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.
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
- Zero tax for 50 years on profits, capital or assets from 2004
- 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.
Firms engaging in the activity of ‘Asset Management’, can apply to the ADGM for a Cat 3C License. Asset management, in this context, means managing client portfolios on a discretionary basis, under a client mandate. This license also allows the firm to carry our non-discretionary investment advisory and arrangement services, if those activities have been applied for as well.
A recent trend has been for investment bankers and financial advisors working with larger asset management companies, to set up on their own, and continue to work with the existing investment banks and custodians, as External Asset Managers. The ADGM Category 3C Asset Manager License is an ideal license for this activity, should the target market be primarily Abu Dhabi.
Firms interested in managing client assets 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 also come under Category 3C. The Fund Manager, if approved, can manage domestic professional (ADGM Exempt Fund and ADGM Qualified Investor Fund) 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.
ADGM Capital requirements:
The base capital requirement for a Category 3C Asset Management License is $ 250,000. Actual capital required will depend on the nature, quantum of business and forecasted annual expenditure, as per the financial model of the proposed firm.
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 per activity. Usually, there are 2-3 relevant activities (such as managing assets, advising on financial products, arranging deals in investments etc.)
License fee: US$ 5,000 per activity.
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)
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 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.
Establishment Card Application – US$ 300
E-channel Application – US$ 1,200
Visas (per visa) – from US$ 1,200
We provide turnkey services for ADGM Category 3C Asset Manager License. From fintech consulting, to assistance in authorisations, to assistance in preparation of the legal documentation, 10 Leaves helps you navigate the FSRA Rulebook and submit an application that is comprehensive, complete and compliant.
• 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.