Guide to the ADGM Category 3C Fund Manager License - 10 Leaves

  • 29-05-2020
The ADGM is an upcoming international financial centre in the MENA region for business and fintech. The quality of ADGM’s independent regulator, the prevailing common law framework, excellent infrastructure and tax efficiencies make it the perfect base to take advantage of the rapidly growing demand for financial and business services in Abu Dhabi and the greater MENA region.  
 

Why setup a financial services firm in the ADGM?

The ADGM is one of two international financial centres in the UAE. Established in 2015, it quickly rose through the rankings and is now counted as one of the top 25 financial centres in the world. ADGM’s innovative SPV regime, its initiatives in the fintech space and its issuance of the region’s first cryto-asset regulatory framework, have all contributed to its success. 

Clients who wish to cater primarily to the Abu Dhabi market, sovereign wealth funds and Abu Dhabi family offices may consider setting up in the ADGM.

Specific Advantages:

Here are some specific advantages of establishing in the Abu Dhabi Global Market:

LEGAL AND REGULATORY FRAMEWORK:

  • Legal framework supports cross-border activities
  • 100% foreign ownership permitted
  • No restriction on foreign talent or employees
  • No restrictions on capital repatriation

TAX BENEFITS:

  • Zero tax for 50 years on profits, capital or assets from 2004
  • 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

DIVERSE ECOSYSTEM:

  • 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

GEOGRAPHIC EPICENTRE:

  • 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.

ADGM Fund Manager License:

Firms interested in managing funds from the ADGM are required to submit applications to the Financial Services Regulatory Authority, or FSRA.

The FSRA has a fast-track process for Fund Manager licenses, which come under Category 3C. The Fund Manager, if approved, can manage domestic professional (Exempt and Qualified Investor Funds) and Foreign Funds in other jurisdictions as well. In case the firm wishes to also engage in discretionary portfolio management services, it has to go through a full-fledged license process.

Exempt Funds:

Exempt Funds are open only to Professional Clients (as defined by the ADGM). The other features of an EF are:

  • Minimum subscription of US$ 50,000; and
  • Units are offered to persons only by way of a Private Placement.

Qualified Investor Funds:

Qualified Investor Funds are open only to Professional Clients (as defined by the ADGM). The other features of a QIF are:

  • Minimum subscription of US$ 500,000; and
  • Units are offered to persons only by way of a Private Placement.

ADGM Capital requirements:

The base capital requirement for a Category 3C Fund Manager is $50,000, if it manages Exempt (EF) or Qualified Investor Funds (QIF). Actual capital required will depend on the nature, quantum of business and forecasted annual expenditure, as per the financial model of the proposed firm.

Costs:

Setting up an ADGM Regulated Firm involves the following interactions:

Financial Services Regulatory Authority (FSRA):

The FSRA is responsible for reviewing and approving all applications for financial services. Costs depend on the activities applied for, which puts the applicant in one of five categories.

Generally, there are two components of FSRA fees. One – an application processing fee, and the other, an annual licensing fee.

Application fee: US$ 5,000

License fee: US$ 5,000

Registration Authority (ADGM RA):

The RA helps to set up the legal structure of the ADGM Regulated Firm. Shareholders can be individual, or corporate. There are many options available, such as ‘Private Company Limited by Shares’ and ‘Limited Liability Partnerships’. In case of Private Company Limited by Shares, the costs for setting up include:

Application for reserving a name (2 working days): US$ 200

Application for Incorporation of a Private Company Limited by Shares (5 working days): US$ 1,500

Commercial License on Incorporation (5 working days): US$ 4,000 (annual fee)

Business Activity Fee: US$ 9,000 (annual fee)

Data Protection:

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

Office spaces:

Every entity registered in the ADGM is required to lease a physical office. You can choose from the WeWork and Regus business centres, or from the four buildings managed by Mubadala.

Prices vary, depending on the space availed and the building. Here is an indication of the prevailing rates:

WeWork Business Centre – from a two-desk office at US$ 15,000.

Fitted Offices – from US$ 55 per square foot.

Visas:

Establishment Card Application – US$ 300

E-channel Application – US$ 1,200

Visas (per visa) – from US$ 1,200

 

Contact us to discuss more about ADGM Category 3C Fund Manger License

 

 

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