The UAE is popular with businesses of all sizes. Famed for its bright lights and big business, the Emirates is home to some of the most prestigious names in the world. Alongside these household names such as Google and Microsoft are freelancers, startups and microbusinesses.
And the UAE is not just the perfect place to start a traditional business. The country is also home to numerous holding companies, allowing owners to hold assets and conduct certain business activities in the most efficient manner possible.
One such holding company is the Special Purpose Vehicle (SPV) offered by Abu Dhabi Global Market (ADGM). Among other benefits, SPVs allow owners to limit liability and isolate financial risk. Below is a detailed guided, covering the key features of ADGM’s SPV, to help you determine if it is the right setup for your business requirements.
What is ADGM?
The Abu Dhabi Global Market (ADGM) is an International Financial Free Zone where for the first time English Common Law is directly applied in the Middle East.
It is governed by three independent authorities – the Registration Authority (RA), the Financial Services Regulatory Authority (FSRA) and ADGM Courts – making it one of the of the most trusted financial centres in the region.
ADGM is globally recognised for its robust, progressive and responsive business-friendly ecosystem. Since its launch six years ago, ADGM has issued 2,385 registrations. Today it is home to a 22,000-strong workforce and has over USD 26bn worth of assets under management.
Benefits of English common law
There are several considerable benefits to operating under English Common Law. Its principles are familiar to the business world and have been previously tested to a high standard.
Operating under English Common Law also offers a level of certainty to proceedings and it is backed by English courts.
Typical uses of ADGM SPV
In simple terms, Special Purpose Vehicles are passive holding companies established for the purpose of isolating financial and legal risk by ring-fencing certain assets and liabilities.
ADGM’s SPV is suited to a wide range of businesses and industries such as wealth management, financing, leasing, and also to individual investors.
There are numerous common uses, including:
- Holding Shares of Operating Companies
- Holding Real Estate Investments
- Holding Intellectual Property
- Securitization of Loans
- Securing Investments
- Risk Sharing through Joint Ventures
- Raising Capital independent to Parent Firm
Benefits of ADGM SPV
ADGM’s SPVs offers business owners and asset holders greater freedom while allowing for separation of financial and legal risk.
Its key feature, and perhaps its biggest benefit, is that an SPV holds a completely separate legal personality from its owner/s.
SPVs are a cost-effective route to UAE company ownership, requiring no minimum share capital, a minimum requirement of just one shareholder and one director, and no need to take on office space or premises.
Benefits of ADGM SPVs include:
- Based on English Common Law
- No restrictions on nationality of ownership
- No physical office space requirement
- No minimum share capital
- No maximum number of shares and shareholders
- Minimum requirement of only one shareholder and one director
- Ability to customize Articles of Association
- UAE Tax Residency and access to UAE Double Tax Treaty Network
- Migration and Continuation of existing corporate entities
- No attestation of documents
- Multiple classes of shares
SPV Incorporation process
The UAE company formation process is built with simplicity in mind. And the SPV incorporation process is no different. However, as is the case when starting any business in this part of the world, it does require a level of expert knowledge.
With the assistance of a company formation expert, the ADGM SVP incorporation process consists of just four simple steps:
- Initial processing – KYC, Incorporation Documents and Consent Letter by Registered Office Provider
- Submit your application via the official portal
- ADGM application review and Abu Dhabi Immigration clearance of Authorized Signatories
- Completion and licensed received
When making your application with the help of an expert, the whole process usually takes just 10 working days.
What is the cost of an ADGM SPV license
The cost of the ADGM SPV license comprises two parts. First there is the ADGM fee which totals USD 1,600 in the first year and USD 1,200 in the second year.
Then there is the cost of the ADGM Office Address and the professional services fee, this is charged together at USD 1,400 per year.
This puts the total cost of ADGM SPV license at USD 3,000 in the first year and USD 2,600 in the second year.
Are you ready to start a new business in Abu Dhabi?
Hopefully this guide has made clear that if you’re armed with the right knowledge, setting up an SPV at ADGM doesn’t have to be overly complex or expensive.
That being said, it does require a level of prior knowledge of the process. What’s more, it is important to note that the application process is only straightforward if your license application is complete at the time of submission and free from errors.
To help you to ensure that this is the case, it’s a good idea to work with a company formation specialist such as Business Incorporation Zone (BIZ) when establishing a new company in the UAE.
We are a team of company registration professionals who are passionate about bringing the dreams of aspiring entrepreneurs and SMEs to life.
As well as handling your license application, BIZ can also assist with the opening of corporate bank accounts and advise on the most appropriate financial institution to suit your specific needs.
We also offer visa and immigration services and can handle all government formalities, permissions, work permits and visas applications that are required to trade in the UAE.
In short, our experts can establish your company on your behalf, make your license and visa applications, and take care of all the necessary admin – leaving you free to get on with running your business.