Abu Dhabi Global Market – ADGM
ADGM offers a secure and efficient platform for companies & financial institutions to establish operations & fulfill their expansion ambitions. The ADGM is harnessing the inherent strength of the Abu Dhabi Economy & advancing the spirit of long-term partnership and collaboration.
The ADGM is under the control of three independent authorities – the Registration Authority, the Financial Services Regulatory Authority (FSRA), and the ADGM Courts.
✔ 100 % foreign ownership (There is no need to have 51% of the shares held in the name of a UAE national (or company wholly owned by UAE nationals)
✔ Zero tax rates with the ability to repatriate profits and capital.
✔ A broad range of commercial activities.
✔ Attractive tax regime and access to UAE’s excellent network of double tax treaties.
PROCESS OF COMPANY FORMATION
Reserve a company name in compliance with the ADGM Business and Company Names Rules 2016 and choose a registered office which must be located in Al Maryah Island, Abu Dhabi.
Create a brief business plan and review the documentation requirements for the application & submit an application and required documentation to the Registrar via the online system.
Provided all information is accurately submitted and the Registrar is satisfied with the documents and information provided, a certificate of incorporation and commercial license will be issued.
DOCUMENTS REQUIRED FOR THE INCORPORATION
➤ Copy of passport, visa page or immigration entry stamp and Emirates ID of the director(s), secretary, and shareholder(s)
➤ Application form for reservation of the proposed name of the company
➤ Copy of business plan
➤ Statement of capital and initial shareholding, for companies limited by shares
➤ Statement of guarantee, for companies limited by guarantee
➤ Statement of proposed officers of the entity
➤ Trade name reservation document
➤ A statement with the intended address of the proposed company
➤ Copy of Articles of Association (AOA) and resolution of the board of directors
➤ A copy of the lease agreement for the office space
➤ Confirmation of restricted scope of the company
➤ Duly filled and signed data protection form
➤ Duly filled and signed beneficiary or ultimate owner form
➤ Any other documents that may be required by the authorities, based on the scope of activities that the company would be undertaking
ADGM TECH STARTUP
ADGM has launched its new Tech up License giving entrepreneurs cost-effective access to the ADGM Platforms. ADGM’s calibrated and tailored regulatory regime for investments and capital raising can help enterprises seek capital at various stages of their life cycle to launch grow or divest their business. However, it is limited in time to the first 2 years after which it must be converted to a full-fledged license.
HUB71 is a global tech hub where businesses can take advantage of its community of founders, partners, and business enablers under one roof supported by internationally recognized legal and commercial frameworks that provide access to capital and global markets. It is a business-friendly incorporation regime and support program for start-ups which is supported by professional service providers and mentors.
SPECIAL PURPOSE VEHICLES (SPVs)
Special Purpose Vehicles (SPVs) are companies established for isolating financial and legal risk by ring-fencing certain assets and liabilities. The SPV regime is designed to be simple, efficient, flexible, and robust, benchmarked against leading alternatives around the world. They offer a quick, easy to use and fully digital registration process, with straightforward reporting requirements and transparent pricing. Catering to the needs of a broad range of business types, uses, and industry sectors, the SPV regime is adopted for a wide variety of purposes. SPVs cannot be used to conduct operational business or hire staff.
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APPLICATION FOR SPV’S
Can be used by an originating party to securitise loans (or other receivables) by creating an SPV which in turn purchases these assets by issuing debt, secured on these underlying assets.
➤ 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. Click here to read about how you can structure real estate investments through an SPV in the ADGM.
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.
➤ 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.
➤ Raising Capital
Can be used to raise capital, with creditworthiness determined by the collateral of the SPV, rather than the credit rating of the parent firm.
➤ 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. Here is an article that has details on how you can hold intellectual property using an SPV in the ADGM.
ADGM SPVs can be eligible to apply for a Tax Residency Certificate to avail of the UAE’s Double Tax Treaty network. The certificate is issued by the International Financial Relations and Organisations Department (IFROD) of the Ministry of Finance (MOF) and is valid for a period of one year from the date of issue. The SPV may need to fulfill certain additional criteria.
For more details –
|ANNUAL ACCOUTNS FILING||Every ADGM entity must keep adequate accounting records, prepared in accordance with International Accounting Standards (IAS). The first Accounting Reference Period is a period of more than six months but not over 18 months from date of incorporation.
Public companies are required to lay accounts before a general meeting.
|ANNUAL RETURNS||Every ADGM entity has a duty to deliver annual returns within one month of the anniversary of incorporation and then on an annual basis. Annual Return and Annual Accounts are completely separate filing and not to be confused as both will not usually be filed at the same time. The annual return confirms basic information such as details of registered office, directors, secretary, Type & the business activities, statement of capital and shareholder information about the entity.|
|COMMERCIAL LICENSE RENEWAL||All entities registered in ADGM are required to hold a valid commercial licence issued by the ADGM Registration Authority. Entities that fail to comply with these requirements are liable to fines under ADGM’s commercial legislation.|
|DATA PROTECTION RENEWAL||Entities are obliged to annually renew their registration of adherence to Data Protection Regulations 2015 which set out the obligations of ADGM entities and the rights of individuals, in relation to the processing and privacy of personal data.|
|FSRA FILING||ADGM requires all the firms registered under FSRA to submit information on a regular basis, including regulatory and financial reports, so they can better understand their activities and financial position on a periodic basis. ADGM’s Electronic Prudential Reporting System is a portal dedicated to simplifying the submission of regulatory filings.|
Frequently Asked Questions (FAQ)
1. How to prevent paying a fine?
Penalties for delayed filing can be avoided by ensuring that when a filing obligation is due, all the process must be in place and filing is prepared and submitted to the relevant Registrar within the specified filing period.
The Registration Authority through their online portal will keep updating entities about their impending due dates with multiple reminder emails specifying the deadlines.
2. How to hand over annual accounts to the Registration Authority?
The easiest way to hand over the filing to the Registration Authority is through uploading the file in their online portal, available at www.registration.adgm.com
3. Can a filing time extension be requested?
Companies should take appropriate measures to ensure that the filing date is identified, and the filling is prepared and submitted within the prescribed period.
However, if due to unforeseen circumstances or an exceptional reason the filing is delayed, a company may request the Registration Authority for the extension period.
The extension request should include all relevant information including an explanation of why the company cannot comply with the prescribed period for filing and the length of the extension being requested. Depending on the reasons and circumstances, the Registration Authority may require documentary evidence supporting the claims to be provided.
Requests for extensions should be made in writing as a letter, stamped and signed by an authorised signatory or a director of the company, and emailed to the Monitoring & Enforcement Department at [email protected]
If the Registration Authority is satisfied with the information given is sufficient for extension of time, a confirmation will be provided with the new deadline for filing.
If the request for an extension is not granted and a company fails to submit the filing on time, the company will be liable to the relevant late filing penalty. Time taken by the Registration Authority to consider an extension request that is not granted shall not be a valid reason for failing to meet the original deadline for filing.
4. What if a filing is returned?
The filings which do not meet the requirements of the Companies Regulations of the Registration Authority will be returned back for correction. For example, if the accounts are not signed by a director, or accompanied by a director’s report (if applicable).
A late filing penalty will be imposed if the filing is resubmitted after the impending date of the original filing.
5. What ensues when a fine is levied?
When a company fails to deliver the accounts to the Registration Authority on time, a late filing penalty is imposed automatically.
The penalty imposed will generally be determined as per the Guide.
In case of online submission of filing via Registration Authority’s online portal, the penalty notice will be issued electronically by the portal.
In case of hard copy submission, the Registration Authority will issue a penalty notice to the company’s registered office address.
6. What if the fine goes unsettled?
The Registration Authority treats the fine as a debt due to it, if all or any of the amount of a fine is outstanding at the end of the deadline for payment as specified in the notice.
The Registration Authority may apply to the ADGM Courts for recovery of the debt.
7. Can the fine levied be appealed?
An appeal can be made against a late filing penalty only if the company demonstrates that the circumstances are exceptional or that the fine imposed was incorrect.
The Registration Authority has very limited discretion not to collect a fine. Exceptional circumstances include unforeseen and catastrophic events that render a company unable to submit a filing.
A company should take appropriate measures to ensure that its accounts are ordinarily prepared (and audited, if required) and submitted to the Registration Authority within the prescribed period.
8. How to make an appeal?
An appeal must be made in writing and the letter should be addressed to the Monitoring & Enforcement Department.
The letter should include all the details of the exceptional circumstances and reasons as to why the Registration Authority should consider the appeal. The letter must be duly stamped and signed by a director or authorized signatory of the company and should be submitted by email to [email protected].
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