Are you an entrepreneur eager to launch your next big venture or an investor on the lookout for new opportunities? Or are you looking to streamline your investment structures and access new markets? If so, you will want to learn about a financial free zone known as the Abu Dhabi Global Market Special Purpose Vehicle (ADGM SPV). The ADGM offers a compelling solution with its innovative SPVs. In this blog, we will delve into everything you need to know about ADGM SPVs.
What is ADGM SPV?
In the capital state of the UAE, Abu Dhabi, lies a free zone that was designed to be a global financial hub. That’s exactly what ADGM is. It was founded and established in 2013 and is regulated by English Common Law, with a 50-year corporate tax holiday and access to an extensive collection of double tax treaties made to attract businesses and investors alike.
ADGM SPVs are private companies that are established for numerous reasons, such as protecting financial and legal interests by keeping assets and liabilities separate. These companies can be part of a larger company (holding company), explicitly for projects, or as joint ventures. This separation ensures that only the assets linked to specific transactions are vulnerable if there is a possibility of encountering issues.
The biggest advantage of an SPV is that it acts like a separate legal entity, independent from its parent company, meaning the creditors cannot go behind the assets of its shareholders or the holding companies.
Types of ADGM SPV
|
Type |
Uses |
|
Private Company (Limited by Shares) – LTD |
1. Standard private limited company 2. Passive holding company |
|
Restricted Scope Company (RSC) |
ADGM has a unique legislative framework that allows for limited public disclosure but complete disclosure to the Registrar. RSCs should be included as follows: 1. A subsidiary of another corporation that creates and publishes group accounts. 2. A subsidiary of a firm established by Emiri order. 3. A subsidiary of a single-family office |
Benefits of ADGM SPV
- There is no minimum share capital and no minimum number of shares or shareholders.
- Use of common law jurisdiction
- Independent ADGM courts
- A best-in-class independent regulatory framework
- Access to a broad UAE double tax treaty network
- A variety of legal structures are available to set up
- Quick and easy, fully digital registration process
- No attestation is required for corporate documents
- Physical office space is not required
Eligibility and requirements
When applying for an ADGM SPV, individuals or entities are categorised as either “exempt” or “non-exempt.” Exempt applicants are not required to hire a company service provider to manage their SPV application. Conversely, non-exempt applicants must appoint an ADGM company service provider to handle the SPV application process and provide company services such as managing a registered address and filings on behalf of the SPV.
Eligibility can further be classified into two subdivisions:
The following eligibility criteria should be considered when planning to set up an ADGM SPV:
1. Nexus: When establishing an ADGM SPV, an applicant must show an acceptable link or “Nexus” to ADGM, the UAE, or the GCC. This connection can be made in one of two ways:
- Asset: The SPV must own an asset in the GCC area. For startups, this asset might be a subsidiary in any of the GCC states that could conduct commercial activities for the business.
- Ownership: The SPV’s shareholders must be GCC residents who collectively own at least 25% of the SPV’s shares. It is important to remember that proving a relationship with ADGM, the UAE, or the GCC may require careful investment planning and structuring.
2. ADGM authorised signatory: A GCC citizen or UAE resident must be appointed as the SPV’s authorised signatory. While nominee services may help with this need, the nominated authorised signatory must have the necessary abilities and expertise to perform this role.
Why ADGM?
- World-class institutions and advisors: There is access to a strong ecosystem of finance, services, and talent, and it is home to the world’s leading professional advisory firms.
- Legal and regulatory: The independent jurisdiction of ADGM features its own civil and commercial laws, supported by the direct application of common law for enhanced legal certainty, along with independent ADGM Courts.
- Tax environment: ADGM offers a favourable tax environment with no withholding taxes and a 0% corporate tax rate, ensuring unrestricted repatriation of profits. Moreover, it provides access to an extensive and expanding array of double tax treaties.
- Efficient process and procedures: The process and procedures within ADGM are highly efficient, featuring a fully digital application process.
- Infrastructure: ADGM boasts Grade ‘A’ offices and modern infrastructure, alongside global connectivity facilitated by world-class airlines. Additionally, it offers leading hotels, healthcare, and lifestyle amenities to support its thriving ecosystem.
How can we help?
When setting up an ADGM SPV, it is advisable to engage with a reputable and qualified corporate services provider like Gatestone. Our team of experts aims to provide the best services to our clients and ensure that their ADGM SPV considers all legal and regulatory standards.
Ready to embark on your ADGM SPV journey in the UAE? Gatestone Group is here to guide you every step of the way. Our team of experts can assist with business setup and navigation through SPVs throughout Abu Dhabi. Contact us today for a free consultation via email at [email protected] or call +971 52 410 0849 or +971 4 450 1023.
