The Abu Dhabi Global Market (ADGM), the new international financial centre on Al Maryah Island today – 15 June 2015 – begin accepting licence applications from existing non-financial services tenants on Al Maryah Island that have either a private limited or branch office legal structure.
ADGM is being established as a broad-based financial services hub for local, regional and international institutions, initially in the sectors of private banking, wealth management and asset management. Al Maryah Island is already home to a number of international companies, financial institutions and professional service firms and will become the city’s financial and central business district.
The announcement followed the signing of a memorandum of understating (MoU) late last month between ADGM and the Abu Dhabi Department of Economic Development (DED), which covered: the registration and protection of company names and licences, both onshore and within ADGM; developing the process for transferring and renewing the trade licences of those companies already operating on Al Maryah Island; and ensuring consistency in respect of regulations, standards and business classifications.
All current tenants who are eligible to apply during this first phase will have a 12-month grace period during which to decide and apply for an ADGM licence. Other types of companies, including financial services institutions and those that are not currently tenants of Al Maryah Island, will be able to apply for an ADGM licence later in the year.
ADGM is the second financial free zone in the UAE and shares many features with the Dubai International Finance Centre (DIFC), which was established in Dubai in 2004 under a similar Federal framework legislation. Both ADGM and DIFC are common law, English language jurisdictions that are separate from the UAE’s civil law regime. They both have their own independent management and are governed by three main bodies: registrar, financial services regulator and court system.
ADGM has its own civil and commercial legal regime, based on and incorporating aspects of English common law, which will apply within the defined geographical area of the free zone. Abu Dhabi civil and commercial laws, comprising both emirate laws and Federal laws of the UAE, will not apply in ADGM.
ADGM aims to offer a business-friendly environment with rules and regulations aligned with international best practice standards. The principal advantage for international financial institutions and foreign investors will be the ability to operate within a transparent legal regime offering greater certainty and familiarity, and less risk, than other jurisdictions in the Middle East region. They will have be able to resolve disputes, should they arise, in an English language, precedent-based court system with familiar procedures.
Non-UAE nationals may establish operations without a local partner and wholly own their businesses in each free zone. Ownership restrictions under Federal law effectively prevent foreign investors from owning more than 49% of a UAE company. Free zone companies also benefit from a zero tax rate and will be able to repatriate profits and capital. It is also generally easier and quicker to establish a presence in a free zone.