- The DFSA will take into account the applicant’s activities, the risks connected with those activities, the accumulation of risk related to those activities, and the cumulative effect of factors that, when considered separately, may be deemed insufficient to give reasonable cause to doubt an applicant’s fitness and propriety.
If a representative office wants to modify or remove a condition or restriction, or alter the scope of its license, it must submit a written request with all the proposed modifications to the DFSA.
License Withdrawal
A representative office wishing to have its license revoked must send a written request that includes the following information:
The following justifies the request:
- That it no longer provides financial services for running a representative office from within the DIFC or that it plans to stop doing so
- The day that it stopped providing financial services or plans to stop doing so
Guidelines for representative offices
- Principle for Integrity: A representative office is required to uphold the highest standards of fairness and integrity.
- Principle for: Excessive diligence, competence, and attention.
- Principle for Resources: A representative office is required to manage its operations and keep sufficient resources on hand, as well as be able to prove their presence.
- Principal for Relations and Regulations: A representative office is required to communicate openly and cooperatively with regulators and promptly notify the DFSA of any noteworthy occurrences.
Head of the Organization
A representative office must appoint a single person of the United Arab Emirates to serve as its chief representative.
Previous Performance and Estimates
Any marketing material that a representative office provides to an individual that contains information or representations about past performance, or any future forecast that is based on past performance or other assumptions, must be clear, fair, and not misleading. It must also prominently display a warning that past performance is not always a reliable indicator of future results.
Maintaining Records
A representative office is required to keep adequate records pertaining to all of its operations and functions for a minimum of six years.
Workers
The representative office is responsible for ensuring the suitability of its staff.
Managing Property
A representative office is not allowed to possess or manage another person’s funds or assets unless it is absolutely required to cover regular running costs.
Ability to solve
As soon as a representative office learns that it is insolvent or that it is unlikely to stay solvent in the near future, it is required to promptly notify the DFSA.
Anti Money laundering
A representative office conducting business in the DIFC or elsewhere must abide by all applicable anti-money laundering laws and regulations.
How to apply to work as a UAE representative office?
- The DFSA Authorization Team and the Dubai International Financial Center Authority (DIFCA) should be contacted by the applicant.
- A representative office applicant must contract with the DFSA in order to gain access to the DFSA E-portal and complete the online application. The AUT-IND4 form, which may be found on the DFSA e-portal, must be submitted by a representative office applicant. They must also submit their online applications for authorized individual status or Principal Representative.
- A Representative office requires an application fee of USD 4,000 in addition to an initial annual fee that is prorated for the first year of authorization. After that, annual costs are USD $4000.
Disclaimer: Above all information is for general reference only and sourced from internet, before making any kind of decision please visit the authorized websites of authorities and service providers.