Acme Labs — Board Package

Board Structure Recommendation for Acme Labs (Seed-Stage Fintech)

Recommended Jurisdiction

According to Acme Labs' anticipated investor profile and regulatory pathway, we recommend incorporation as a DIFC Private Company Limited by Shares (LTD) under the DIFC Companies Law (DIFC Law No. 5 of 2018). This structure is preferred over ADGM or mainland UAE for the following reasons:

Recommendation: Incorporate in DIFC. If Acme Labs' primary customers or co-investors are Abu Dhabi-based sovereign entities or ADNOC ecosystem partners, a secondary ADGM entity or branch can be added at Series A.

Board Composition at Seed Stage

For a seed-stage fintech, the board must be lean, high-impact, and fundraise-ready — not a ceremonial committee. We recommend a 3-member board to launch, with a contractual right to expand to 5 at Series A.

Rationale:

• A 3-member board avoids deadlock risk while remaining agile enough for seed-stage decision velocity.
• The iNED provides credibility with the DFSA (regulators expect governance substance even at early stages for fintech licensees).
• The investor director represents economic interests without creating a majority bloc pre-Series A.
• Quorum is set at 2 of 3, preventing a single party from blocking all decisions.

Expansion Triggers (Series A)

The Shareholders' Agreement (SHA) should include a board expansion clause triggered by a qualifying Series A (defined as a round ≥ AED 18.4M / USD 5M). At that point, the board expands to 5 seats: 2 Founders, 1 Lead Seed Investor, 1 Series A Investor, 1 additional iNED (with the new iNED subject to approval by 75% of shares).

Observer Rights

• Seed investors holding < 5% equity (e.g., angel syndicate members) may be granted Board Observer rights — the right to attend and receive board materials but not vote or count toward quorum.
• Observer access should be subject to a signed NDA and Observer Side Letter referencing DIFC confidentiality obligations.

Regulatory Note

If Acme Labs is pursuing a DFSA Innovation Testing Licence (ITL) or full Category 3C/4 licence, the DFSA will assess fitness and propriety of all directors and senior managers. Each director must submit a DFSA Form B (Individual Questionnaire) and satisfy the 'Fit and Proper' standard under DFSA Rulebook (GEN Module, Chapter 2). Plan for 6–10 weeks of regulatory review per director appointment post-ITL application.

Director Profiles — 3 Recommended Seats

Below are detailed role specifications for each of the three board seats. These profiles define the competencies Acme Labs should actively recruit for, and form the basis of the Director Agreements in Section 4.

Seat 1: Founder / CEO — Executive Director

Profile Summary: The founding CEO serves as the single executive voice on the board. Their role is to present, defend, and execute strategy — not to act as an independent check.

Required Competencies:

• Demonstrated fintech product or commercial leadership (payments, lending, wealth-tech, or insurtech)
• UAE/GCC market experience: understanding of CBUAE regulations, VAT (Federal Decree-Law No. 8 of 2017), and local banking partnerships (FAB, Emirates NBD, Mashreq)
• Ability to lead fundraising narrative at Seed and Series A
• Arabic language skills desirable but not required for DIFC entity

Responsibilities on Board:

• Present monthly/quarterly management accounts and KPI dashboards
• Lead all Board agenda items related to operational performance, hiring, and product roadmap
• Sole executive with signing authority up to AED 150,000 without additional board approval (per Reserved Matters schedule)
• Must disclose any conflict of interest per DIFC Companies Law Article 65 before each meeting

Compensation: As CEO, receives founder salary (market rate: AED 25,000–55,000/month at seed, depending on funding size). No additional board fee. ESOP cliff/vesting as per Founders' Agreement.

Seat 2: Independent Non-Executive Director (iNED) — Governance & Regulatory

Profile Summary: The iNED is the board's governance anchor. At seed stage for a UAE fintech, this role is disproportionately valuable: it signals regulatory maturity to the DFSA, credibility to institutional investors, and risk awareness to banking partners.

Ideal Candidate Background:

• Former DFSA or CBUAE official, OR
• Ex-Chief Compliance Officer / General Counsel of a UAE-licensed financial institution (e.g., Visa UAE, Tabby, Tamara, Network International), OR
• Senior partner from a DIFC/ADGM-registered law firm with fintech regulatory practice (e.g., Dentons, Linklaters, Al Tamimi & Co.)
• Must be genuinely independent: no current equity stake > 1%, no commercial relationship with the company worth > AED 50,000/year

Responsibilities on Board:

• Chair the Audit & Risk sub-committee (informal at seed stage; formalised at Series A)
• Lead annual Board Effectiveness Review
• Sign off on AML/CFT policies and Data Protection compliance (UAE Federal Decree-Law No. 45 of 2021)
• Provide written opinion on any Related Party Transaction exceeding AED 100,000
• Act as primary liaison with DFSA for governance-related queries

Fit & Proper Assessment:

• Must complete DFSA Form B
• Criminal record check (UAE Police Clearance Certificate + home country equivalent)
• No disqualification under DIFC Companies Law Article 84 (director disqualification)

Compensation:

• AED 60,000–90,000 per annum retainer (paid quarterly)
• 0.25%–0.50% equity (options, 2-year vest, 6-month cliff, subject to DFSA approval if regulated entity)
• Expense reimbursement for DIFC meeting attendance, travel (economy class within GCC)
• D&O Insurance coverage (see Section 6)

Suggested Sourcing Channels:

• DIFC Authority's Director Development Programme alumni
• MENA Private Equity Association (MENAPEA) network
• LinkedIn outreach targeting 'UAE Fintech Regulatory Advisory' profiles
• Referrals from lead seed investor's LP network

Seat 3: Lead Seed Investor Director — Commercial & Capital Markets

Profile Summary: Represents the economic interests of the lead seed investor (assumed to be a GCC-based VC or regional angel network). This director brings capital markets intelligence, follow-on investor introductions, and commercial BD leverage.

Ideal Candidate Background:

• Principal or Partner at a UAE/GCC-based VC fund (e.g., Wamda Capital, Global Ventures, BECO Capital, Shorooq Partners, or a family office with fintech exposure)
• Track record of sitting on DIFC/ADGM fintech boards (e.g., experience with portfolio companies in payments, BNPL, or B2B SaaS-fintech)
• Network into Series A institutional investors: regional (e.g., Mubadala Ventures, ADQ) and international (e.g., Sequoia Middle East, Tiger Global MENA)

Responsibilities on Board:

• Hold veto right on Reserved Matters (see Board Charter, Section 3): new share issuances, debt facilities > AED 500,000, M&A
• Provide quarterly valuation benchmarking against comparable GCC fintech rounds
• Lead introductions to Series A investors and strategic partners (e.g., banking-as-a-service providers, payment processors)
• Present annual fund-level governance report to co-investors (observer class)

Compensation:

• No cash retainer (standard practice for investor directors in GCC VC-backed companies)
• Board seat is a condition of the investment (captured in SHA and Subscription Agreement)
• Travel and accommodation reimbursed for board meetings held outside investor's base city

Appointment Mechanics:

• Investor Director right is personal to the lead investor entity and cannot be transferred without board consent
• Right lapses if investor's shareholding falls below 7.5% on a fully diluted basis (include as a trigger event in SHA)

Board Charter — Acme Labs

*Adopted by the Board of Directors of Acme Labs (DIFC) Limited*

*Version 1.0 | [Date of Adoption]*

1. Purpose and Authority

This Charter establishes the role, composition, responsibilities, and operating procedures of the Board of Directors (the "Board") of Acme Labs (DIFC) Limited (the "Company"), incorporated under DIFC Companies Law (DIFC Law No. 5 of 2018). The Board derives its authority from the Company's Articles of Association ("AoA"), the Shareholders' Agreement ("SHA"), and applicable DIFC law.

The Board is collectively responsible for:

• Setting and monitoring strategic direction
• Ensuring adequate risk management and internal controls
• Protecting the interests of all shareholders, including minority shareholders
• Maintaining the Company's good standing with the DFSA and DIFC Authority

2. Composition and Independence

2.1 The Board shall comprise 3 directors at Seed stage, expandable to 5 upon a qualifying Series A (≥ AED 18.4M / USD 5M), as described in the SHA.

2.2 At least one director shall qualify as an Independent Non-Executive Director (iNED), defined as having:

• No employment or consulting relationship with the Company or its affiliates in the past 24 months
• No equity stake exceeding 1% of the fully diluted share capital
• No material commercial relationship with the Company (> AED 50,000/year)
• No family relationship with any other director or member of Senior Management

2.3 Director appointments shall be approved by ordinary resolution of shareholders (>50% by value), except where the SHA grants a specific appointment right to a named investor.

2.4 The Board shall not have a permanent Chairman at Seed stage. The iNED shall chair each meeting to ensure independence. This shall be reviewed at Series A.

3. Reserved Matters (Requiring Board Supermajority or Shareholder Approval)

The following matters require the affirmative vote of all 3 directors (or 4 of 5 post-Series A) AND, where marked *, additionally require shareholder approval by special resolution (75%+):

4. Director Duties

All directors are subject to the following duties under DIFC Companies Law and common law principles adopted by DIFC courts:

• Duty to Act in Good Faith (Article 59): Act in the way the director considers, in good faith, most likely to promote the success of the Company
• Duty to Act Within Powers (Article 58): Act only in accordance with the AoA and SHA
• Duty to Avoid Conflicts of Interest (Article 63): Disclose any direct or indirect interest in a proposed transaction before each relevant board vote
• Duty Not to Accept Benefits from Third Parties (Article 64)
• Duty of Care, Skill and Diligence (Article 60): Exercise the care, skill, and diligence that would be exercised by a reasonably diligent person with the general knowledge, skill, and experience of that director
• Duty to Declare Interests in Existing Transactions (Article 65)

> Practical Note for Seed Stage: Given Acme Labs' fintech licence obligations, directors must also comply with DFSA Rulebook (GEN 2.2 – Fit and Proper) on an ongoing basis. Any conviction, regulatory sanction, or material adverse change in a director's personal financial position must be disclosed to the Board and the DFSA within 10 business days.

5. Conflicts of Interest Protocol

• At the opening of each board meeting, the Chair shall ask each director to declare any conflicts with agenda items.
• A conflicted director shall recuse themselves from discussion and voting on the relevant item.
• Declarations shall be recorded in the minutes and maintained in the Company's Conflicts Register.
• The iNED shall maintain and annually review the Conflicts Register.

6. Quorum and Voting

• Quorum: 2 of 3 directors present (in person, by video, or by written proxy) — but a meeting is not quorate if only the CEO and Investor Director are present without the iNED, for any Reserved Matter item.
• Ordinary Resolutions: Simple majority (2 of 3)
• Reserved Matters: Unanimous (3 of 3)
• Written Resolutions: Permitted for non-Reserved Matters; must be signed by all 3 directors within 5 business days of circulation
• Casting Vote: No casting vote; tied votes on non-Reserved Matters shall be deferred to the next meeting

7. Information Rights and Board Papers

• Board papers shall be circulated no fewer than 5 business days before each scheduled meeting
• Standard board pack shall include: (i) CEO Report, (ii) Financial Statements (P&L, Balance Sheet, Cash Flow), (iii) KPI Dashboard, (iv) Risk Register update, (v) Legal & Compliance update, (vi) any Reserved Matter proposals with supporting analysis
• All board materials are classified CONFIDENTIAL and subject to the Company's Information Security Policy
• Directors may request additional information from management; the CEO must respond within 3 business days

8. Charter Review

This Charter shall be reviewed annually by the Board, with the first review no later than 12 months from the date of adoption. It shall be updated to reflect any changes in the Company's regulatory status, shareholding structure, or applicable DIFC law.

Director Agreement Framework — Acme Labs

This section sets out the key commercial, legal, and governance terms that should be included in each Director Agreement (also referred to as a Letter of Appointment for NEDs). Agreements must be governed by DIFC law and provide for disputes to be resolved before the DIFC Courts.

4.1 Structure by Director Type

4.2 Key Clauses — iNED Letter of Appointment (Detailed)

The following clauses are specifically recommended for the iNED agreement, as this is the most negotiated appointment at seed stage.

Clause 1 — Appointment and Term

> The iNED is appointed for an initial term of 12 months from the Commencement Date, renewable by mutual written agreement. The appointment is subject to annual re-election at the Annual General Meeting (AGM) as required under DIFC Companies Law Article 51.

Clause 2 — Time Commitment

> The iNED is expected to commit a minimum of 8–12 hours per month to Company matters, including: (i) attendance at scheduled board meetings (minimum 4 per year + 2 ad hoc), (ii) review of board materials, (iii) participation in sub-committee calls, and (iv) availability for ad hoc regulatory or investor calls with reasonable notice (minimum 48 hours).

Clause 3 — Remuneration

> (a) Cash Retainer: AED [60,000–90,000] per annum, payable quarterly in arrears to the iNED's nominated bank account. This amount is inclusive of any applicable value-added tax (VAT) under Federal Decree-Law No. 8 of 2017 (the Company will issue a VAT invoice if required).

> (b) Equity: Subject to the Company's ESOP plan adopted by the Board, the iNED shall be granted options over [0.25%–0.50%] of the Company's fully diluted share capital at the time of grant, exercisable at the Fair Market Value as determined by the Board at grant date. Options vest over 24 months with a 6-month cliff. Options lapse 90 days after termination of appointment (except for good leaver scenarios: death, disability, or removal without cause).

> (c) Expenses: Reasonable out-of-pocket expenses incurred in performance of duties (economy class travel within GCC, accommodation up to AED 800/night for DIFC meetings) shall be reimbursed within 15 business days of submission of receipts.

Clause 4 — Confidentiality

> The iNED acknowledges that all information received in their capacity as a director constitutes confidential information of the Company. This obligation survives termination for a period of 3 years. The iNED shall not disclose any material non-public information to their employer, fund, or affiliated entities. This clause is enforceable under DIFC Contract Law (DIFC Law No. 6 of 2004).

Clause 5 — Conflicts of Interest

> The iNED shall promptly disclose to the Board any situation that may give rise to a conflict of interest, including: (i) acceptance of a directorship in a competing fintech company, (ii) entry into any commercial arrangement with the Company or its affiliates, or (iii) acquisition of more than 1% equity in any competitor. Failure to disclose within 5 business days of awareness constitutes a material breach.

Clause 6 — DFSA Fit and Proper Compliance

> The iNED confirms that they satisfy the DFSA Fit and Proper standard (GEN 2.2) at the date of appointment and undertakes to notify the Company immediately of any change in circumstances that may affect their fitness and propriety, including: any criminal investigation, regulatory sanction, personal insolvency, or director disqualification in any jurisdiction.

Clause 7 — Indemnity and D&O Insurance

> To the maximum extent permitted by DIFC Companies Law Article 74, the Company shall indemnify the iNED against all costs, claims, damages, and expenses arising from their role as director, except where such liability arises from the iNED's own fraud, wilful misconduct, or gross negligence. The Company shall maintain D&O insurance with a minimum limit of USD 2,000,000 per claim, naming the iNED as an insured (see Section 6 for full D&O terms).

Clause 8 — Termination

> Either party may terminate this appointment on 30 days' written notice. The Company may terminate immediately for cause, defined as: (i) material breach of this Agreement, (ii) conviction of a criminal offence, (iii) loss of DFSA Fit and Proper status, (iv) persistent failure to attend board meetings (defined as absence from 3 consecutive scheduled meetings without prior written consent of the Board). Upon termination, unvested options lapse and vested options are exercisable within 90 days.

Clause 9 — Governing Law and Dispute Resolution

> This Agreement is governed by DIFC law. Any dispute shall be referred to the DIFC Courts (Small Claims Tribunal for disputes < USD 200,000; Court of First Instance for larger matters). The parties waive any right to jury trial. Mediation shall be attempted for 30 days before formal proceedings are commenced.

4.3 ESOP Plan Requirements

For equity grants to the iNED to be valid and enforceable in DIFC:

• The Company must adopt a Board-approved ESOP Plan compliant with DIFC Employment Law (DIFC Law No. 2 of 2019, as amended)
• Options must be granted at or above Fair Market Value at time of grant (document a board-approved valuation methodology — at seed stage, the post-money seed round price per share is typically used as the reference point)
• ESOP pool should be 10%–15% of fully diluted shares (standard GCC VC expectation at seed; create this pool pre-money in the seed round)
• All option grants must be approved by the Board as a Reserved Matter (any grant > 1% fully diluted requires shareholder approval per the Reserved Matters Schedule)

12-Month Meeting Structure — Acme Labs Board Calendar

Overview

At seed stage, board meetings serve three critical functions: (1) strategic alignment and accountability, (2) providing investor directors with the information flow required for portfolio reporting, and (3) building a governance track record that accelerates Series A due diligence. Acme Labs should aim for quality over frequency — well-prepared meetings of 90–120 minutes are more effective than monthly check-ins with no prior materials.

Recommended cadence: Quarterly Formal Board Meetings + Monthly Investor/Management Updates (written) + 2 Ad Hoc Board Meetings (triggered by Reserved Matters as needed).

Annual Board Meeting Calendar

Total formal board meetings in Year 1: 5 scheduled + up to 2 ad hoc = 7 maximum

Monthly Written Update (Between Formal Meetings)

To maintain investor confidence and avoid information asymmetry, the CEO shall circulate a Monthly Board Update (written, not a meeting) by the 5th business day of each month. This replaces the need for monthly formal meetings and is standard practice at GCC seed-stage fintechs (modelled on best practice from Wamda Capital and Global Ventures portfolio requirements).

Monthly Written Update — Standard Template:

```

• Headline KPIs vs. Budget (table format)
• Revenue (AED) | GMV / TPV (if payments) | MoM Growth %
• Burn Rate (AED/month) | Runway (months)
• Active Users / B2B Clients | NPS Score (if tracked)

• Cash Position
• Opening Bank Balance (1st of month)
• Closing Bank Balance (end of month)
• Next 90-day cash projection

• Regulatory & Compliance Update
• DFSA licence status
• Any regulatory correspondence received
• AML/CFT incidents (if any)

• Top 3 Wins This Month
• Top 3 Risks / Issues Requiring Board Awareness
• Series A Fundraising Pipeline Update (Month 7 onwards)
• HR Update: headcount, open roles, departures

```

Directors may respond with comments within 3 business days. The CEO must address material questions before the next formal board meeting.

Detailed Agenda: BM-01 (Inaugural Meeting)

Pre-Meeting Requirements (circulate 5 business days before):

• Draft Board Charter (final version)
• Director Agreements (all 3 signed)
• ESOP Plan document
• Annual Budget (P&L, Cash Flow, Headcount plan)
• Bank signatory resolution template
• DFSA licence application status memo

Agenda:

• Confirmation of quorum and conflicts declaration *(5 min)*
• Adoption of Board Charter *(10 min — vote)*
• Appointment of Company Secretary (recommend engaging a DIFC-registered corporate services firm, e.g., Vistra, Tricor, or TMF Group; cost: AED 25,000–45,000/year) *(10 min — vote)*
• Approval of bank mandate and authorised signatories *(10 min — vote)*
• Adoption of ESOP Plan and authorisation of option pool *(20 min — vote; Reserved Matter)*
• Approval of Annual Budget FY2024 *(30 min — discussion + vote)*
• DFSA/regulatory update from iNED *(15 min)*
• Series A timeline discussion *(15 min)*
• AOB and next meeting date *(5 min)*

Detailed Agenda: BM-03 (Mid-Year Strategic Review)

Pre-Meeting Requirements:

• H1 Financial Statements (reviewed by external accountant; audit not required until AED 18M+ revenue or Series A, whichever earlier)
• Updated 3-year financial model with Series A scenarios
• Market benchmarking: GCC fintech comparables (raise size, valuation multiples, revenue multiples)
• DFSA licence progress report
• Updated Risk Register

Agenda:

• Conflicts declaration *(5 min)*
• H1 Financial Performance vs. Budget *(25 min)*
• Product roadmap: H2 priorities and resource allocation *(20 min)*
• DFSA licence / regulatory pathway update *(15 min)*
• Series A readiness: investor pipeline, data room status, lead investor profiles *(30 min)*
• Risk Register review *(15 min)*
• iNED governance report *(10 min)*
• AOB *(5 min)*

Meeting Logistics — UAE-Specific Considerations

• Venue: DIFC entity board meetings should be held within the UAE (physical or hybrid). For DIFC Companies Law compliance, at least 2 of 5 meetings per year should be physically held within the DIFC or UAE to establish local management and control (critical for tax residency and Economic Substance Regulations compliance under Cabinet Resolution No. 57 of 2020).
• Minutes: Must be drafted within 5 business days of each meeting, approved by the Chair (iNED), and filed in the Company's statutory records maintained by the Company Secretary.
• Language: Minutes may be in English (DIFC entity). If a mainland branch is established, Arabic minutes may be required by mainland authorities.
• Video Conferencing: Permitted under DIFC Companies Law Article 85 (directors may participate remotely). All remote participation must be recorded or attested by the Company Secretary.
• Public Holidays: Build the board calendar around UAE public holidays (Eid Al Fitr, Eid Al Adha, UAE National Day — December 2–3) and Ramadan (reduced working hours; avoid scheduling formal meetings during the last 10 days of Ramadan).
• Economic Substance Test: The Board must ensure that the Company passes the 'Directed and Managed' test under the Economic Substance Regulations. This means board decisions on core income-generating activities must be made in the UAE, and a majority of attending directors at key meetings must be UAE-present. Document this explicitly in minutes.

Liability & Governance Notes — UAE/DIFC Specific

This section addresses the key legal risks, liability exposure, and protective measures relevant to Acme Labs' directors under UAE and DIFC law. This is not legal advice; directors should obtain independent legal counsel from a DIFC-registered law firm.

6.1 Director Liability Framework — DIFC vs. Mainland UAE

Key Takeaway: DIFC provides the strongest director liability protection for legitimate business decisions (business judgment rule is recognised by DIFC Courts). However, fintech directors face an additional regulatory liability layer via the DFSA that is unique and must not be underestimated.

6.2 DFSA Enforcement — Practical Risks for Acme Labs Directors

As a DFSA-regulated (or ITL-holding) entity, Acme Labs directors are subject to DFSA enforcement action independent of DIFC Companies Law. Key risk areas:

a) Failure to Maintain Adequate Regulatory Capital

• DFSA requires minimum capital requirements depending on licence category. Breach can trigger regulatory intervention within 10 business days.
• Directors must ensure real-time monitoring of capital adequacy. The iNED should receive a monthly capital adequacy confirmation from the CFO/Finance function.

b) AML/CFT Failures

• UAE Federal Decree-Law No. 20 of 2019 (AML Law) and Cabinet Decision No. 10 of 2019 impose personal liability on Senior Management (including board members who are designated 'Senior Managers' under DFSA Rulebook) for systemic AML failures.
• Directors should ensure the Company appoints a DFSA-approved Money Laundering Reporting Officer (MLRO) as a separate named individual (not the CEO).
• Annual AML risk assessment must be presented to the full Board and documented in minutes.
• UAE is subject to FATF monitoring. As of 2024, UAE has been removed from the FATF grey list — maintaining this status requires demonstrable board-level AML governance.

c) Market Conduct and Data Protection

• UAE Federal Decree-Law No. 45 of 2021 (Personal Data Protection Law — PDPL) imposes fines up to AED 20,000,000 for data breaches where governance failures are evident.
• Directors should approve a Data Protection Policy and Annual PDPL Compliance Report at least once per year.
• The DFSA's Market Conduct rules (MKT Module) prohibit directors from trading in the Company's securities using material non-public information — relevant if Acme Labs pursues a DFM or Nasdaq Dubai listing.

6.3 D&O Insurance — Recommended Terms for Acme Labs

D&O insurance is strongly recommended for all three directors from the date of the inaugural board meeting. At seed stage in the UAE, D&O coverage is often required by institutional investors as a condition of closing.

Recommended Policy Parameters:

Critical Note on Run-Off Cover: If the Company is acquired, merges, or winds down, directors should ensure the policy includes a run-off (tail) clause providing coverage for claims made after the policy period for acts that occurred during the policy period. Standard run-off period: 6 years. Negotiate this into the policy from Year 1.

6.4 Economic Substance Regulations (ESR) Compliance

Under UAE Cabinet Resolution No. 57 of 2020 (as amended), DIFC entities carrying out Relevant Activities (which include 'Finance and Leasing' and 'Holding Company' activities that may apply to a fintech) must:

• File an Annual ESR Notification with the DIFC Authority (due within 6 months of financial year end)
• Demonstrate Economic Substance in the UAE: adequate employees, operating expenditure, and physical premises in the UAE
• Confirm that Core Income Generating Activities (CIGA) are conducted in the UAE
• The Board must formally review and approve the ESR Report annually — include this as a standing agenda item at the Year-End Board Meeting (BM-05)

Penalty for non-compliance: AED 10,000–50,000 for failure to file; AED 50,000–300,000 for failure to meet substance requirements. Repeated failure can result in spontaneous exchange of information with the director's home country tax authority.

6.5 Ultimate Beneficial Owner (UBO) Register

DIFC entities must maintain and file a UBO Register with the DIFC Registrar of Companies, disclosing all individuals who ultimately own or control ≥ 25% of the Company. This is a legal requirement under DIFC Law No. 1 of 2020.

• The Board (via Company Secretary) must update the UBO Register within 14 days of any change in beneficial ownership (e.g., new ESOP exercises, secondary transfers)
• Failure to maintain an accurate UBO Register is a criminal offence under DIFC law
• For seed rounds, ensure the SHA contains a UBO disclosure covenant requiring all investors to provide complete UBO information as a condition of closing

6.6 Wrongful Trading and Insolvency Awareness

Under DIFC Insolvency Law (DIFC Law No. 1 of 2019), directors can be personally liable for wrongful trading if they continued to incur liabilities when they knew (or should have known) there was no reasonable prospect of the Company avoiding insolvent liquidation.

Practical Safeguards for Acme Labs Directors:

• The Board must formally discuss and minute runway and cash position at every board meeting
• If runway falls below 3 months, an emergency board meeting must be convened within 5 business days and a formal 'going concern' memo prepared by the CFO/finance function
• Directors should seek legal advice immediately if the Company cannot pay debts as they fall due
• A Solvency Certificate signed by the CEO and reviewed by the iNED should be tabled at each formal board meeting as part of the financial pack
• Directors who dissent from a decision they believe may constitute wrongful trading should ensure their dissent is clearly recorded in the minutes

6.7 Summary: Director Risk Mitigation Checklist