Set in the heart of Abu Dhabi, the Abu Dhabi Global Market (ADGM) Free Zone is an ideal location for investors to set up a company in the financial sector, especially private banking, wealth management, and asset management. The Abu Dhabi free zone provides an efficient and robust business environment for the firms operating in the financial service industry. Commenced in the year 2015, ADGM has made substantial progress in collaborating with the bigwigs, both domestically and internationally. They have collaborated with prominent authorities like the Economic Department in Abu Dhabi, the UAE’s Central Bank, Insurance Authority, Abu Dhabi Municipality and the Financial Service Commission in Jersey.
The Abu Dhabi Global Market has 3 independent authorities providing a holistic environment by allowing companies to operate from the center. They are:
If an individual wants to establish a business in ADGM free zone, Registration Authorities are the first point of contact for the same. They support and guide you through the whole process of company formation, registration and licensing.
Financial Service Regulatory Authority (FSRA)
The main objective of FSRA is to establish a robust and well-regulated financial market with a high level of regulatory transparency and engagement.
They have a fully independent common law framework to adjudicate civil and commercial disputes.
Benefits of Setting Up a Business in ADGM Free Zone
Just like any other free zone in the UAE, ADGM also had its own advantages for setting up a business:
100% foreign ownership
0% tax for 50 years
Zero restrictions on the repatriation of capital and profits
Common law jurisdiction
Simple and convenient business procedures
Availability of dedicated skilled professionals
No requirement to have corporate documents attested and legalized (in most cases)
No physical office space required in ADGM. As a registered agent, the Sovereign will provide registered addresses for special purpose vehicles (SPVs)
No restrictions on nationality for the purposes of share ownership
Types of Entities in ADGM Free Zone
There are mainly 4 types of entities investors can set up in ADGM free zone:
Company Limited by Shares
Branch of a Foreign Company
Company Limited by Guarantee
How to Set Up a Business in ADGM Free Zone?
For companies looking to set up a business in Abu Dhabi Global Market free zone, there are many options available. One can open a business limited by shares where the presence of at least 2 directors is mandatory, or you can open a branch of the company already established in the UAE or any foreign land. Now, coming to set a business in Abu Dhabi’s financial market, each business is required to fill out the application forms online through ADGM online registry solutions. A paper-based application is also acceptable, however extra fees are charged for the same. ADGM free zone has a business-friendly 4-step registration process as follows:
Procedure to Set Up a Business in ADGM Free Zone
A special business development team to discuss the requirements of your business is provided, after which you can complete the business application form through online registry solutions and submitting it after filling the same.
Registration and Incorporation
After you get an approval from the authorities for the business application, proceed to complete the online registration/incorporation form. You are also required to submit all the documents mentioned in the form.
Once you get the approval for the filled registration form, a commercial license will be issued within a few days. If all the documents are provided correctly then it will not require more than a week for the approval.
Apply for a FAWRI account and Establishment Card. They are mainly required in order to apply for ADGM issued visas.
FAWRI Account: Every company needs to be registered in the Fawri’s system so that it can proceed with the visa processing.
Establishment Card: An Establishment Card is needed for all services related to the visas and is mandatory for all new companies in ADGM.
The Abu Dhabi Global Markets (ADGM) financial free zone has created a flexible, robust, simple and efficient Special Purpose Vehicle (SPV) regime that caters to a broad range of business types, uses and industry sectors including but not limited to aviation financing and leasing, corporates, sovereign wealth funds, single family offices, trustees and individual investors.
SPVs are corporate vehicles, typically private companies, established for the purpose of isolating financial and legal risk by ring-fencing assets and liabilities. SPVs can be established as subsidiaries, project or joint venture vehicles to ensure that only those assets related to a transaction are exposed to the liabilities associated with that transaction. The key feature of an SPV is its separate legal personality, which means that claims by an SPV’s creditors cannot attach to the assets of the SPV’s shareholders or any of its sister companies.
ADGM offers a platform from which to fulfill narrow, specific or temporary corporate objectives. There are no restrictions on who can set up an ADGM SPV. It can be an individual or a corporate entity but a minimum of one shareholder is required.
The ADGM follows the English model such that SPVs follow the Companies Regulations rather than separate regulations, which provides consistency across all corporate vehicles. SPVs will be provided with a commercial licence specifying that the company is undertaking SPV activities.
ADGM also provides the option, to applicants meeting certain criteria, for an SPV to be formed as a ‘Restricted Scope Company’ (RSC). RSCs may be incorporated as a subsidiary of either a group that files public consolidated accounts or a company formed by Emiri decree, or as a Single Family Office. RSCs are required to make only limited information disclosure on the public register although full disclosure to the ADGM Registrar is mandatory.
The ADGM SPV regime is underpinned by ADGM’s robust regulatory platform, its common law legal system and independent courts, as well as its highly favourable tax environment. All ADGM-registered companies are eligible to apply for a Tax Residency Certificate from the UAE Ministry of Finance to benefit from the UAE’s extensive double tax treaty network.
As an ADGM-registered agent, Sovereign Corporate Services is permitted to manage an SPV and to provide the registered office address, thereby eliminating the requirement for the client to have a physical office space in the ADGM.
Benefits and Key features of an ADGM SPV include:
Fast efficient set-up process via Sovereign
Highly competitive fees
All ADGM-registered companies are eligible to apply for a Tax Residency Certificate
Access to ADGM’s independent civil and commercial legal regime
Access to ADGM’s independent English Common Law courts
No requirement to have corporate documents attested and legalised (in most cases)
No physical office space required in ADGM. As a registered agent, Sovereign will provides the registered address for the SPV
No restrictions on nationality of share ownership
No minimum share capital, no maximum number of shares or shareholders, and different classes of shares are permitted
Migration or continuance of existing corporate entities permitted
Simple ongoing reporting requirements
No liquidator required for wind-down process
Typical uses for SPVs:
Securitisation – An SPV can be used by an originating party to securitise loans (or other receivables) by creating an SPV that purchases these assets by issuing debt, which is secured on these underlying assets. This ensures that the holders of the asset-backed securities have first priority right to receive payments on the debt while limiting recourse to the originator of the assets.
Real Estate Investment – An SPV can be used to acquire title to real property and limit recourse of mortgage lenders depending on the location of the asset. In some countries, the sale of an SPVs shares can result in lower taxes and transaction fees than transferring the asset itself.
Financing – Can be used to ring-fence investments, permitting financing without increasing debt levels for the parent company or exposing the parent’s assets (or SPV’s assets) to cross-liabilities.
Asset transfer – An SPV can be used to transfer assets along with associated material agreements that may permit the transfer of all or part of ownership of the enterprise, while keeping intact material agreements that may be necessary to maintain the value of the asset.
Risk sharing – An SPV can be used to form project companies for joint ventures, reflecting agreed management responsibility while legally isolating joint venture partners from risks associated with the venture.
Raising capital – An SPV can be used to raise capital at favorable rates in certain situations, with credit worthiness determined by the available collateral of the SPV rather than the credit rating of the parent company.
Intellectual Property (IP) – An SPV can be used to separate valuable IP into a standalone SPV that has minimal liabilities and can be used to raise funds and enter into license agreements with third parties. It can also assist in managing products with a variety of IP components.