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ADGM
Abu Dhabi Global Markets
ADGM
ADGM is an international financial centre located in Abu Dhabi, UAE and one among the leading financial centre in the Middle East. It was established in 2013 and became fully operational in 2015.
ADGM operates across Al Maryah Island and Al Reem Island and it is one of the largest financial districts in the world.
ADGM’s legal framework is based on English common law. English common law covers a wide range of scenarios for the investors. For the companies incorporated in ADGM, all the civil and commercial disputes will be under the jurisdiction of ADGM courts only and they need not refer to the shariah law.
Non-Regulated Entities
Any activity which is non-financial will fall under the category of “Non-regulated”. Following are some of the activities categorized as non-regulated:
Non-Regulated Entities
Special Purpose Vehicle (SPV)
The Abu Dhabi Global Market (ADGM) Free Zone is an attractive destination for businesses looking to set up a Special Purpose Vehicle (SPV) company. SPVs are entities that are created for a specific purpose and are typically used to ring-fence assets or liabilities.
ADGM process
Uses of ADGM SPV
The SPV can derive dividend income from these investments, and also capital gains when divested. Since SPV is a passive entity, they cannot have office and cannot hire employees.
Securitisation:
Can be used by an originating party to securitise loans (or other receivables) by creating an SPV which purchases these assets by issuing debt, secured on these underlying assets. The ADGM allows to register pledges with the Registration Authority, and these pledges will have to be cleared before any share transfers can be affected on the SPV.
Real Estate Investments:
Can be used to acquire title to real property and limit recourse of mortgage lenders depending on the location of the asset. In some jurisdictions the sale of the SPV’s shares can result in lower taxes and transaction fees when compared to transferring the asset.
Financing:
ADGM SPV can be used to ring-fence certain investments, permitting financing without leading to an increase in existing debt levels for the parent firm or exposing the parent’s assets (or SPV’s assets) to cross-liabilities.
Asset Transfer:
Can be used to transfer assets in conjunction with material agreements. These transfers can be triggered on specific milestones, and also be incorporated into legacy-planning solutions for long-term asset transfers.
Intellectual Property:
Can be used to separate Intellectual Property into a separate structure, which has minimal liabilities and can be used to raise funds and enter into license agreements with third parties.
Raising Capital:
Can be used to raise capital, with credit worthiness determined by the collateral of the SPV, rather than the credit rating of the parent firm.
ADGM process
Risk Sharing:
In cases of joint ventures, can be used to form specific project-based companies. This would reflect agreed management responsibility while legally isolating joint venture partners from risks associated with the joint venture.Again, in these cases, only passive management of the SPV is allowed, which means that the SPV structures as a joint venture cannot have employees, office space or be seen in general as actively managing the arrangement.
ADGM process
Protection of Intellectual property:
Once registered,the IPshould be protected. This exercise is detailed and involves a thorough analysis of the current jurisdictions where the organisation operates, the associated costs and the risks involved in not moving fast enough. The approximate cost of registering an IP in GCC is $4,300.
- SPV can be used to hold Intellectual property registered in multiple jurisdictions into a single entity.
- Separation of IP from the operational company, thus protecting the IP from operational liabilities.
- Ability to claim tax relief under DTAAs signed with the UAE.
- Mechanism to support standalone IP valuation.
ADGM process
SPV Company Set-Up
The ADGM Free Zone offers an attractive environment for setting up an SPV company. SPVs can be set up as a Private Limited company, Partnership and can be redomiciled from a different jurisdiction provided they are as per the regulations of ADGM. The registration process for an SPV in ADGM is straightforward and can be completed quickly with the help of experienced business setup consultants.
ADGM holding companies can be used to hold assets within the UAE, the GCC, or anywhere else in the world. These include real property and shares in other companies in the UAE and worldwide.
The first step to starting an SPV company in ADGM is to select the appropriate legal structure for your business. Once you have decided on the legal structure, you need to register your business with the ADGM Registration Authority. The registration process involves submitting the necessary documentation, including your business plan and company formation documents. The ADGM Registration Authority will review your application and provide you with a license if your application meets their requirements.
Benefits of ADGM
SPV Company Set up
One of the primary benefits of setting up an SPV company in ADGM is that it provides a tax-free environment for businesses. ADGM does not levy any corporate or personal taxes, which means that businesses can retain more of their profits. Additionally, the free zone offers a range of incentives for businesses, including exemptions from customs duties and a relaxed regulatory environment. Another advantage of setting up an SPV company in ADGM is that it provides a high level of confidentiality and privacy for businesses.
Requirements to set up
SPV in ADGM
There are 2 primary criteria to set up an SPV in ADGM. They are:
- The Authorized Signatory of the SPV must be either a UAE resident or a UAE/GCC national.
- For the registration authority to approve the SPV application, the SPV has to meet Nexus requirements. The underlying asset of the SPV must be in the UAE or GCC. If this requirement is not fulfilled, the UBO of the SPV (holding more than 25% shares) must be a UAE resident.
Set up Cost
ADGM SPV Company
The process of setting up an SPV company in ADGM is straightforward and can be completed quickly with the help of experienced business setup consultants. The set-up costs are generally competitive compared to other financial free zones in the region.
ADGM fees to incorporate an SPV is USD 1,900.
Our expert consultants in XPRO will assist you to incorporate a SPV in ADGM, collate KYC, draft incorporation documents, open bank account and manage post incorporation services.
Base of ADGM
ADGM Foundation
Foundation is an entity which provides a mechanism to consolidate family holdings of various assets (Property, Shares in a company, IP rights, Royalties), legacy planning, managing family wealth, succession planning into a single holding entity.. The main foundation difference between a foundation and a company is that a company can hold assets as well as issue shares whereas a foundation can only hold assets.
ADGM Foundation
Requirements to Register
Authorized Signatory
ADGM foundation needs UAE/GCC resident or national as Authorized Signatory.
Beneficiary Select
Individuals or corporates nominated by founder can legally distribute foundation assets.
Council Member
Need to appoint minimum 2 council members. Can be individuals (or) body corporate
ADGM Foundation
Cost of Setting Up
Cost Effective
ADGM foundations are cost effective as it will cost only USD 500 to register a foundation.
Our expert consultants in XPRO will assist you to register a foundation, collate KYC, draft incorporation documents, open bank account and manage post registration services including renewal services.
Our expert consultants in XPRO will assist you to register a foundation, collate KYC, draft incorporation documents, open bank account and manage post registration services including renewal services.
Base of ADGM
Tech Start-Up
ADGM provides a launching pad for the tech entrepreneurs to start a company which is cost effective, a thriving ecosystem to operate in ADGM. Tech startups are provided with an incentive package, whereby they will have to pay only USD 1000 (seed stage) and USD 4300 (Emergent stage).
The company will be eligible to apply for 3 visas for every desk space.
Our expert consultants in XPRO will assist you to register a Tech start up, collate KYC, draft incorporation documents, secure desk space, open bank account and manage post registration services including renewal services.
Operational Holding
Holding Company in ADGM
Operational Holding company helps to consolidate investments under single entity. As the name suggests, an ADGM opco will be an operational entity with investors having the option to hire employees and to operate as a full-fledged operational entity. The difference between an SPV and Opco is the SPV is a passive entity, cannot hire staffs and an OPCO is an entity eligible for visas.
The maximum number of visas you can apply for will depend on both the type of business you plan on setting up as well as the size of the premises you lease in the ADGM.
Specific advantages setting up in ADGM are :
TAX BENEFITS
- Zero tax for 50 years on profits, capital or assets
- Zero tax on employee income
COUNTERPARTY CONFIDENCE
- Well regarded, independent regulator
- Independent, English-speaking, common law judicial system
- Distinct from the UAE legal system
- Risk-based regulatory approach
Costs of setting up ADGM Opco is USD 10,300 and USD 200 to register the lease with ADGM.
Our expert consultants in XPRO will assist you to incorporate a ADGM Operational Holding company, collate KYC, draft incorporation documents, rent office space inside ADGM, register lease, open bank account and manage post incorporation services, including renewal services.
Investment
Proprietary investment Company
As the name suggests, proprietary investment company allows the company to manage their own investments. The Proprietary investment asset license holder is not allowed to manage/ advise investment for third parties.
Costs of setting up ADGM proprietary investment company is USD 10,00 for the 1st year.
Our expert consultants in XPRO will assist you to incorporate a ADGM proprietary investment company, collate KYC, draft incorporation documents, rent office space inside ADGM, register lease, open bank account and manage post incorporation services, including renewal services.
Family Office
Single Family Office in ADGM
What is Single Family office:
Single family office is an entity which will allow family to manage their investments and affairs of a single family to a single holding company. The assets held by the SFO will be considered as families own assets. SFO is allowed to provide services to single family only. SFO is an operational entity, where one can rent an office, obtain visas. An SFO can hold assets owned by a family worldwide. Through this entity the family can manage the entire assets held worldwide in an efficient manner.
Benefits of Single Family office:
SFO can provide the following services
- Succession planning
- Tax Planning
- Legacy Planning
- Estate planning
SFO, allows a family to effectively structure Families assets.
Cost of setting up a SFO in ADGM:
Costs of setting up a Single-Family office in ADGM is USD 10,300 and USD 200 to register the lease with ADGM.
Our expert consultants in XPRO will assist you to incorporate a Single-family office, collate KYC, draft incorporation documents, rent office space inside ADGM, open bank account and manage post incorporation services including renewal services.
