Business Setup in ADGM | Complete Guide

Abu Dhabi Global Market is the financial free zone that is located in Abu Dhabi, UAE. The Registration Authority, the Financial Services Regulatory Authority (FSRA), and the ADGM Courts fully regulate this market. The UAE government officially recognized ADGM as Abu Dhabi’s financial center, where civic and commercial laws aim to strengthen the economy. A Federal Decree issued in 2013 established this framework. The ADGM is a key pillar of Abu Dhabi’s Economic Vision, designed to act as a catalyst for the growth of a dynamic financial services sector in the UAE.

The 3 Regulatory Bodies in ADGM

• Registration Authority
  The Registration Authority oversees the entire process of incorporating, registering, and licensing legal entities within ADGM. It also delivers a full range of government-related services for businesses and professionals operating on Al Maryah Island. The team offers guidance, reviews submissions, and processes applications for those looking to establish a legal entity in ADGM.
• Financial Services Regulatory Authority
  The FSRA aims to build a strong, well-regulated, and sustainable financial market that aligns with global standards and follows best practices from leading financial hubs like London, Hong Kong, and Singapore. Positioned at the crossroads of the Middle East, Africa, and Asia, ADGM serves as an international financial center offering a broad range of services, including banking, insurance, wealth and asset management, and capital markets.
• ADGM Courts
  ADGM Courts and its judiciary are largely based on the English judicial system, providing a clear, familiar, and trusted legal framework. By directly applying English common law, ADGM becomes the first jurisdiction in the Middle East to follow a model similar to that of Singapore and Hong Kong.

Getting Started – With ADGM

Who can apply for a business license in ADGM?

Companies that largely focus on financial and non-financial services are applying for business licenses in ADGM. The first step is to apply through the mail, contact the FSRA to explain the business idea, and get approval. Followed by the registration with the registration authority.

What are the steps to register and incorporate a business in ADGM?

• Talk to experts at Arnifi and brief about the business. We’ll work on the application/registeration procedures with the relevant authorities. 
• Once the registration is done and the application is approved, the incorporation process can be initiated, and the license will be issued.
• Apply for an FAWRI (a system for obtaining a UAE residency permit or visa, specifically for those working or investing in the ADGM) account and establishment card.

How much is the cost to set up a business in ADGM?
The cost of setting up a business is based on your chosen business activities. There’s a one-time fee for name reservation (which is mandatory) and for registering the legal entity. Additionally, there’s an annual fee to renew your registration. The commercial license fee is recurring and varies depending on the number and type of business activities selected.

How do I reserve my business name in ADGM?
Company name reservations should be done through the registration authority. The name is held for 30 days and can be renewed twice (each for another 30 days) with additional fees. Further extensions need Registrar approval. The name must not be identical, offensive, or restricted. Check availability via the ADGM Companies Register and review trademarks. Once approved, use the name within 30 days to incorporate or change your company name. A confirmation email will follow your submission.

Can a child own shares in an ADGM entity?
ADGM policy states that individuals under 18 cannot directly hold shares in their name. If a company intends to issue shares to a minor, the shares must instead be issued to a guardian, who will hold them in trust on the child’s behalf.
Note: Even DIFC – Dubai International Financial Centre, freezone doesn’t allow minors to hold shares.

Types of ADGM Company Incorporation

• ADGM Operating Company – This is the company that is licensed under the ADGM authorities. Why ADGM operating company? An operating company is a business that is actively involved in producing goods or providing services. It handles the day-to-day operations—like selling products, managing customers, hiring staff, and running marketing campaigns. In this point of view, ADGM offers a flexible setup and cost-effective and business-friendly policies.
• ADGM Holding Company – A holding company is a type of company that owns shares in other companies but does not produce goods or services itself. Its main purpose is to control or manage other companies, which are usually called subsidiaries. These type of companies can be set up in ADGM with the proper approval of 3 major authorities.
• ADGM SPV incorporation – A Special Purpose Vehicle (SPV) is a legally separate company created for a specific, limited purpose, usually to isolate risk, hold assets, or carry out a particular project or investment. It doesn’t usually have day-to-day operations like a typical business. It’s mostly used for financial, legal, or investment structuring.

ADGM SPV Incorporation

• What is ADGM SPV incorporation?
  An ADGM SPV is a passive holding company that can be used to hold investments in companies across UAE, GCC, and worldwide, minimizing financial and legal risk by segregating specific assets and liabilities.
  
•  What’s the role of ADGM SPV?
  It can hold shares, convertibles, warrants, and notes, derive dividend income, and realize capital gains. However, it cannot conduct active business operations, have employees, or maintain physical offices beyond a registered address.
  
• What are the key requirements to set up an ADGM SPV?
  To set up an ADGM SPV, you need to demonstrate a satisfactory connection (nexus) to the GCC region, either through asset ownership (holding GCC-based assets) or ownership structure (minimum 25% GCC shareholders). You also need at least one GCC-resident authorized signatory, though nominee services are available for this requirement.
  
• How is ADGM SPV different from other UAE company structures? 
  ADGM SPVs operate under English Common Law, making them more familiar and attractive to international investors. They offer enhanced legal protections, enable sophisticated investment instruments like convertible notes and SAFEs, and have no requirements for document attestation/legalization. Unlike mainland or other free zone companies, they can be set up without physical office space and with just one director, making them more cost-effective and flexible for holding structures.
  
• What are the limitations of an ADGM SPVs?
  An ADGM SPV can only engage in passive activities – it cannot have employees, issue work visas, rent office space, or enter into commercial agreements with customers or suppliers. It can, however, open bank accounts and receive funds like investments or dividends from subsidiaries.
  
• What flexibility does an ADGM SPV offer in terms of structure?
  The SPV offers significant flexibility including no minimum share capital requirement, no restrictions on the nationality of shareholders, the ability to have multiple share classes with different voting/dividend rights, and the freedom to customize the Memorandum & Articles of Association. You only need a minimum of one director who can be a non-resident.

ADGM Strategic Advantages

• Common Law jurisdiction
  ADGM is the first Middle Eastern jurisdiction to adopt English Common Law, offering a recognized legal framework that combines English Common Law, equity principles, and customized provisions for ADGM Courts.

• Open to all nationalities
  ADGM provides a global platform for businesses, entrepreneurs, and investors. Its business-friendly environment and regulatory framework attract participants from various sectors, making it an ideal location for establishing and growing international ventures.

• Shareholding Flexibility
  ADGM offers a flexible shareholding structure with no participant limits, supporting full foreign ownership, and multiple share classes, and enabling startups and international companies to scale, attract investment, and diversify ownership.
  
• No capital requirements
  ADGM has no minimum or maximum capital requirement for most businesses, allowing flexibility. However, regulated entities like financial institutions must meet specific capital requirements set by the ADGM Financial Services Regulatory Authority (FSRA).
  
• Multiple share-class options
  In ADGM, multiple share-class options allow businesses to issue different types of shares with varying rights, such as voting, dividends, and liquidation preferences, offering flexibility in ownership and control structure.
  
• Customizable Article Usage
  The rules and regulations are set by the three major authority bodies mentioned above. The laws & articles are designed in such a way that they improve the economic growth of Abu Dhabi. So, they allow customizable Articles of Incorporation so businesses can tailor governance, shareholder rights, & operational rules. This will ensure a legal framework that aligns with their unique objectives and needs.

Conclusion

Setting up a business in Abu Dhabi is crucial as the entire free zone is governed by three major authorities. The business plan and the proceedings should abide by the laws and regulations set by the Federal Decree of Abu Dhabi. This zone is mostly concerned with the financial and non-financial related services business, and the hype is also about the financial one. There is another aspect of setting up a company called SPV incorporation, which helps the existing companies to manage their finances. For better understanding, reach out to our experts at Arnifi.com