Business Setup & Licensing Services | ADGM & DIFC | SPV & SPC

ADGM & DIFC Licensing (Financial Licensing, Branches, SPV, SPC, Family Offices)

Regulated Financial Entities
Terminology:

Branch Company – the parent company remains its sole owner. As such, there is no share capital required to open a branch office. The branch company also uses the parent’s articles of incorporation.

Representative Office –Representative Offices are usually the most cost-effective The major difference with representative offices is that their business activities are limited to promoting and sourcing work for the parent company. Representative Offices are not allowed to make a profit in the UAE and must outsource all work back to the parent company.

Wincore Advisory Group’s structuring team will advise you on the best structuring to establish your UAE presence, establish your branch or representative office whilst assisting you in fulfilling all regulatory licensing with ROC (Registrar of Companies), DED (Department of Economic Development), Freezone authority and the Regulatory authorities.

Branches and Representative Offices

Merits of establishing a branch or representative office in DIFC freezone

  • DIFC is an onshore financial centre. At the heart of the DIFC model is an independent risk-based regulator, the Dubai Financial Services Authority (DFSA), which grants licenses and regulates the activities of all banking and financial institutions in DIFC.
  • DIFC is unique in that it has a legislative system consistent with English Common law. DIFC has its own set of civil and commercial laws –Companies Law DIFC Law No. 5 of 2018 including UK Companies Act 2006 plus policy decisions on where to deviate or apply lighter touch than UK or other common law positions)- and regulations and has developed a complete code of law governing financial services regulation.
  • As part of its autonomy, DIFC has created an independent judicial system. The DIFC Courts is the entity responsible for the independent administration and enforcement of justice in DIFC. The Courts have exclusive jurisdiction over all civil and commercial disputes arising within DIFC and or relating to bodies and companies registered in DIFC.

Merits of establishing a branch or representative office in ADGM freezone

The ADGM Free Zone has three independent authorities:

  • The Registration Authority is responsible for the registration, incorporation and licensing of legal entities in ADGM and supports with all government-related services.
  • The FSRA, which has two independent bodies (the Regulatory Committee and the Appeals Panel) is a signatory to 88 bilateral MoUs with foreign regulators and international financial centres and member of the International Organisation of Securities Commissions (IOSCO) & Basel Committee Consultative Group (BCG);. Financial services entities registered in ADGM need to meet specific obligations set out by the FSRA. These obligations are in addition to standard obligations that all ADGM registered entities are required to meet.
  • ADGM Courts and its judiciary are modelled on the English judicial system. The direct application of English common law (including the rules and principles of equity plus well-established English statutes on civil matters) makes ADGM the first jurisdiction in the Middle East to adopt a similar approach to that of Singapore and Hong Kong: The foundation of the civil and commercial law in ADGM is provided by the Application of English Law Regulations 2015.

ADGM SPV

Abu Dhabi Global Market 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. ADGM Free zone incorporates various entities providing financial or non-financial services.

Special Purpose Vehicle (SPV) model was 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 the 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:

  • Benefit of UAE Double tax conventions
  • They are so-called “exempt” structures and thus do not fall under the direct supervision of the Financial Services Regulator.
  • 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.
  • An ADGM SPV could morph into an ADGM Holding Company whichis typically a parent corporation, existing as a Private Limited Company (Ltd) and can own other companies (subsidiaries), property such as real estate, patents, trademarks, stocks and other assets, wherever they may be.
  • A Foreign IBC could morph into an ADGM SPV.
  • The Registration Authority will register charges against the name of the company in ADGM and make the register of charges available to the public.

Key Uses:

  • Single family offices
  • Holding structure – wrapper and consolidation vehicle
  • Availing Tax Conventions benefits
  • Proprietary investment
  • Securing the control of underlying mainland companies
  • Securitization- asset based securities
  • Fund raising and Trustee structuring
  • Regional Head Quarters

Case Study:

Strengthen the investor’s control over the 51%local shareholding of his mainland LLC business – Uses of ADGM SPVto establish a common law corporate entities layer.
CURRENT BUSINESS STRUCTURING

https://wincoreadvisory.com/wp-content/uploads/2020/02/imgg.png

NEW BUSINESS STRUCTURING OR RESTRUCTURING
First degree of structuring – More confidential and sophisticated structuring are possible.

https://wincoreadvisory.com/wp-content/uploads/2020/02/secondimg.png

Outcome:

  • The local and foreign shareholdings are uplifted from a dual sharia law and civil law jurisdiction to a common law jurisdiction:
  • allowing more flexibility to gain a higher investor’s protection while the ultimate local shareholding complies with the mainland regulatory framework;
  • granting access to more sophisticated contractual and structuring environment;
  • Subjecting the resolution of conflicts to a common law jurisdiction, court and arbitration rules.
  • Exiting from the heavy legalisation and notarisation costs (unlike foreign IBC used or corporate actions are executed).

Wincore Advisory Group’s structuring team will advise you on the best structuring to establish your UAE presence and reach your objectives whilst maintaining the highest degree of control over your business and confidentiality. Wincore Advisory Group’s structuring team will advise you also on related capital raising planning, tax structuring and succession planning in a Sharia Law environment.

error: Content is protected !!

Sign up for our News & Alerts

Don’t like emails?
Just follow us on Linkedin or Twitter to get the latest news in our feed.