DIFC Invites Public Feedback on Proposed Variable Capital Company Framework 

The Dubai International Financial Centre (DIFC) has announced a public consultation on new Variable Capital Company (VCC) Regulations, set to significantly enhance investment structuring and asset management within the financial hub. The proposed regulations, published on June 25, 2025, aim to offer greater flexibility for proprietary investment activities in the DIFC. This initiative invites industry stakeholders to review and provide feedback on the regulatory framework aimed at supporting a wide range of investment fund structures. 

What is a Variable Capital Company? 

A Variable Capital Company is a flexible corporate structure specifically designed for proprietary investment activities. The VCC structure supports the formation of umbrella entities comprising multiple sub-funds, each maintaining its own distinct assets and liabilities.  

The proposed regulations further clarify that VCCs can also be used for proprietary investment purposes without the need for a DFSA license or fund manager, unless they intend to conduct regulated financial services. From an investor perspective, the VCC regime promises several advantages, including increased operational flexibility, enhanced asset protection through legal segregation, and more efficient capital management strategies.  

To be eligible for incorporation, continuation, or conversion into a VCC within the DIFC, an entity, along with any segregated or incorporated cells it may have, must meet at least one of the conditions outlined in the draft regulations. These include being under the control of one or more qualifying persons or entities such as GCC Persons, DIFC-registered entities, or DFSA-authorized firms; being established for the purpose of holding or managing GCC-eligible assets; being formed for a recognized qualifying purpose; or having a director who is employed by a corporate service provider that maintains an approved arrangement with the DIFC Registrar. 

Key aspects of the new VCC framework include: 

• Establishment as a standalone company or an umbrella structure with incorporated or segregated cells. 

• Share capital equivalent to net asset value, allowing for flexible share issuance and redemption, and efficient capital flows. 

• Ability to distribute capital based on net asset value, not solely profits. 

• Facilitation of asset segregation and diverse investment strategies through incorporated or segregated cells, enabling distinct risk profiles and ringfencing of liabilities while benefiting from centralized management. 

This new model is anticipated to be particularly advantageous for family-owned businesses, high-value multi-asset holdings, and complex proprietary investment portfolios, offering consolidated management and flexible structuring solutions. 

Further details are available in Consultation Paper No. 2 of 2025. The public consultation period is open until July 24, 2025. 

You can read the full announcement on the DIFC website: https://www.difc.com/whats-on/news/difc-announces-consultation-of-new-variable-capital-company-regulations