AGDM SPV
ABOUT THE ADGM
Abu Dhabi Global Market (“ADGM”) is established pursuant to Abu Dhabi Law No. 4 of 2013 as a financial free zone in the Emirate of Abu Dhabi, with its own civil and commercial laws. ADGM offers market participants a world‐class legal system and regulatory regime.
ADGM provides a wide spectrum of services covering Banking, Insurance, Wealth Management, Asset Management and Capital Market activities.
WHY ADGM?
- Fully backed up by the Abu Dhabi Government which has top sovereign credit ratings.
- First jurisdiction in the MENA region to apply English Common Law in its entirety.
- First to host world’s first fully digital courtroom.
- Home to world’s first digital banking license regime.
- Region’s first virtual asset regulatory framework.
- Over 3000 entities registered and operating from ADGM
WHAT IS AN SPV?
SPVs are usually established to isolate financial and legal risk by ring- fencing assets and liabilities. SPVs can be established as subsidiaries, project or joint venture vehicles to ensure that only those assets related to a transaction are exposed to the liabilities associated with that transaction.
FEATURES OF AN ADGM SPV
An ADGM SPV offers multiple classes of shares, a first in the region. Coupled with an option to customise the Memorandum completely, the ADGM SPV provides a viable option for a range of holding and investment structures.
SALIENT FEATURES & BENEFITS OF ADGM FOUNDATIONS:
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 capita
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 CAN AN ADGM SPV BE USED FOR?
The typical uses of an SPV include:
INVESTMENT HOLDING
Can own all types of financial, non-financial and virtual assets, internationally including freehold properties in Dubai and Abu Dhabi.
SECURITISATION
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.
FINANCING
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:
1. Private Company Limited by Shares – LTD
A standard private company limited by shares.
2. 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.
BANKING
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.
