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.
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.
Qualified Investor Funds in the ADGM:
Qualified Investor Funds are subject to the lowest level of regulation in the ADGM, due to the fact that they are open to sophisticated clients only. An ADGM Qualified Investor Fund has a minimum subscription of US$ 500,000 and is open to Professional Clients only.
Who is a Professional Client?
The ADGM has a detailed definition of Professional Client, which includes service-based, assessed and deemed professional clients. While specifics are best checked at the FSRA website (or you can contact us for more details), in general, assessed professional clients are subject to the net asset test of US$ 500,000.
All units in an ADGM Qualified Investor Fund would have to be offered to persons by way of private placement only.
The FSRA has a fast-track process for fund managers who wish to manage Qualified Investor funds from the ADGM. The base capital requirements are also lower – US$ 50,000 as opposed to US$ 250,000 in case of fund managers of public funds.
Since Qualified Investor Funds are offered to professional clients only, the FRSA has relaxed many requirements that otherwise apply to public funds. ADGM Qualified Investor Funds are permitted to add oversight arrangements, but this is not mandatory. Also, for most closed-ended funds, it is not mandatory to appoint a fund administrator. Read this article to know more about the other service providers that may be required for ADGM Funds.
ADGM Qualified Investor Funds enjoy a fast-track application process where the FSRA aims to complete the process within a period of 5 days. Documents required to be submitted include the Private Placement Memorandum and the Fund Constitution, in case of a fund structured as an investment company. Learn more about the documents required for ADGM funds by clicking here.
Setting up a fund structure in the ADGM:
Setting up a fund in the ADGM requires either a) setting up a Domestic Fund Manager or b) licensing an existing fund manager in a recognized jurisdiction, to act as the External Fund Manager of the ADGM fund. Read this article to know more about the licensing process and associated costs.
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