About ADGM SPVs
An Abu Dhabi Global Market (ADGM) Special Purpose Vehicle (SPV) is emerging to be one of the most preferred options for consolidating equity participations and investments in the region mainly due to the solid legal framework it offers as an ADGM SPV is governed by the English Common Law and has its own Courts similar to the DIFC.
Renowned for its flexibility, robust, simple and efficiency, which is benchmarked against leading alternatives around the world, with its own civil and commercial laws based on English common law, ADGM is an international financial centre that offers the local, regional and international business community a world-class legal system and regulatory regime.
What are the benefits of an ADGM SPV?
- No attestations for Corporate Documents
- Shelf SPVs permitted
- No requirement to file or Audit Accounts
- Minimum requirement of 1 shareholder and 1 director
- No minimum share capital
- 0% Corporate Tax and no Tax Filing required
- No restrictions on the Nationality of ownership
- No maximum number of shares
- Migration of companies into and out of ADGM allowed.
What uses of an ADGM SPV?
- Investment Holding
Can own all types of financial, non-financial and virtual assets, internationally including freehold properties in Dubai and Abu Dhabi.
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.
- 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.
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.
- 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.
- Raising Capital
Can be used to raise capital, with creditworthiness 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.
- Legal Structure
The following main options are available:
- Private Company Limited by Shares – LTD
- A standard private company limited by shares.
- Restricted Scope Company – RSC
This offers limited information disclosure on the public register; however, full disclosures would have to be made to the Registrar. To account for the fact that this less stringent approach could prejudice shareholders and creditors, RSCs may only be incorporated as a subsidiary of a public company, or as a family office.
- Tax Residency
ADGM SPVs can be eligible to apply for a Tax Residency Certificate from the Ministry of Finance to avail the UAE’s Double Tax Treaty network. The SPV may need to fulfil certain additional criteria.
- Office Space Requirement
SPVs are not required to have dedicated physical office spaces; however, they would need to maintain a registered address in the centre. The ADGM allows for the use of the offices of ADGM-based service providers, for this purpose.
ADGM Companies can take advantage of the solid banking infrastructure offered by the UAE without incurring expensive legalization fees for constitutional documents which are generally required for foreign entities in order to open bank accounts in the UAE.
ADGM Companies may also establish bank accounts outside UAE internationally with much more relative ease than its counterparts in other offshore jurisdictions.
What does ADGM require to register an SPV?
To set up the SPV under ADGM Authorities, it is required to submit the purpose of the vehicle. There is a nexus requirement for ADGM SPVs. To satisfy the Registrar of the requirement at Licensing Conditions, in relation to an ADGM SPV, applicants must be able to demonstrate that the SPV will have an appropriate connection or ‘nexus’ to the ADGM, the UAE and/or to the GCC Region (the Nexus Requirement).
A connection or ‘nexus’ may be demonstrated in a number of ways, including documentary evidence that:
- The SPV is owned or controlled by a UAE or GCC based private company, family/family office or individual
- The SPV holds assets that are located in the UAE or the GCC Region
- The SPV facilitates transactions connected, or provides real or economic benefit, to the UAE
- The SPV’s purpose includes the issuance of Securities that will be admitted to the Official List maintained by the Financial Service Regulatory Authority (FSRA), and / or admitted to trading on a Recognised Investment Exchange, MTF3 , OTF4 or other licenced platform (including a PFP5 ) that is established in ADGM
- An SPV wholly owned by a foreign non-resident person that solely holds assets located outside the UAE or the GCC Region would not meet the requirements of the Nexus r
How can Rosemont Partners help?
One of the main requirements to incorporate an ADGM SPV is to a appoint a Corporate Service Provider (CSP). Rosemont Partners are a fully licensed CSP in ADGM and is able to assist with all steps and formalities to register an SPV in ADGM.
Our knowledgeable Business Setup Consultants and Operations Team provides outsourced services to assist with the preparation of the applications. If you need support with registering an SPV, or any other related company formation, compliance or immigration matters, reach out to us today.