DWTCA Updates Rules on Share Classes for DWTC Free Zone Companies

The Riffle

The Dubai World Trade Centre Authority (DWTCA) has issued Circular No. 17, introducing significant amendments to the DWTCA Company Regulations regarding the creation and management of different share classes for companies incorporated within the DWTC Free Zone. These updates align corporate governance practices with global standards and offer companies greater flexibility in structuring equity, voting rights, and capital instruments.

Key Highlights ( in reference to MoA )

1. Companies Can Now Issue Multiple Share Classes

Companies may create different classes of shares with varying rights and restrictions as long as these are clearly defined in the Memorandum of Association (MoA). Permissible share classes now include:

• Preference shares with priority on dividends/profit distribution

• Shares with enhanced, limited, or no voting rights (max. 10 votes per share)

• Shares with transfer restrictions

• Any other class approved by DWTCA

  All shares within the same class must carry identical rights.

2. Mandatory Voting Rights on Critical Matters

Regardless of class structure, except for non-voting shares, every shareholder must retain one vote per share for key resolutions related to:

• Appointment of auditors

• Amendments to the MoA (excluding class rights variation)

• Winding up of the company

3. Redeemable Shares Allowed

Companies may now issue or convert shares into redeemable shares, subject to:

• The shares being fully paid up

• At least 10% of issued capital remaining non-redeemable

• Redeemed shares being treated as cancelled, reducing share capital

4. Companies May Purchase Their Own Shares

A company may buy back its fully paid-up shares if authorised by a Special Resolution, provided that:

• At least one shareholder remains holding non-company shares

• Buybacks are funded from permissible capital/reserves

• Cancelled shares reduce share capital unless held as treasury shares

5. Treasury Shares Permitted

Companies may hold treasury shares (up to 50% of issued capital) if approved by Ordinary Resolution. Treasury shares:

• Hold no voting, dividend, or shareholder rights

• May be sold, transferred, or cancelled

6. Converting One Share Class to Another

A company may convert shares between classes if:

• Approved by Special Resolutions, including by shareholders of the affected class

• The share capital is fully paid up

7. Variation of Class Rights

Class rights may be varied only if:

• At least 75% of the nominal value of that class consents in writing,

  or

• A Special Resolution is passed at a separate class meeting

  (Treasury shares are excluded.)

8. Mandatory Notifications to the Registrar

Companies must notify the Registrar within 30 days of any:

• Redemption

• Sale or transfer

• Cancellation

• Conversion of shares.

9. Authority May Issue Further Regulations

DWTCA retains the power to issue additional rules related to share classes.

Conclusion

Circular No. 17 strengthens the DWTC Free Zone’s corporate framework by offering greater flexibility in ownership and capital structuring — from diversified share classes to treasury shares and buybacks. This update brings companies closer to global governance standards and enhances their structuring options. For further clarification, companies may contact the DWTCA Free Zone Department.

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