ADGM SPV Registered Agent services - 10 Leaves

  • 02-05-2019
The Abu Dhabi Global Market (ADGM) has been open for business only since October 2015, but it has already garnered much praise and respect over its efforts to differentiate itself through unique offerings. It recently concluded the inaugural FinTech Abu Dhabi summit, attended by over five hundred global Financial Technology (FinTech) personalities; and has launched a series of collaborations with different companies such as Temenos, Al Ansari, and Mastercard to help forward its FinTech initiative.
 
Another such initiative is the Special Purpose Vehicles (SPV) regime. The SPV regime is open to a wide variety of uses, from investor-friendly holding structures, to asset separation and transfer. The SPV regime has proved to be very successful, with over 800 companies currently registered with the centre. 

What is an ADGM SPV?

ADGM Special Purpose Vehicles can be established to isolate financial and legal risk by ring-fencing assets and liabilities. The SPVs can act as holding companies, or for the securitization of assets and liabilities on a per-transaction basis. Clients also SPVs to hold Intellectual Property such as trademarks, patents, and copyrights.

What are the features of an ADGM SPV?
 

An SPV in the ADGM is a versatile vehicle, offering many features that had earlier not been seen in GCC companies. Here are some of them.

  1. Multiple classes of shares – each share class can have its own features, voting rights, share value, redemption options, and dividend options.

  2. Customizable Memorandum – While the ADGM offers a template memorandum, the actual use of the vehicle calls for a fully customizable Memorandum.

  3. No attestations of corporate documents – Unlike many free zones, the ADGM does not require attestations of company documents in case of corporate shareholders. This saves clients a lot of time and money.

  4. No restrictions on nationality and ownership.

  5. No minimum share capital.

What can an ADGM SPV be used for?
 
The typical uses of an SPV include:
 
Passive Holding Company:An ADGM SPV can be used to hold investments in companies in the United Arab Emirates, Saudi Arabia and any other country in the world. These can be in the form of shares in these underlying entities, conevrtibles, warrants and notes as well. 
 
The SPV can derive dividend income from these investments, and also capital gains when divested.
 
However, it should be noted that ADGM SPVs cannot act as operational holding companies, which means it cannot have employees, office space (other than what is provided by the Company Service Provider sush as 10 Leaves), and generally conduct any activities that can be construed as active management of the underlying investments.
 
In that case, it is recommended to set up an operational holding company in the ADGM. 
 
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. Do get in touchshould you require more information on how to register a pledge with the ADGM. 
 
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.

Financing:
 
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. 
 
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.
 
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.
 
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.
 

What is the role of a registered agent in an ADGM SPV?

While the colloquial term of a registered agent is often used in the case of ADGM SPVs, the actual term would be Company Service Provider. The ADGM is a well-regarded jurisdiction due to the checks and balances that it has in place for companies that wish to set up in the center.

Services of a company service provider include the following:

  1. Provision of registered address – in lieu of full-fledged office space. This helps reduce costs substantially. This service is provided on an ongoing basis.

  2. Provision of incorporation services – a one-time service, that involves a complete review of the ADGM SPV application, submission, and followup until receipt of the license.

  3. Assistance in bank account opening – most SPVs in the ADGM require a bank account.

  4. Accounting and bookkeeping – while ADGM SPVs are passive holding entities, they still need to maintain accounts as per the ADGM Companies Regulations.

  5. Corporate secretarial services – an essential component of managing an SPV in the ADGM. Company secretary services cover the mandatory annual general meeting (AGM) and submission of annual returns. Other services include ongoing maintenance of the shareholding and directorship registers, drafting of resolutions and powers of attorney, etc.

How much does all this cost?

The cost of acting as a registered agent for ADGM SPVs depends on the services taken. Usually, company service providers bundle such services in a way that it becomes more economical to take the whole package, rather than opt for ad-hoc services. In other cases, clients take up only certain services depending on their requirements.

Update:

The ADGM Company Service Provider Regulations come into effect in April 2021. 

All ADGM Special Purpose Vehicles* are now required to appoint a Company Service Provider to carry out company secretarial and registered agent services. 

The ADGM Company Service Provider will be the point of contact between the ADGM Registration Authority and the SPV. 

10 Leaves is a Company Service Provider in the ADGM and offers the following services to ADGM SPVs:

  • Incorporation Agent – assistance in setting up the SPV.
  • Registered address – providing the registered office. 
  • Provision of directors.
  • Provision of company secretaries.
  • Provision of Authorised Signatories.
  • Provision of nominee shareholders. 
  • Provision of accounting services.
  • Customisation of the Articles of Association. 
  • ESR Filings and notifications.
  • Pledge Arrangements and registration.
  • Translations and attestations.
  • Assistance in bank account opening.

In addition to the above, we offer corporate and commercial services through 10 Leaves Legability.

These include shareholding agreements, IP agreements, Share vesting plans and agreements and ESOPs.

For startups, we offer structuring solutions, including issuance of warrants, SAFE notes, convertibles and maintenance of cap tables. 

We provide all our services through a proprietary digital frontend, with a secure digital backend, to ensure that you have a seamless experience, unmatched by competition. As a client, you also have access to our industry-leading media solution that incorporates engaging videos, detailed podcasts and informative publications to keep you updated and informed of the latest developments that affect your company on an ongoing basis. 

*some SPVs are exempt, such as entities connected to regulated firms, and those that they are able to demonstrate adequate presence in the UAE

Are you looking for registered agent services for ADGM SPVs? Contact us today!

DOWNLOAD OUR ADGM SPV BROCHURE.

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