A GATEWAY TO FINANCIAL,
NON-FINANCIAL AND
RETAIL BUSINESSES

ADGM

ADGM Free Zone

ADGM Free Zone (Abu Dhabi Global Market Free Zone) is an international financial center for local, regional and international institutions. ADGM Free Zone is regulated by three independent authorities (the Registration Authority, the Financial Services Regulatory Authority (FSRA) and ADGM Courts) to ensure that ADGM center operates in line with best international practice recognized by major financial centers.

The ADGM Freezone incorporates various entities providing financial or non-financial services (family offices*, corporate headquarters and various management functions, LLPs, GPs, LPs, holding companies**, special purpose vehicles*** and other structures to hold and protect assets, dual licenses entities*****, foundations******).

If you want to set up a business in the ADGM free zone, Wincore Advisory Group should be your first point of contact. We will support you and guide you through the whole process of your company formation in Abu Dhabi, registration and licensing.

Advantages of setting up a company in Abu Dhabi Global Market (ADGM)

Family offices are arguably the fastest-growing investment vehicles in the world today, as families with substantial wealth are increasingly seeing the value of establishing a centralized function to manage their family wealth and business interests.

There is no obligatory product or structure for a single-family office. The term refers more to a concept encapsulating a variety of structures established to manage family wealth, and in each case a bespoke solution should be applied. The core activities of a family office arrangement involve the centralized management of wealth derived from one or more families. Nuances arise with distinctions in the decision making hierarchy and how influence is distributed throughout the family structure. Often these family structures will have a broad range of business interests, with management responsibilities and ownership entitlement spread across multiple family members, which can make them complex.

MANAGING FAMILY WEALTH

TOOLS

  • Governance Provisions
  • Family Charter
  • Letter of Wishes
  • Trusts
  • Foundations/Private Trust Company
  • Protector/Enforcer

INVESTMENT MANAGEMENT

  • Investment Committee
  • Specialist Advisors
  • Fund Managers
  • Private Equity

SPECIAL PURPOSE VEHICLES

  • ADGM SPV (Residential House Overseas)
  • ADGM SPV (Commercial Property)
  • ADGM SPV (Private Jet/Yacht)

OPERATIONAL COMPANIES

  • Local UAE Company
  • International Company
  • ADGM Holding Company
  • Joint Ventures

FAMILY ADMINISTRATION OFFICE

  • Management/Administration

An ADGM Holding Company is typically a parent corporation, existing as a Private Limited Company (Ltd). It can own other companies (subsidiaries), property such as real estate, patents, trademarks, stocks and other assets, wherever they may be.

In creating the Special Purpose Vehicle (SPV) model, ADGM has drawn on the best available structures internationally and therefore offers a number of different vehicles in which to fulfil narrow, specific or temporary corporate objectives. In addition to the standard SPVs, ADGM has also introduced a new Restricted Scope Company structure: Restricted Scope Company (RSC). An ADGM RSC is a company (usually a Private Limited Company) with limited public disclosure requirement. RSCs are particularly useful for Single Family Offices or SPVs established to hold investments or own assets.

Key features and benefits of ADGM SPVs:

  • No restrictions on nationality of ownership
  • No restrictions on the number of shareholders
  • 1 shareholder and 1 director permitted
  • Corporate directors are permitted
  • No secretary requirements
  • No minimum share capital
  • Different classes of shares possible

Where a company creates a charge, the Registration Authority will register charges against the name of the company in ADGM through applicable provisions of the relevant ADGM Regulations. The Registration Authority will include in the register of charges a statement of satisfaction in whole or in part or a statement of the fact that all or part of the property or undertaking has been released from the charge or has ceased to form part of the company’s property or undertaking. The Registration Authority will make the register of charges available to the public.

A person taking a charge over a company’s property shall be taken to have notice of another charge disclosed on the public register at the time the charge is created.

The Dual Licensing Regime permits ADGM registered entities which hold a valid ADGM commercial license to apply for a license issued by the Abu Dhabi DED which authorizes them to conduct business activities outside the borders of ADGM without the need to maintain additional office space in mainland Abu Dhabi.

ADGM Foundations Regime has been introduced as an alternative to trusts for financial planning and structuring.  The regime was developed to strike an appropriate balance between transparency and discretion. ADGM Foundations can be used for a variety of purposes, including but not limited to, wealth management and preservation, family succession planning, tax planning, asset protection, corporate structuring, and for public interest foundations (excluding charities).

Unlike trusts, however, Foundations are incorporated as a legal entity with their own distinct attributes and legal personality. In this respect foundations are similar to companies but without shareholders, making them suitable for wealth management across generations. Though a foundation operates similarly to a common law trust, it has certain features more akin to a company, such as being incorporated with a separate legal personality and holding assets in its own name on behalf of beneficiaries.  Unlike a company, though, a foundation cannot carry out commercial activities, other than those necessary, ancillary or incidental to its purposes. A key feature of a foundation (as compared to a common law trust) is the ability of the founder to retain more control over the foundation (Governance controls and safeguarding the founder’s ability to exercise control over a foundation). In contrast, the settlor has a more limited role and, once assets are settled on trust, the duties of trustees are towards the beneficiaries, rather than the settlor.

BENEFITS OF FOUNDATIONS:

  • Offers enhanced asset protection
  • Tax/Access to UAE’s DTTs (subject to the Ministry of Finance Requirements)
  •  Provides a robust governance structure
  •  Additional assurance through guardian oversight
  •  Provides a robust governance structure – Foundation Council acts in an equivalent manner to a board of directors.  Council members’ duties are prescribed in the Foundations Regulations.  ADGM Foundations Regulations follow international best practice and set a legislative standard for the foundation council.  This standard includes statutory duties, such as those similar to common law and equitable duties of directors pursuant to the ADGM Companies Regulations 2015.
  •  Assurance through Guardian oversight – Guardian supervises the Foundation Council and ensures that it acts in accordance with the Foundation’s Charter and By-Laws.  Appointment of the Guardian is compulsory upon Founder’s death and optional during Founder’s lifetime.
  •  Distinct legal personality, unlike a Trust – Having a legal personality provides Foundations with flexibility to enter into contracts and arrangements directly, as a company would be able to.
  •  Separation of liability whilst maintaining control of assets – Foundation is a distinct legal entity which allows for separation of liability between Founder and the Foundation.
  •  Perpetual existence after lifetime of Founder – like a company, a Foundation is a perpetual concept, allowing arrangements to continue and therefore providing certainty after the Founder’s death.
  •  Asset protection mechanisms – increased protection from bankruptcy claims, claims in the event of divorce and from the effect of forced heirship rules.

WHY CHOOSE ADGM FOUNDATION’s REGIME?

  • Locally based option
  • Developed in close consultation with global advisors to meet local and international needs
  • Strikes an appropriate balance between transparency and discretion
  • Additional comfort in using a reputable, world-class international financial center
  • Facilitating migrations from other jurisdictions to ADGM and vice versa
  • The most comparable jurisdictions to ADGM’s foundations regime are Jersey and Guernsey.
  • ADGM Courts have jurisdiction over ADGM Foundations, as part their overall jurisdiction under Article 13 of Abu Dhabi Law No. 4 of 2013.  The ADGM Foundations Regulations preserve a pro-active role for ADGM Courts.
  • Like other common law jurisdictions, ADGM has incorporated “asset protection mechanisms” into its Foundations Regime.  These are known as “firewall provisions”, and are a familiar feature in common law trust jurisdictions, as well as Foundations jurisdictions.

Confidently

ADGM has sought to balance preserving client confidentiality and maintaining transparency of ownership by splitting the formation process into two (2) separate elements:

Public and Private

Public Disclosure:A Foundation Charter, which contains limited information (the name of the foundation and the name of a fiduciary or nominee founder) will be submitted to the Registrar as part of registration requirements. This would be publicly available (along with the registered address, registration date and service provider) and would allow third parties to verify the existence of the foundation and enable the foundation to demonstrate that it is properly constituted and in good standing.

Private/Confidential Disclosure:Foundation By-Laws governing, for example, the constitution of the foundation council would remain private and would only be provided to the Registrar upon request (and, if requested, would not to be made available for public inspection without consent of the founder). However, the Foundation By-Laws and other non-public information would be disclosed to governmental authorities in limited circumstances, such as those prescribed in the ADGM Companies Regulations 2015.

Comparative Table

DIFCADGMLIECHTENSTEINPANAMAJERSEYGUERNSEY
LawThe Foundations Law 2017The Foundations Regulations
2017
The Persons and Companies Act,
1926 (as amended, 2008), Art.552 [1-43]
The Private Interest Foundation
Law 1995
The Foundations (Jersey) Law 2009The Foundations (Guernsey)
Law 2012
Legal SystemCommon Law principles based legal system & Courts – own Civil & Commercial LawsCommon Law legal system & Courts -Laws of England & Wales based Civil and Commercial LawsCivil lawCivil lawCombination of
French civil law & English
common law
English common
law & Equity principles
Benefits• Top Tier international financial center
• No requirement to file or audit account unless requested by the Registrar
•Migration of foreign foundations allowed
• Strategic location in the Middle East & emerging markets
• No corporate and inheritance tax
• No tax filing
• UAE Tax treaty
Network
• Depository certificates could be issued by Foundation
• Possibility to morph company into foundation
• Private arbitration of disputes
• Top Tier international financial center
• No requirement to file or audit account unless requested by the Registrar
•Migration of foreign foundations allowed
• Strategic location in the Middle East & emerging markets
• No corporate and inheritance tax
• No tax filing
• UAE Tax treaty
Network
• Low set-up and running costs
• Onshore International financial center
• Fast processing
• Location in Europe
• EU compatible Investment
vehicle
• International financial center
• Fast processing
• Location in Latin America
• No corporate tax -Exemption from local taxes for foreign source income
•International financial center
• Fast processing
• Location in Europe
• No corporate tax
• International financial center
• Fast processing
• Location in Europe
• No corporate tax
Initial capitalAny property as initial endowment

 

USD100Assets of a minimum
value of CHF 30,000
Assets of a minimum
value of USD 10,000
Any property as initial endowmentAny property as initial endowment
Corporate Income Taxnone

 

none12.5% on
net income (
minimum tax of CHF 1,200)
noneNone- registered as an ISE (international services entity) for GST
(Goods Service Tax)
none

DIFCADGMLIECHTENSTEINPANAMAJERSEYGUERNSEY
StakeholdersFounder:
1 (or more) natural
or corporate person•Council:
At least 2 natural
or corporate person (Founder could be Councilor)• Guardian:
Mandatory if charitable or specific purpose (natural
or corporate person)• Beneficiaries:
natural
or corporate persons (including Founder)• Registered Agent is
Optional
Founder:
1 (or more) natural
or corporate person•Council:
At least 2 natural
or corporate person (Founder could be Councilor)• Guardian:
Mandatory if no
surviving founder (natural
or corporate person)• Beneficiaries:
Person or class of persons (including Founder)• Registered Agent is
Optional
Founder:
1 (or more) natural
or corporate person• Council:
At least 1 natural
or corporate person (Founder could be Councilor) with at least 1 qualified person (Local qualified fiduciary).• Guardian:
optional (natural
or corporate person)• Beneficiaries:
natural or
corporate persons / or class of beneficiaries (including Founder)• Auditor: mandatory if the
foundation carries out commercial
activities
Founder:
1 (or more) natural
or corporate person•Council:
At least 3 natural
or 1 corporate person (Founder could be Councilor)• Protector:
Optional• Beneficiaries:
natural
or corporate persons (including Founder)Resident Agent:
Mandatory
Founder:
1 (or more) natural
or corporate person•Council:
At least 1 natural
or corporate person (Founder could be Councilor) with at least 1 qualified person (Jersey qualified fiduciary).• Guardian:
Mandatory• Beneficiaries:
Person or class of persons (including Founder)
Founder:
1 (or more) natural
or corporate person•Council:
At least 2 natural
or corporate person unless the Constitution permits it
(Founder could be Councilor)• Guardian:
Mandatory if only a purpose without beneficiaries
or there are disenfranchised
beneficiaries
(natural
or corporate person)• Beneficiaries:
natural
or corporate persons (including Founder)• Registered Agent is Mandatory if
councilor or
guardian is Guernsey licensed fiduciary
Local representation• registered office (could be at registered agent’s address)

 

• registered office (could be at registered agent’s address)• At least one member of the
board must be
resident in
EU and
a qualified professional
• The Resident Agent must have a local
address
• One member of the Council must be a Jersey Qualified Person.resident
Guernsey licensed Fiduciary
agent is mandatory if is not one
councilor or
guardian
Public information•foundation charter
• founder,
Councilor &
registered agent ‘names, addresses & nationalities
• The foundation charter except (
Details of councilors-beneficiaries, guardian,
beneficial owner of
founder
if it is a
legal
person)
•None if Foundation is not registered• initial capital
• details of
Councilors, founder
& resident
agent• appointing method of beneficiaries
•purposes/ objects and duration
• clauses deemed
expedient by the founder
• modification process of
charter
•Object, purposes
and initial endowment
•Part A only:
Councilors and Guardian’s details
Migration• Allowed• Allowed• Allowed• AllowedJersey companies
& recognized entities are allowed to
morph as Jersey foundations.Jersey foundations
are allowed to continue as recognized
entities.
• Allowed
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