Consolidation and management of assets is one of the key points of concern for investors worldwide, and even more so in the GCC. A growing investor ecosystem, coupled with the high density of family wealth in the region, call for robust structures that can help high net worth individuals manage their investments. One such structure is an ADGM holding company. This article contains details for an operational holding company, that is, a holding company that actively manages the assets under it. This holding company is eligible for visas and hence can employ staff to carry out their operations.
For a passive holding company, where the objective is to hold shares, Intellectual Property or Real Property, you can read our article on Special Purpose Vehicles in the ADGM.
What is a holding company?
A holding company consolidates investments, be it shares in other companies or property, under a common umbrella, for ease of management and reporting. Such companies do not usually carry out a trade or service – they merely manage existing investments. The management team of the holding company also seeks to make new investments, based on certain pre-determined criteria, to expand their existing portfolios.
The Abu Dhabi Global Market, or ADGM, provides an excellent corporate structure to facilitate such activities – an ADGM holding company.
Why setup a holding company in the ADGM?
The ADGM is an upcoming financial center in the region for business and fintech. 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. Here are some reasons why setting up a holding company in the ADGM makes sense.
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.
Here are some specific advantages of establishing in the Abu Dhabi Global Market
LEGAL AND REGULATORY FRAMEWORK
- The legal framework supports cross-border activities
- 100% foreign ownership permitted
- No restriction on foreign talent or employees
- No restrictions on capital repatriation
- Zero tax for 50 years on profits, capital or assets
- Zero tax on employee income
- Well regarded, independent regulator
- Independent, English-speaking, common law judicial system
- Distinct from the UAE legal system
- Risk-based regulatory approach
- Central to regional deal making
- High concentration of international firms, investment funds, wealth management firms, banks, and financial institutions
- World-class regional and international law and auditing firms, and other professional services
- A growing fund domicile in the region
- Management offices, holding companies and family offices are located closer to the assets they own or manage
- The Middle East, Africa and South Asia (MEASA) is increasingly the centre of gravity for the global economy
- The UAE plays a central role in the growing South-South trade, principally between Asia and Africa
- Well-positioned to harness the potential of emerging markets
Costs Of Setting Up A Holding Company In ADGM
Setting up an AGDM Holding Company involves the following interactions:
Registration Authority (RA)
The RA helps to set up the legal structure of the ADGM Holding Company. In most cases, this would be a Private Company Limited by Shares. Shareholders can be individual, or corporate. The costs for setting up such a company are:
Application for reserving a name: US$ 200
Application for Incorporation of a Private Company Limited by Shares: US$ 1,500
Commercial License on Incorporation: US$ 4,000 (annual fee)
Business Activity fees: US$ 4000 (annual fee)
The data protection notification is part of the process of registering a new entity in the ADGM. The costs involved are as follows:
Registration - US$ 300
Annual renewal – US$ 100
Every entity registered in the ADGM is required to lease a physical office. You can choose from business center options, or physical spaces within the ADGM.
Here is an indication of the prevailing rates:
Business Centre – from a one-desk office at US$ 19,000.
Fitted Offices – from US$ 55 per square foot.
Establishment Card Application – US$ 273
E-channel – US$ 1,100 (one-time)
E-channel deposit – US$ 1,360
Visas (per visa) – from US$ 1,500
Application for reserving a name
Application for Incorporation
Business Activity fee
Data Protection Registration
Office spaces (business center), from
Fitted Offices, from
Establishment Card application
• Reviewing the business model and advice on the applicable regulatory framework;
• Preparation of the Regulatory Business Plan and comprehensive financial projections;
• Preparation of all policies, processes and manuals required;
• Provision of Outsourced Compliance Officer and Outsourced Finance Officer services;
• Finalising the legal structure, including holding company setup and customisation of Memorandums; and
• Finalisation of leased space, bank account opening and obtaining Financial Services Permissions.