DIFC launches the UAE’s first variable capital company regime

The DIFC introduced the UAE’s first Variable Capital Company (VCC) regime following its June 2025 consultation, strengthening the state’s position as a global wealth and asset‑management hub. The regime is particularly relevant for family offices and multi‑asset managers seeking a consolidated yet flexible structure, aligning DIFC with leading international fund jurisdictions and supporting the Centre’s broader strategy to enhance regulatory clarity and deepen the region’s asset‑management ecosystem.

What is a VCC?

A VCC a Private Company that meets one of the following conditions:

• It is incorporated in the DIFC as a Variable Capital Company;

• It is a Private Company originally incorporated in the DIFC that has been converted into a Variable Capital Company; or

• It has been continued into the DIFC as a Variable Capital Company.

The VCC structure is designed to support multiple investment strategies or asset pools within a single overarching entity, while keeping each one properly ring‑fenced. It allows different portfolios, business lines, or investor groups to sit under one platform without the need to establish a new company every time.

The benefits are mainly practical but strengthens investor protection, as liabilities in one Cell do not spill over into another.

How a VCC is structured

A VCC can be set up with either Segregated Cells or Incorporated Cells, and the distinction between the two is important for how assets and liabilities are managed.

A Segregated Cell is essentially an internal compartment within the VCC. It does not have its own legal personality, but it does ring‑fence the assets and liabilities allocated to it from those of the VCC and any other Cells. Even if the VCC has multiple Segregated Cells, the company remains a single legal entity.

In contrast, an Incorporated Cell is formed as a separate legal entity under the VCC umbrella. It has its own Articles of Association and holds its own assets and liabilities independently of the VCC and other Incorporated Cells. This structure allows for operational separation where needed, while still benefiting from the broader VCC framework.

Inside a VCC

The VCC’s asset base is divided into Cellular Assets and Non‑Cellular Assets.

Cellular Assets belong to a specific Cell—this includes Cell Share Capital, reserves, and any income or investments attributed to that Cell. Non‑Cellular Assets are those held by the VCC itself and not allocated to any Cell.

The VCC may issue Shares based on the NAV of its Non‑Cellular Assets, while each Cell may issue its own Cell Shares priced according to the NAV of its Cellular Assets; however, the VCC itself cannot hold any Cell Shares in respect of its Cells. Redemptions must always reflect the proportional NAV of the relevant asset pool, and neither the VCC nor an Incorporated Cell can redeem Shares to the point where none remain in issue. Any redeemed Shares must be cancelled immediately.

Navigating VCC regulations

1. CSP Appointment & Core Compliance Responsibilities

• Unless exempt, a VCC must appoint a Corporate Service Provider (CSP) to handle compliance, governance, filings and record‑keeping for the VCC and any Incorporated Cells. It cannot employ staff.

• An exempt VCC is a VCC that has a controller which is a registered entity or regulated firm in the DIFC or recognised financial services regulator, a government or listed entity.

• The CSP must be properly authorised, submit required documents/fees, maintain dialogue with the Registrar, and keep necessary records for the VCC and its Cells.

2. Registrar Oversight: Licensing, Cell Scope & Revocation Powers

• The DIFC Registrar determines the licence and the extent to which a VCC may create Cells, as set out in the Articles of Association for an Incorporated Cell.

• The Registrar has the power to revoke VCC status in cases of non‑compliance.

3. Structural & Operational Requirements for Cells and the VCC

• Incorporated Cells must share the same Registered Office as the VCC and, where relevant, the same CSP, ensuring consistent administration.

• Naming and documentation standards must be met: legal names must use “VCC Limited (VCC Ltd)” and, where applicable, “VCC Segregated Cell (VCC SC)” or “VCC Incorporated Cell (VCC IC)”; Cell Share certificates must clearly identify the relevant Cell, the number/class of shares and the holder’s name.

• VCCs benefit from an explicit exemption from DIFC operating‑presence and principal‑place‑of‑business rules, reflecting their function as a flexible cross‑border asset‑holding structure.

4. Orderly Lifecycle, Systems & Centralised Filings

• A VCC cannot be dissolved immediately on wind‑up: all Cells must first be transferred, converted, or wound up, preserving the integrity of the structure.

• Firms must maintain adequate systems, controls and oversight, especially where multiple sub‑funds or cross‑border strategies are involved.

All required filings (documents, notices, forms) are submitted by the CSP on behalf of the VCC or any Cell, unless the VCC is exempt.

A Shift in the UAE’s Financial Landscape

The introduction of the VCC regime represents a positive evolution of the UAE’s financial landscape. It complements ongoing initiatives to strengthen the region’s asset‑management ecosystem, attract global fund managers and provide internationally recognised structures for private capital operating within the DIFC. By establishing a clear framework for variable‑capital structures, DIFC has created a platform that supports innovation while maintaining the regulatory discipline expected of a leading financial centre, reinforcing the UAE’s position as an adaptive jurisdiction capable of accommodating sophisticated multi‑asset investment activity.