Setting up a company in Abu Dhabi Global Market (ADGM) offers you a unique opportunity to engage in a dynamic international financial centre. This thriving hub, located in the capital of the United Arab Emirates, provides an ideal business environment with a robust legal and regulatory framework based on English common law, making it attractive to global investors. ADGM is positioned to support a diverse business ecosystem, particularly in banking, asset management, and fintech innovation sectors.
With significant advantages, including a favourable tax regime, complete foreign ownership, and a strategic location, ADGM stands out as a premier destination for businesses looking to expand their market reach. We cover the steps involved in establishing a presence within ADGM, ensuring you can effectively navigate its comprehensive legal and regulatory landscape.
Introduction to the Abu Dhabi Global Market
The ADGM is a prominent international financial centre located in the capital of the United Arab Emirates. Established under the Federal Decree No. (15) 2013, ADGM was created to bolster Abu Dhabi’s economic strategy by serving as a global hub for business and finance.
Location and Significance
In the heart of Abu Dhabi, ADGM is positioned to attract local and international businesses. Its location within the capital city not only enhances accessibility but also aligns with Abu Dhabi’s vision of becoming a leading global business destination. ADGM’s significance lies in its ability to offer a favourable business environment, characterised by a distinct legal system and regulatory regime that supports a wide range of industries.
Legal Framework and Authorities
ADGM operates under a comprehensive legal framework that is distinct from the rest of Abu Dhabi and the UAE. This framework is based on English common law, which is renowned for its clarity and predictability, making it attractive to international investors. The ADGM Registration Authority plays a key role as the commercial regulator, overseeing the licensing, registration, and incorporation of entities within the market. The Financial Services Regulatory Authority (FSRA) ensures a robust regulatory environment for financial services, promoting transparency and accountability.
Business Ecosystem and Industry Focus
ADGM supports a diverse business ecosystem, catering to various sectors such as banking, asset management, and fintech innovation. This broad industry focus allows your business to thrive in a dynamic environment that encourages growth and innovation. The market offers different types of licences tailored to specific business activities, including financial services, professional services, and commercial activities. This flexibility enables you to choose the most suitable legal structure and licensing options to meet your operational needs.
Comparison with Other Free Zones
Abu Dhabi is home to several free zones, each specialising in different sectors. While ADGM focuses on finance and financial services, other regional free zones cater to aviation, renewable energy, manufacturing, logistics, and media industries. For instance, the Abu Dhabi Airports Free Zone (ADAFZ) targets the aviation sector, while Masdar City is dedicated to renewable energy.
Each zone contributes to Abu Dhabi’s goal of becoming a competitive and world-class business location, attracting local and international investments. Compared to these zones, ADGM stands out for its comprehensive legal framework and focus on financial services, making it a preferred choice for businesses in the finance sector.
Benefits of Setting Up in ADGM
Location Advantages
ADGM is located on Al Maryah Island, providing businesses with exceptional access to the Middle East, Africa, and South Asia (MEASA) region, which is becoming increasingly significant for global economic activities.
Furthermore, the UAE’s pivotal role in the growing South-South trade further underscores the benefits of establishing a presence in ADGM, making it an optimal base for companies aiming to broaden their market reach in these vibrant areas.
Regulatory and Legal Benefits
As a financial free zone, ADGM has its own unique set of laws and regulations that differ from those applicable in the rest of Abu Dhabi and the UAE. This includes a legal framework that facilitates cross-border transactions, allowing for 100% foreign ownership and unrestricted capital repatriation.
The regulatory landscape is well-defined, with the FSRA employing a risk-based approach to oversight. The use of an English common law framework by ADGM courts enhances legal clarity and minimises compliance expenses, providing businesses with a familiar and effective legal setting. This independent regulatory framework fosters trust and credibility among clients and partners.
Tax Incentives and Financial Advantages
Its appealing tax structure is a major incentive for establishing a business in ADGM. Companies enjoy a low corporate tax rate of 9% and zero withholding taxes. Furthermore, there is a 50-year exemption from taxes on profits, capital, assets, and personal income.
This tax-friendly environment is complemented by the UAE’s extensive network of double tax treaties, which currently includes over 100 agreements in effect and more in negotiation. These financial benefits make ADGM an attractive option for businesses looking to optimise their tax obligations while engaging in a flourishing economic landscape.
Access to Global Market Network
Recognised as one of the top 25 financial centres worldwide, ADGM provides businesses with access to a broad network of international financial institutions and service providers. With over 1,000 firms operating within its ecosystem, ADGM serves as a dynamic platform for collaboration and business partnerships.
The presence of a respected independent regulator and a concentration of financial expertise enhances the market’s role in deal-making and financial services. This vibrant ecosystem supports business growth and positions ADGM as a premier destination for companies seeking to enter global markets and capitalise on the increasing demand for financial and business services in the region.
Steps to Set Up a Company in ADGM
Choosing the Right Company Structure
When establishing a company in the ADGM, selecting the appropriate company structure is a crucial first step. ADGM provides various options, including private and public companies, with the possibility of limited liability by shares or by guarantee. This flexibility allows you to choose a structure that aligns with your operational needs and goals.
The chosen structure will impact various aspects of your business, such as governance, financial obligations, and regulatory compliance. It’s essential to consider these factors carefully to ensure the selected structure supports your long-term objectives.
Reserving Your Company Name
The initial step in forming a company in ADGM involves reserving a company name. This can be efficiently completed online through the ADGM Registration Authority’s portal. The name reservation process is straightforward and requires a fee of USD 200. Securing a unique and suitable name is vital, as it forms the foundation of your company’s identity and brand. Once the name is reserved, the subsequent steps in the incorporation process are facilitated.
Preparing Necessary Documentation
Compiling the necessary documentation is critical in setting up a company in ADGM. This includes detailed information about your company’s shareholders, directors, and overall structure. The application must include a statement of capital and initial shareholdings if your company will have share capital or a statement of guarantee if it is limited by guarantee.
Additionally, you must provide the intended address of your company’s registered office within ADGM and any proposed articles of association. Private companies are also required to confirm whether the company will be registered as a restricted-scope company. Ensuring accurate and complete documentation is essential for a smooth registration process.
Licensing and Registration Process
The licensing and registration process in ADGM is overseen by the Registration Authority, which ensures compliance with the regulatory framework. Securing approval for the licence activity takes approximately 5-7 working days. Following this, obtaining the licence from ADGM requires 15-20 working days. The incorporation application fee is USD 1,500, and once incorporated, a commercial licence must be obtained to operate your business legally. The annual fee for this licence is USD 4,000, with potential additional fees depending on your specific business activities.
Compliance with ADGM’s data protection regulations is also mandatory, with an initial registration fee of USD 300 and an annual renewal fee of USD 100. Furthermore, leasing office space within ADGM is necessary, with options ranging from business centres to fully-fitted offices. The cost for a one-desk office in a business centre starts at USD 19,000 annually. If you intend to employ staff, establishment cards and visas are required, with costs starting at USD 273 for the establishment card and USD 1,500 per visa. This process ensures that you’re fully equipped to operate within ADGM’s robust legal and regulatory environment.
Financial Requirements and Costs
Initial Setup Costs
Establishing a company in ADGM entails various initial expenses that depend on the specific business type. The fee structure for company registration is categorised into three main groups: Financial Services, Non-Financial Services, and Retail, with registration fees set at USD 15,000, USD 10,300, and USD 6,000, respectively. These fees correspond to the nature of the business activities and the associated regulatory requirements. Additionally, businesses must comply with minimum share capital stipulations, which vary according to the type of entity being formed.
Ongoing Operational Expenses
After the company is set up, ongoing costs are necessary to sustain operations within ADGM. A key recurring expense is the annual renewal fee for the business licence, which differs by category. Financial services firms are charged USD 13,000, while non-financial services and retail businesses pay USD 8,000 and USD 4,000, respectively. Companies involved in specialised activities may face extra licensing fees. Furthermore, maintaining a registered office address within ADGM incurs leasing costs, and there may be additional service charges for administrative changes, typically around USD 100 each.
Banking and Financial Services
ADGM particularly appeals to financial institutions and fintech companies due to its favourable tax and adherence to international best practices. The FSRA supervises the financial services sector, ensuring compliance with a strong regulatory framework. This environment is advantageous for private banking, asset management, and other financial services, providing a competitive edge by lowering compliance costs and enhancing risk management. Companies can access a variety of banking and financial services designed to support their operations in this dynamic free zone.
Visa and Employment Packages
For businesses intending to hire foreign employees, visa-related costs are significant. The expense of securing a new employment visa for a non-UAE citizen varies based on whether the individual is already in the UAE or not. A two-year employment visa for those within the UAE costs USD 1,021, while the fee is USD 800 for those outside.
Additionally, transferring an existing employment visa incurs a fee of USD 800. These expenses are crucial for companies looking to employ international talent while ensuring compliance with ADGM’s employment regulations. Companies must also factor in annual data protection fees, which include an initial registration and renewal cost of USD 300 each, as part of their operational budget.
Post-Setup Considerations
Compliance and Regulatory Obligations
After establishing your company in ADGM, it is essential to comply with the obligations set by the FSRA. The market operates under a unique legal framework that includes various regulations such as Companies Regulations, Financial Services and Markets Regulations, and Data Protection Regulations.
These guidelines are designed to promote transparency and accountability in business practices. As a business owner, you must ensure adherence to these regulations, which may involve regular filings, licence renewals, and maintaining accurate records. The FSRA monitors compliance closely and expects businesses to implement effective systems and controls for responsible operations.
Scaling and Expanding Your Business
ADGM fosters a supportive environment for businesses aiming to grow. The free zone’s regulatory and tax advantages can significantly benefit expansion efforts. To scale successfully, developing a comprehensive business plan that outlines market analysis and financial forecasts is crucial. This approach will help identify growth opportunities.
Additionally, ADGM encourages innovation through initiatives like the FinTech Regulatory Laboratory (RegLab) and the Digital Lab, which can serve as valuable resources for businesses looking to enhance their offerings.
Networking and Building Partnerships
Establishing connections and partnerships is key to thriving in ADGM. The market hosts a variety of multinational corporations, financial institutions, and investment funds, creating numerous collaboration opportunities. Engaging with the ADGM community can lead to new business prospects and valuable relationships.
The ADGM Academy contributes to Abu Dhabi’s status as a global financial hub by providing education and training in finance and banking. Participating in these programs can enhance your skills and knowledge, making you a more appealing partner for future collaborations.
Staying Updated with ADGM Policies
The regulatory environment in ADGM is subject to change, with frequent updates to policies and regulations. Keeping informed about these developments is vital for maintaining compliance and seizing new opportunities. The ADGM Registration Authority regularly publishes reports and consultation papers to update the business community on regulatory changes and gather feedback on proposed amendments.
By staying engaged with these resources, you can ensure your business remains compliant and adaptable to any shifts in the regulatory landscape while also understanding how new policies may impact your operations and strategy.
Final Thoughts on Setting Up a Company in Abu Dhabi Global Market
Establishing your company in the ADGM is a decision offering many opportunities. ADGM’s robust legal framework, advantageous tax structure, and strategic location make it an attractive option for businesses seeking to expand their footprint. With its strong emphasis on financial services, ADGM provides a conducive environment for growth and innovation.
By carefully navigating the processes of company structure selection, licensing, and regulatory compliance, you position your business for success in a competitive international market. The supportive ecosystem within ADGM and access to a global network of professionals enhance your ability to capitalise on emerging markets.
Staying informed about regulatory changes and actively participating in the ADGM community will be essential to thrive in this dynamic setting. Seize this opportunity to drive your business forward in one of the world’s most prestigious financial centres.
Do you want to set up a business in Abu Dhabi Global Market? Our company formation experts can walk you through the process and requirements, ensuring your ADGM business setup is smooth and efficient from start to finish. Book your free consultation now to learn how to get started.
