Changes to JAFZA Offshore Regulations

In 2023, the Jebel Ali Free Zone Authority (JAFZA) introduced notable amendments to its offshore company framework. The JAFZA Offshore Companies Regulations 2023 replaced key provisions of the previous 2018 Regulations, most significantly revising Article 14, which historically restricted JAFZA offshore companies from conducting business within the United Arab Emirates (UAE).

These changes reflect a regulatory shift that expands the types of activities JAFZA offshore entities may undertake, including potential engagement in onshore business operations, subject to licensing and regulatory approvals.

Under the JAFZA Offshore Companies Regulations 2018, Article 14.1 expressly prohibited offshore companies from:

• Directly carrying out any commercial activity in the UAE,
• Holding a lease for UAE property (except in designated freehold areas),
• Conducting banking, insurance, or other regulated financial services,
• Engaging in any activity restricted by the Authority.

At the same time, Article 14.2 carved out certain exceptions, allowing JAFZA offshore companies to:

• Engage UAE-based legal, accounting, and consulting services,
• Maintain books and records within the UAE,
• Hold director or shareholder meetings in the UAE,
• Own property in designated freehold areas,
• Own shares in UAE operating companies,
• Open UAE bank accounts.

Article 14.3 allowed offshore companies to engage in business activities in the UAE—but only with the appropriate license from the competent authorities.

The Offshore Companies Regulations 2023 revise Article 14 in a way that significantly alters the earlier restrictions.

Now, under Article 14.1, an offshore company:

“shall be permitted to conduct lawful business activities as permitted by the Registrar from time to time.”

This marks a clear departure from the previous blanket prohibition. The new provision implies that offshore companies may now carry out business activities in the UAE, provided such activities are:

• Lawful under UAE law,
• Permitted by the JAFZA Registrar, and
• Licensed or authorized by competent authorities, where applicable.

The revised Article 14.2 continues to allow the engagements previously permitted—such as owning shares, holding property, and maintaining bank accounts—while Article 14.3 reiterates the requirement for appropriate licenses or permits for any business activities conducted in the UAE.

Aspect 2018 Regulations 2023 Regulations

General Business Activity in UAE Explicitly prohibited unless licensed under Part 17 Permitted, subject to Registrar approval and relevant licensing

Leasing UAE Property Not permitted unless in designated freehold areas and for registered office use Permitted for use as a registered office in designated freehold areas

Owning Property in UAE Permitted only in designated freehold areas Same provision retained

Banking and Insurance Activities Explicitly prohibited No explicit reference; assumed to remain restricted without appropriate licensing

Engagement with UAE Advisors Permitted to engage legal, accounting, and management services in UAE Same provision retained

Maintaining Records in UAE Permitted Same provision retained

Holding Director or Member Meetings Permitted Same provision retained

Owning Shares in UAE Companies Permitted Same provision retained

UAE Bank Accounts Permitted Same provision retained

Licensing Requirement Required license from competent authority to conduct business in the UAE Licensing or permits still required for certain activities

The amended Article 14 provides greater flexibility for JAFZA offshore companies by removing the general prohibition on UAE-based commercial activity. Instead of a blanket restriction, the approach now reflects a permit-and-license model, contingent on:

• The nature of the business activity,
• The Registrar’s discretion, and
• Approvals from competent UAE regulators.

While onshore engagement is now more accessible, companies must still navigate applicable regulatory and sector-specific requirements, particularly for financial services, insurance, media, education, and other regulated sectors.

These reforms may enhance the utility of JAFZA offshore entities for purposes such as:

• Holding company structures to manage shares in UAE and international subsidiaries,
• Investment vehicles participating in UAE-based or cross-border projects,
• Lightweight representation for foreign businesses seeking a presence in the UAE without full operational infrastructure,
• Asset holding and property ownership in designated freehold areas.

Importantly, it remains a requirement that JAFZA offshore companies can only be registered and managed through JAFZA-approved registered agents. All formation, corporate maintenance, and official interactions with JAFZA must be carried out via such agents.

The 2023 revisions to JAFZA’s Offshore Company Regulations—particularly the restructured Article 14—represent a measured shift in the regulatory landscape. By permitting certain business activities within the UAE, subject to licensing and Registrar approval, these changes broaden the potential use cases for JAFZA offshore companies.

While the reforms offer greater flexibility, they also reinforce the importance of regulatory compliance. For companies exploring JAFZA offshore structures, legal due diligence remains a necessary step in determining the feasibility and scope of their intended operations.

Yamalova & Plewka FZCO is a JAFZA-registered agent and is fully authorized to assist with the establishment, licensing, and ongoing management of JAFZA offshore companies. For tailored legal advice or support, please contact us at www.lylawyers.com.