DIFC enacts new Variable Capital Company regulations

DIFC enacts new Variable Capital Company regulations

Dubai International Financial Centre (DIFC) announced on 10 February 2026 the enactment of new Variable Capital Company (VCC) Regulations, significantly expanding investment structuring and asset management options for proprietary investment activities in the jurisdiction. This introduces a new option for investors to structure proprietary capital and diversified investment strategies within DIFC without entering a regulated fund environment.

Overview of the VCC framework

The VCC Regulations introduce a flexible corporate vehicle designed to accommodate proprietary investment activities without requiring authorisation from the Dubai Financial Services Authority (DFSA) or the appointment of a regulated fund manager, unless the vehicle engages in regulated financial services activities.

This positions the VCC as an efficient structure for investors seeking collective or segregated investment strategies, whilst benefiting from flexible capital management without the procedural requirements typically associated with regulated fund vehicles.the benefits of collective investment activity or segregated investment strategies, whilst leveraging flexibility in managing share capital with reduced procedural requirements.

Expanded eligibility criteria

Following public consultation, the Regulations introduce expanded eligibility criteria allowing any applicant to establish a VCC in DIFC, provided the VCC appoints a Corporate Service Provider (CSP) to perform administrative, compliance and regulatory liaison functions with the Registrar of Companies.

This CSP requirement ensures robust governance and operational oversight for VCCs formed by unregulated or non-DIFC entities. The CSP acts as the primary point of contact with the Registrar and supports ongoing administrative and compliance oversightmaintains compliance standards across the VCC's operations.

Exempt VCCs - including those controlled by DIFC Registered Persons, Authorised Firms, government entities or publicly listed companies - are not required to appoint a CSP.

Key structural features

• Structure options: A VCC may be established as a standalone company or as an umbrella structure with either incorporated or segregated cells. This allows investors to choose the level of structural complexity appropriate to their investment strategy.

• Flexible share capital: Share capital is equal to net asset value, providing flexibility for issuing and redeeming shares. This enables efficient capital inflows and outflows aligned with the underlying investment portfolio's value.

• Distribution flexibility: Unlike traditional companies limited to paying dividends from profits, a VCC can make distributions from capital based on the VCC's (or relevant cell's) net asset value. This provides greater flexibility in returning capital to investors.

• Asset segregation: The VCC structure enables segregation of assets and investment strategies through incorporated or segregated cells. Different cells can maintain distinct risk profiles with ringfencing of asset liability, whilst benefiting from economies of scale through centralised management and oversight.

In practice, this allows multiple investment strategies to be managed under a single structure whilst maintaining ringfencing between them.

Target applications

The VCC model is particularly suited to:

• Family-owned businesses seeking consolidated management of diversified holdings

• High-value multi-asset portfolios requiring structural flexibility

• Complex proprietary investment portfolios, including secondaries structures

• Investors seeking segregated investment strategies under a single corporate umbrella

• Investors seeking to consolidate multiple SPVs under a single umbrella structure

The structure's flexibility in capital management and ability to create segregated cells makes it attractive for sophisticated investors requiring both operational efficiency and asset protection.

DIFC's positioning

"The Variable Capital Company Regulations advance DIFC's position as a global hub for sophisticated investment structures," said Jacques Visser, Chief Legal Officer at DIFC Authority. "The VCC regime also caters to a wide spectrum of applicants, supported by Corporate Service Providers to ensure strong compliance and operational integrity across the sector."

The introduction of the VCC framework aligns DIFC with other leading financial centres that have adopted similar structures, enhancing the jurisdiction's competitiveness for proprietary investment vehicles.

Comparison with other jurisdictions

The VCC concept has been successfully implemented in jurisdictions including Singapore, which introduced its VCC framework in 2020. DIFC's implementation includes distinctive features such as the CSP requirement for non-exempt entities and explicit provisions for both incorporated and segregated cells.

The DIFC VCC offers advantages for investors already operating in the UAE or MEASA region, providing by combining a familiar regulatory environment with the structural flexibility associated with VCC frameworks globallywith robust legal infrastructure whilst offering the structural flexibility associated with VCC frameworks globally.

Regulatory considerations

Whilst VCCs do not require DFSA authorisation for proprietary investment activities, they remain subject to DIFC's corporate governance and compliance framework. The mandatory appointment of a CSP for non-exempt VCCs ensures ongoing regulatory liaison and administrative compliance.

VCCs engaging in regulated financial services activities would require appropriate DFSA authorisation and would be subject to the relevant regulatory requirements for such activities.

How Alpadis can support

Alpadis Dubai is authorised to act as a Corporate Service Provider in DIFC and can support private and institutional asset owners with VCC incorporation and ongoing administration.

Our DIFC team can assist clients in evaluating whether a VCC is appropriate for their wider structuring framework investment structure and provide comprehensive support throughout the incorporation and operational phases.

For further information on how the DIFC VCC Regulations may benefit your investment structure, please contact Alpadis.