Unique features of VCCs
In February 2026, the Dubai International Financial Centre (“DIFC”) enacted regulations (“Regulations”), introducing a new type of a corporate structure known as a variable capital company (“VCC”). Whilst similar vehicles have been in existence in some other jurisdictions, it is the first such entity type available in the Middle East and the Gulf.
What is the VCC?
A VCC is a company that could be formed in the DIFC. It can be formed as a private company and exist in a similar way to any other DIFC company.
However, it is a unique type of a company, for the following reasons, in particular:
- The VCC’s share capital is equal to its net asset value (“NAV”), providing flexibility for the issuance and redemption of shares and, therefore, efficient capital inflows and outflows. This contrasts with a standard DIFC company whose share capital is based on its nominal share value, and whose capital reduction process requires shareholder approval, solvency statements, creditor notifications, etc.
- Once a VCC is formed, it can establish: (i) “Segregated Cells”: internal ‘compartments’ within a single VCC that ringfence assets / liabilities from each Cell, without creating separate legal persons, i.e., the VCC is one company with multiple protected ‘pools’; or (ii) “Incorporated Cells”: separate legal entities formed under the VCC umbrella, each with its own licence and Articles of Association, but with no parent / subsidiary relationship to the VCC or to the other Incorporated Cells, making them easier to spin out and/ or redomicile, independently.
- With Segregated Cells or Incorporated Cells, a VCC can segregate assets / liabilities, accompanying investment strategies and, ultimately, risk profiles, as needed.
- Distributions from a VCC can be made from its NAV-based capital, and not just from realised profits, as is the case for a nominal/ fixed capital company.
- The VCC can establish Incorporated Cells at only US$1,000 each, and the Segregated Cells at US$300 each, making them more cost-efficient than any vehicles alike, available in the UAE.
- Finally, to ensure compliance and corporate administrative interface between the VCC and the DIFC Registrar of Companies (“ROC”) is maintained, in most cases, a VCC is required to appoint a corporate services provider.
VCCs as Family Wealth Game-Changer
The VCC regime appears like an ideal instrument for family wealth structuring design, asset protection and wealth preservation. On one hand, the VCC could become an umbrella platform providing centralised management and oversight to the family portfolio. On the other, particular family members/ branches, could benefit from dedicated Cells, shielding their own portfolio from liability that would attach to the Cells of the others. Distributions can also be tailor-made towards specific beneficiaries/ family branches or members.
It follows, the Regulations provide families and, in particular, family offices and other common private wealth structures, such as trusts and foundations, the ability to house investment portfolios and asset classes with varying risk appetites to sit under one overarching ‘platform’ with neither the need to be regulated as a fund nor having to incorporate successive holding companies.
Distributions from the ultimate private wealth structure to family member beneficiaries can be correspondingly legislated for in light of its VCC’s segregated holdings, if so desired. It also provides protection as the liabilities of one Cell (which, for example, may hold a riskier portfolio) would not taint that of another Cell within the same VCC. These operative functions of a VCC combined with, for example, a DIFC foundation, would achieve not only the family’s investment goals, but also its succession planning and asset protection objectives, cohesively.
To illustrate, we have set out below a sample family wealth preservation structure:
Conclusion
Undoubtedly, the Regulations represent a landmark development for private wealth structuring in the Region. It is especially so in the context of family wealth structuring.
The VCC regime offers families and family offices a sophisticated, yet cost-effective, vehicle that combines the asset protection strength of statutory ringfencing, the operational agility of NAV-linked capital and the structural versatility of Segregated or Incorporated Cells.
In addition, these benefits are all provided without the burden of regulatory authorisation for proprietary investment purposes. Whether deployed beneath a foundation for succession planning, used to segregate risk by a family office across family branches and generations, or structured to accommodate future spinouts and cross-border redomiciliation, the VCC provides a platform that can evolve alongside the family’s needs.
As the Gulf continues to cement its position as a global hub for private capital, we anticipate that the VCC will become a useful tool for advisers serving HNW families seeking stability, flexibility and governance within the trusted common-law framework of the DIFC.
How Al Tamimi can help?
For more information on the above alert, feel free to contact the key contact.
Key Contacts
Izabella Szadkowska, Partner, i.szadkowska@tamimi.com
Noff Al Khafaji, Of Counsel, n.alkhafaji@tamimi.com
Stella Kim, Senior Associate, Stella.Kim@tamimi.com