When a foreign company is making the decision to expand its business into the UAE, one of the first decisions you will need to make is whether to establish a branch of a foreign company or to incorporate a subsidiary Limited Liability Company (LLC) in Dubai, Abu Dhabi or one of the UAE’s free zones.

Both structures will enable your company to trade from the UAE, but there are some distinct differences to consider in respect of regulations, tax, compliance and strategic business planning. Either option has its own benefits and considerations, and the right choice will depend on your specific business needs and goals.

However your choice between a branch or a subsidiary can have a significant impact on your risk, tax profile and how your group does business in the UAE. One of the questions we are often asked by multinational groups is: “Can we convert our foreign branch into a Limited Liability Company (LLC)?”

The short answer is yes, but it’s not always straightforward.

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Two structures come up more than any others: the Limited Liability Company (LLC) and the Sole Establishment. Both are well-established, widely used and backed by clear procedures. But they’re built for different types of businesses.

An LLC offers protection for personal assets and is often a better fit for companies planning to hire, scale or bring in partners. A Sole Establishment, on the other hand, is simpler and suits professionals who want to work independently under their own name.

Let’s look at how the two compare—so you can decide which one suits your plans.

What is a sole establishment in Dubai and who is it suited for?

A sole establishment is a business owned by one person who takes full responsibility for its profits, losses and liabilities. It’s a common choice for consultants, freelancers and other professionals offering specialised services under their own name.

Setup is straightforward. The paperwork is light, the fees are relatively low and the owner has complete control over the business. There are no partners to consult, no shareholders to involve and no company board to manage. That simplicity makes it appealing to professionals who want to get started quickly and stay in charge.

Foreigners can still own 100% of a sole establishment in many cases, especially in the professional services sector. Depending on the activity and the licensing authority, some owners may need to appoint a local service agent—a UAE national who acts as a formal liaison with government departments. This requirement is not universal and has been relaxed in recent years, particularly in Dubai.

This setup works well when the model is clear and the risk is low. That said, the owner is personally liable for any debts or legal claims, which is something to weigh up before choosing this route.

Pros

• Easy to set up
• Full control
• Lower setup costs
• Eligible for small business tax relief (subject to conditions)

Cons

• Unlimited personal liability
• Harder to raise capital
• Less appealing to banks and investors

What is an LLC in Dubai and when is it the better choice?

The LLC is the most common business structure in Dubai since it offers a good blend of flexibility and protection. It’s a separate legal entity, which means the company takes on the risk—not the individual owners. If something goes wrong, the shareholders are only liable up to the amount they’ve invested.

You can set up an LLC in either a free zone or on the mainland. Free zones often appeal to businesses focused on international trade or digital services. They offer full foreign ownership and simplified setup, but they come with trade restrictions outside the zone. Mainland LLCs, on the other hand, give you access to the UAE market without limitation and can work with government clients. Most sectors now allow 100% foreign ownership, though some still require a local partner or agent.

An LLC also comes with a few built-in advantages. It tends to carry more weight with banks, landlords and investors. It makes it easier to hire staff, apply for visas, and grow beyond a one-person setup. It can also hold assets, open a bank account in the company name and apply for multiple business activities under one licence.

Pros

• Personal asset protection
• Room to grow
• Access to local and international markets
• Easier to attract partners or investors

Cons

• Higher setup and renewal costs
• More steps and formalities

 LLC vs sole establishment: what are the key differences?

The structure you choose shapes how your business operates day to day—how it’s owned, how much protection it offers, how investors and banks see it, and how easy it is to grow. Here’s a side-by-side look at the key differences between the two structures:

The choice between the two will depend on your goals, appetite for risk and how you see your business evolving over time.

Can you switch from a sole establishment to an LLC in Dubai?

Plenty of businesses in the UAE start out as sole establishments and later switch to an LLC. The reasons are generally to limit personal risk, bring in partners, or get access to bigger contracts and financing.

While it’s a well-trodden path, the process isn’t just a licence swap. Legally, you’re setting up a new entity and transferring the business over. That means updating the commercial register, notifying creditors, and publishing notices in Arabic newspapers. If those steps aren’t followed properly, the change can be challenged, and in some cases, the owner may still be held personally liable for past debts.

Done right, though, the conversion is smooth. The key is understanding what’s required and having someone experienced handle the details—from drafting the sale agreement to coordinating with the relevant authorities. With the right support, it’s a straightforward step that can open the door to a more secure and scalable setup.

How can Sovereign PPG support your Dubai business setup?

Whether you’re starting fresh or switching from a sole establishment to an LLC, Sovereign PPG can manage the process end to end. With deep knowledge of local requirements and strong ties to key authorities, we handle everything—from licensing and structuring to visas and ongoing PRO support.

Contact us for expert help with company setup, restructuring or local partner services across the UAE, Oman, Qatar or Saudi Arabia.
sovppg@sovereigngroup.com

The post LLC Vs Sole Establishment in Dubai: Which Structure Suits Your Business? appeared first on The Sovereign Group.

The global regulatory and tax landscape is constantly shifting. As regulatory frameworks and statutory requirements change, so businesses may find it advantageous to reassess their place of incorporation and their corporate structure to identify whether there more commercially beneficial and efficient arrangements available.

In recent years, for example, global initiatives to increase transparency in respect of beneficial ownership and tax information have prompting many businesses to consider jurisdictions that offer both international compliance as well as improved stability and efficiency.

Understanding Redomiciliation

Re-domiciliation is the process by which a company incorporated in one jurisdiction moves its place of incorporation or registration to another jurisdiction while maintaining its legal personality. This enables businesses to move their place of incorporation without the need to dissolve the company and re-incorporate, allowing them to retain their corporate history and existing relationships.

In the absence of a corporate re-domiciliation regime, companies that are migrating incorporation have to set up a new entity in the desired jurisdiction, transfer their assets, contracts and other business relationships, and dissolve or liquidate the entity in their previous place of incorporation.

This can be complex and time-consuming, often involving legal intricacies in transferring title to certain assets such as real estate or intellectual property, tax implications, creditor protections and compliance with local regulations.

Why Gibraltar? A jurisdiction of choice

Gibraltar stands out as an attractive jurisdiction for businesses seeking a well-regulated and business-friendly environment. Unlike many alternative jurisdictions, Gibraltar has been subject to the EU’s anti-money laundering directives and operates within a British common law system, offering legal certainty and compliance advantages. Key benefits of redomiciling to Gibraltar include:

1. Regulatory stability and compliance

Gibraltar has a well-established regulatory framework that aligns with international standards, ensuring transparency while providing businesses with a stable and predictable legal environment.

2. ‘Passporting Rights’ into the UK

Under the Gibraltar Access Regime (GAR), Gibraltar is the only jurisdiction worldwide that enjoys ‘passporting rights’ into the UK. Following Brexit, the UK and Gibraltar governments agreed that Gibraltar-licensed firms can continue to provide their services into the UK market and set up branches in the UK on the strength of their Gibraltar licence.

For EU entities that have lost their right to passport into the UK, a new Gibraltar subsidiary can enable them to continue to access the UK market from a more tax efficient platform.

3. No Economic Substance requirements

Unlike many jurisdictions, there are no economic substance requirements in Gibraltar, allowing businesses the flexibility to operate efficiently without the additional burden of demonstrating local activity.

4. Favourable tax environment

• Competitive corporate tax rate: the standard rate of corporate income tax (CIT) is 15% but companies are only subject to Gibraltar taxation on income accrued in and derived from Gibraltar.
• No tax on capital gains: businesses and individuals are not subject to taxes on the sale of assets, which is a significant advantage for wealth management and investment activities.
• No tax on dividend income: dividends received by a Gibraltar company from any other company are not subject to tax in Gibraltar.
• No tax on most interest income: interest income received or receivable is not generally taxed in Gibraltar unless it falls within the scope of trading income or is interest on loans by a company to another company in excess of £100,000.
• No withholding taxes: there are no withholding taxes on dividends, interest or royalties.
• No inheritance, wealth or gift taxes: this makes Gibraltar an ideal location for estate planning and wealth preservation.
• Most passive investment income is not taxable in Gibraltar: this includes bank interest, dividends from companies listed on a recognised stock exchange, or dividends paid to non-residents.
• No Value Added Tax (VAT): Gibraltar does not impose VAT, making it a highly cost-effective jurisdiction for goods and services.

5. Efficient incorporation and business processes

Gibraltar offers a streamlined incorporation process with minimal bureaucracy. Companies can be set up with a single director and shareholder, with no nationality or residency restrictions, and without minimum capital requirements.

6. Strategic location and legal certainty

As a British Overseas Territory, Gibraltar benefits from a common law legal system and robust financial infrastructure. Its geographic position at the crossroads of Europe and Africa further enhances its appeal as a global business hub.

Is redomiciliation the right move for your business?

Given the increasing regulatory obligations worldwide, businesses may find it advantageous to explore redomiciliation options that align with their long-term goals. Gibraltar’s well-regulated, tax-efficient and business-friendly environment, together with its access to the UK, makes it a compelling choice for companies looking to enhance their operational efficiency while maintaining compliance with global regulatory standards.

Sovereign has over three decades of experience in navigating the complexities of multijurisdictional corporate structures together with extensive expertise in redomiciling corporate entities. If you are considering relocating your company, our team is here to provide tailored solutions that will align with your business needs and strategic objectives.

For more information, contact Ejaz Niazi.

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There were also 1,079 non-Hong Kong companies – branch offices – that established a place of business in Hong Kong and were registered under the Companies Ordinance in 2024. By the end of last year, the total number of registered non-Hong Kong companies was 15,126, up 2% compared to 2023 which was also an all-time high figure.

Registering a non-Hong Kong company as a branch office in Hong Kong can, under certain circumstances, offer distinct advantages to incorporating a new Hong Kong company.

A branch office provides direct access to the Hong Kong market and its potential customers but is regarded as an extension of the parent company and is not a separate legal entity. The parent company is therefore fully liable for the debts and liabilities of a Hong Kong branch and, generally.

A branch office is generally subject to the same legal and tax consequences as a company incorporated in Hong Kong but is only required to comply with limited provisions under the Hong Kong Companies Ordinance and may offer the following benefits:

• Simplified set-up – compared to setting up a wholly-owned subsidiary, establishing a branch office can be a quicker and less complex process.
• Cost-effective – branch offices can be more cost-effective than subsidiaries, especially in terms of initial set-up costs.
• Stronger brand presence – operating under the same name as the parent company can enhance brand recognition and credibility in Hong Kong.

No stamp duty is payable in Hong Kong on the transfer of shares held in the foreign company which operates a branch in Hong Kong. There is no requirement for a separate audit and the business operation of a branch can be terminated easily by notifying the Hong Kong Companies Registry that it has ceased to have a place of business in Hong Kong.

A branch office must be registered with the Hong Kong Companies Registry as a non-Hong Kong company that has established a place of business in Hong Kong under Part 16 of the Companies Ordinance. This must be done within one month of establishing the place of business in Hong Kong.

The registration form should include the following particulars of the foreign company:

• Name.
• Place of incorporation.
• Date of establishing the place of business and its address.
• Address of principal place of business in Hong Kong.
• Identity of company secretary and directors, together with dates of appointment and particulars.
• Identity of a local ‘authorised representative’ appointed to accept service of process.
• Details of the registered office and principal place of business overseas.

The form must be accompanied by certified copies of the foreign company’s constitutional documents, a certificate of incorporation, a completed Notice to Business Registration Office and its most recent published financial statements. The latter requirement is waived if it is not also required under the law of the foreign company’s place of incorporation, or if the company has been incorporated for less than 18 months and has not yet published financial statements.

Upon approval, the Hong Kong Companies Registry will issue the Certificate of Registration of Non-Hong Kong Company and the Business Registration Certificate. Following registration, a foreign company is obliged to keep the Hong Kong Companies Registry and Business Registration Office updated of certain changes. It should also file an annual return, supported by the most recent financial statements, where applicable.

A foreign company must maintain the appointment of an authorised representative for as long as it maintains a place of business in Hong Kong, and for a further year after it ceases to have a place of business in Hong Kong.

The post Why Register a Branch Office in Hong Kong Instead of a Subsidiary? appeared first on The Sovereign Group.

The Abu Dhabi Global Market (ADGM), the international financial free zone located on Al Maryah Island in the heart of the UAE’s capital city, reported a 32% year-on-year rise in the number of operational entities in 2023. The total increased from 1,378 to 1,825 over the year, underscoring its position as the region’s fastest-growing financial hub.

The ADGM reported a year-on-year increase of 35% in assets under management (AUM) to the end of December 2023, with the total number of asset managers operating in the ADGM financial free zone reaching 102 and the total number of funds reaching 141. This surge was facilitated by enhancements to the ADGM Financial Services Regulatory Authority’s (FSRA) regulatory framework, particularly the Private Credit Fund framework.

The end of 2023 numbers also reflected 88 financial institutions and two exchanges that had received In-Principle Approvals (IPAs) from ADGM. ADGM said a further 125 firms were already in the pipeline to be registered in 2024.

New international entrants in 2023 included some of biggest names in global finance: US investment bank Goldman Sachs, US alternative asset manager Blackstone, Jersey-based hedge fund manager Brevan Howard, Paris-based private equity investor Ardian, Paris-headquartered alternative asset manager Tikehau Capital, Mumbai-based investment bank SBI Capital Markets, Beijing-based Asian Infrastructure Investment Bank (AIIB), US alternative asset manager Apollo Global Management, US real estate venture capital firm Fifth Wall, London-based investment manager Fidera and US alternative credit investment manager Vibrant Capital.

New local and regional entrants included Abu Dhabi sovereign wealth fund ADQ, venture capital asset manager Chimera Capital, artificial intelligence group G42, alternative investment manager Gulf Capital, alternative investment manager OneIM and Bahrain-based asset manager Investcorp.

ADGM was established in 2015 as a financial free zone in the Emirate of Abu Dhabi, with its own civil and commercial laws. Driven by innovation, it was the first jurisdiction in MENA to directly apply Common law, it established the world’s first fully digital courtroom, it introduced the world’s first comprehensive crypto asset regulatory framework and the first ‘Digital Sandbox’ with a participating regulator.

The ADGM has also emerged as a hub for sustainable finance in the region, supporting the growth of sustainable finance and the acceleration of the UAE’s green economy agenda. With a strong emphasis on transparency and governance, the ADGM has successfully introduced the region’s first comprehensive sustainable finance regulatory framework, encompassing funds, portfolios, bonds, sukuks and carbon-offsets, as well as Environmental, Social and Governance (ESG) disclosures.

The ADGM Growth Strategy 2023-2027 is fully aligned with Abu Dhabi’s goal of driving sustainable economic diversification through the growing financial sector. Last May, ADGM announced a tenfold expansion by bringing Al Reem Island under its jurisdiction, transforming it into one of the world’s largest international financial centres with a total area of 14.38 million sqm.

The growth in the number of operational entities combined with the expansion of existing ADGM-based financial institutions, such as JP Morgan and BNP Paribas, saw a 22% rise in ADGM’s workforce during 2023 to reach 13,394.

“Enhancing Abu Dhabi’s international standing as the ‘capital of capital’, ADGM has truly realised the capital city’s potential for the financial landscape and strategically unlocked opportunities within underlying sectors,” said ADGM Chairman Ahmed Jasim Al Zaabi. “The growth that we are witnessing today is the realisation of the visions of the UAE’s leadership. We remain strongly positive as we move forward into 2024.”

Other significant achievements at ADGM during 2023 included:

• The launch of ADGM’s inaugural Money Laundering and Terrorist Financing (ML/TF) Risk Assessment of ADGM Legal Persons and Arrangements Report (LPA Report).
• The launch of Numou, a digital platform tailored to bridge the funding gap faced by SMEs in collaboration with Al Maryah Community Bank, RAKBANK, Commercial Bank International, CredibleX and Khalifa Fund, which have collectively committed to extend lending up to AED220 million.
• The ADGM Registration Authority (RA) issued an updated version of the Beneficial Ownership and Control Regulations 2022 (BOC Regulations), which repealed and replaced the existing Beneficial Ownership and Control Regulations 2018.
• The ADGM Financial Services Regulatory Authority (FSRA) announced revisions to its Anti-Money Laundering and Sanctions Rules and Guidance (AML Rulebook).
• The ADGM RA published the legislative framework for Distributed Ledger Technology (DLT) Foundations.
• The ADGM Arbitration Centre launched ODR@ADGM, an online dispute resolution platform that hosts a fully digitalised settlement and mediation service.
• The ADGM Academy (ADGMA) achieved the milestone of training, upskilling and reskilling more than 1,000 UAE Nationals for employment in the private sector, including more that 500 graduates from the National Development Programme (NDP).
• The ADGMA Entrepreneurship Programme enrolled over 300 candidates and the first international Student Challenge was presented at the SWIFT International Banking Operations Seminar (SIBOS), a global financial services event.
• ADGMA signed 82 strategic partnership agreements, including two international partnerships and five partnerships for research and innovation. It also signed 19 Memorandums of Understanding (MoUs) to explore future alliances with both academic and corporate entities.

How can Sovereign assist?

Establishing a company within the ADGM free zone can be a complex process. Sovereign Corporate Services has an office in the ADGM and was recognised as the first licensed ‘Corporate Services Provider’ within the ADGM regulatory framework.

Our team offers comprehensive support to any business establishing a legal entity in ADGM and can provide direct access to government entities and regulatory bodies. We will provide guidance and expertise throughout the process and will review applications before submission to ensure that your structure meets all business and regulatory requirements.Top of Form

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UK Companies House announced on 4 March that the first measures under the Economic Crime & Corporate Transparency Act 2023 (ECCTA) had been brought into force with the implementation of new powers to query information, establish lawful purpose, share information, and challenge and change company names.

The ECCTA builds on the Economic Crime (Transparency and Enforcement) Act, which introduced the Register of Overseas Entities in August 2022. Together, both acts are a major step forward in tackling economic crime and improving corporate transparency.

The ECCTA targets reform of Companies House alongside measures to reform the identification doctrine and the introduction of a new offence of failing to prevent fraud. The act gives Companies House the power to play a more significant role in tackling economic crime and supporting economic growth. Over time, the measures will lead to improved transparency and more accurate and trusted information on our registers.

Companies House will have the power to investigate, challenge and remove information that is provided to it, both at the time of incorporation of a new company and retrospectively in respect of existing companies. It will also be able to request supporting evidence.

Companies will be required, at all times, have an ‘appropriate address’ as their registered office, which will no longer include the use of PO Boxes. If a company’s registered office is not deemed appropriate, it will be changed to a default address and, if an appropriate address with evidence of proprietary ownership is not provided within 28 days, the process to strike the company off the register can be commenced. Companies will also be required to have an ‘appropriate’ email address.

For companies incorporated after 3 March 2024 subscribers will be required to declare that they are forming the company for a lawful purpose, and that the intended future activities are lawful as part of their annual confirmation statement.

The ECCTA enables Companies House to impose stronger checks on company names that may give a false or misleading impression to the public. The new measures build on existing controls on company names covering similarity of names and restricted terms.

It introduces new powers for Companies House to reject an application to register a name that is intended to facilitate fraud, is comprised of, or contains computer code, or which suggests a connection with a foreign government or international organisation.

If a company fails to change its name within 28 days, Companies House can now determine a new name for the company (for example, by changing the company name to its registered company number) and can also suppress a name from the register while a company responds to a direction to change its name.

Companies House will further have the ability to share data with other government departments and law enforcement agencies.

Penalties for non-compliance and for failing to respond to a formal request from Companies House for information will include financial penalties, annotations on a company’s record, or prosecution.

Companies House said it would continue to implement more changes over the coming years, including identity verification for all new and existing registered company directors, people with significant control (PSCs) and those who file on behalf of companies; enhancing the protection of personal information to protect individuals from fraud and other harms and streamlining accounts filing options for small and micro entity companies, and transitioning towards filing accounts by software only.

Sovereign Corporate & Trustee Services Limited is supervised by HMRC and registered as a Company and Trust Service Provider. To ensure compliance, do not delay. Get in touch to find out how we can help below or call 0044 (0)1244 901350.

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At the heart of this emerging ecosystem is the Dubai World Trade Centre (DWTC) Free Zone, which offers a regulated virtual asset space and the perfect environment for businesses to grow within the virtual assets sector.

The Virtual Assets Regulatory Authority (VARA) regulates and supervises the provision, use and exchange of virtual assets from the Emirate of Dubai, including the DWTC. Any firm seeking to conduct virtual asset activities in or from Dubai, excluding the Dubai International Financial Centre (DIFC), must obtain a Virtual Asset Service Provider (VASP) Licence before initiating operations.

VARA’s Virtual Assets & Related Activities Regulations 2023 provide a comprehensive framework for virtual assets, which aims to ensure investor security, sustainable market growth and overall stability in the virtual assets sector.

This article provides a comprehensive guide to setting up a VA company in the DWTC Free Zone and applying for VARA approval.

This article provides a comprehensive guide on how to establish a company in the DWTC Free Zone, highlighting the significance and process of securing VARA approval.

Why set up a virtual assets business in DWTC?

DWTC is an ideal base for firms in the virtual assets space, providing a streamlined, single-point operation that caters to companies of all sizes, from start-ups and SMEs to large multinationals.

DWTC also offers a great deal of operational flexibility, giving businesses the option to set up as an onshore entity under a specialised free zone licence or to have dual licensing, enabling access to both the UAE mainland market as well as the free zone itself.

This adaptability, combined with advantages such as 100% foreign ownership, zero personal income tax and no restriction on currency and the repatriation of funds, have made it a key hub in Dubai’s digital economy.

Many global VA companies have already chosen Dubai and the DWTC Free Zone as their base of operations, including Binance, OKX, Komainu, GCEX, Hex Trust, and Crypto.com.

DWTC collaborated early on with VARA to establish an MVP ecosystem for VASPs, significantly accelerating the development of VARA’s regulatory framework and FMP for VASPs.

How to establish a company in DWTC

1. Submit an Online Application: Applicants must submit an online application to DWTC. This initial step involves providing all necessary documents requested by DWTC. They will then conduct their due diligence and may request further information if needed.
2. Secure DWTC Authority Initial Approval: Applicants are required to complete the Virtual Asset Service Provider (VASP) questionnaire and obtain pre-approval from VARA. At this stage, the applicant also needs to pay the DWTC authority fee and 50% of VARA’s fee.

This pivotal step lays the foundation for an initial readiness of a VASP to comply with the regulatory framework. VASPs will need to demonstrate that they can setup the necessary infrastructure, processes, and protocols to ensure that they can meet the regulatory requirements effectively. This includes implementing measures such as customer due diligence, transaction monitoring, risk assessment, and reporting mechanisms as outlined in the regulatory framework. By taking this key step, VASPs can demonstrate their commitment to regulatory compliance and contribute to the overall integrity and stability of the virtual asset ecosystem.

3. Sign Corporate Documents: The applicant must then sign the Memorandum and Articles of Association. These documents, which detail the company’s structure and governance, must align with the capital requirements set by the DWTC Authority, establishing a legal basis for your operations.
4. Submit Office Lease: All applicants are required to leasing physical office space within DWTC. A copy of the lease agreement, which evidences details of the premises to be used as the applicant’s registered office within the free zone, must be submitted.
5. Obtain a Non-Operational Virtual Assets Licence: The DWTC Authority will issue a Non-Operational Virtual Asset Licence to the applicant of one-year validity. This preliminary licence is a precursor to full operational status and allows the applicant to set up necessary infrastructures and systems.
6. Issuance of Operational Licence: The applicant must obtain the VASP Licence / Exemption from VARA to conduct Virtual Assets activities. The DWTC will not issue a full Operational Licence until VARA approval is obtained.

The fee for approval from VARA is AED100,000 (c. USD27,000), of which AED50,000 must be paid at the initial approval stage and the remaining amount upon final approval.

If the applicant does not obtain the VASP Licence from VARA within the one-year validity of the Non-Operational Licence issued by DWTC Authority, the non-operational licence will not be renewed – this is inclusive of visas and establishment cards, if applicable. Any fee or costs paid to DWTC Authority will be forfeited by the applicant.

Governmental fees for incorporation in DWTC

The following is a breakdown of DWTC’s costs for the first year and subsequent year:

• Registration Fee: A one-time fee of AED2,000
• Licence Fee: AED25,000 for the first year, which increases to AED27,000 in the second and following years.
• Establishment Card (Annual): An annual fee of AED2,300, which is required to maintain the company’s formal status.
• Security Deposit: A refundable fee of AED3,500.
• Executive Office 6-Visa Quota: For reference, an executive office with an allowance of six employee visas is available at AED70,000 per year or
• Executive Office 3-Visa Quota: For reference, an executive office with an allowance of three employee visas is available at AED 49,000 per year

The total cost in the first year therefore amounts to AED102,800, reducing to AED99,300 in subsequent years by excluding the one-time registration fee and security deposit fee.

It is important to note that additional activities related to virtual assets incur an annual fee of AED8,000 per activity, enabling businesses to expand their service offerings under the same licence.

The VARA approval process

The Virtual Assets Regulatory Authority (VARA) was established to oversee and regulate the virtual assets sector in Dubai. It aims to provide a secure and progressive environment for virtual assets, recognising the need for a regulatory framework that evolves alongside the rapidly changing VA industry.

VARA has identified eight distinct VA activities within its regulatory perimeter. VASPs seeking to offer these activities must apply for and receive a licence from VARA before undertaking VA activities in Dubai:

• Advisory services.
• Lending and borrowing services.
• Broker-dealer services.
• Management and investment services.
• Custody services.
• Transfer and settlement services.
• Exchange services.
• Other specific activities like proprietary trading and VA issuance.

These VA activities are designed to be flexible and evolutionary as the sector grows and develops over time. The categories are intended to provide space for innovation while offering a solid foundation for industry standards.

It should be noted that a VASP can apply to be licensed for multiple activities and aggregate them under a single overarching licence. VASPs that are licensed to undertake multiple activities must meet the requirements for each activity in full and maintain compliance at all times.

An exception applies to VASPs undertaking Custody Services activities. Due to specific requirements to segregate activities and/or demonstrate independence of governance, VASPs undertaking Custody Services must be set up as a distinct legal entity with a standalone licence.

Licensed VASPs are prohibited from undertaking VA proprietary trading or trading their group’s portfolio of assets under the regulated activity(ies) licence. A separate company must be set up for proprietary trading, which will be required to obtain a No Objection Certificate (NoC) from VARA to confirm that the activity may be undertaken with regulatory oversight without a VA licence.

How to obtain a VASP licence

VASPs seeking a VARA Licence must complete a two-stage application process.

Stage 1: Initial Set-up

The first stage is to apply to set up the legal entity – through Dubai Economy & Tourism [DET] for mainland firms or any Free Zones in the Emirate of Dubai (excluding the DIFC). The application should broadly follow the procedure outlined in the ‘How to establish a company in DWTC’ section above.

The DWTC Authority – or other relevant registrar authority (RA)  – will issue an ‘Initial Approval’ that allows the applicant to establish the company’s legal structure and proceed with setting up operations, including renting office space and hiring staff. set up necessary infrastructures and systems.

Conducting VA activities at this stage is not permitted. VARA reserves the right not to issue an Initial Approval if the firm’s activities fall outside the regulatory perimeter or it does not meet regulatory standards.

Stage 2: Acquiring a VASP Licence

Following receipt of an Initial Approval, a firm can apply for a full VASP Licence as follows:

• Documentation Submission: Compile and submit the required documentation as advised by VARA, which may include detailed operational plans and compliance strategies.
• Feedback and Communication: VARA will review the submission and may request additional meetings, interviews or documentation.
• Final Fees: Applicants must pay the remaining licence application fee and the first year’s supervisory fee.
• Licence Issuance: Successful applicants will receive a VASP Licence, which may be subject to operational condition.

This structured approach ensures that only qualified entities can offer VA services in Dubai, maintaining the integrity and security of the market.

How can Sovereign assist?

Establishing a company within the DWTC with VARA approval can be a complex process. It requires a thorough understanding of Dubai’s regulatory environment, as well as the specific standards set by VARA for the VA sector.

Sovereign Corporate Services Dubai can assist by providing comprehensive support and direct access to government entities and regulatory bodies throughout the application process. We can guide you through the process of establishing your business within DWTC and then obtaining VARA approval by ensuring that your business meets all regulatory requirements.

The post How to set up a company in DWTC with VARA approval appeared first on The Sovereign Group.

The Monetary Authority of Singapore (MAS) launched a public consultation on 24 October on its proposal to streamline the regulatory framework for fund managers by ending the Registered Fund Management Companies (RFMC) regime.

Existing RFMCs would be required to re-register as Licensed Fund Management Companies (LFMCs), which serve only accredited or institutional investors (A/I LFMCs), to continue carrying out fund management activities in Singapore.

The RFMC regime was introduced in 2012, following the closure of an earlier regime for Exempt Fund Managers (EFMs) to enhance MAS’s regulatory oversight of fund management companies and raise the standard of conduct across the fund management industry. EFMs were exempt from licensing and business conduct requirements.

Existing EFMs at that time had the option to apply to become either an RFMC or a LFMC. RFMCs had similar admission criteria and business conduct requirements to LFMCs but were subject to lighter regulatory requirements because they were restricted to managing up to SGD250 million in assets and and up to 30 accredited or institutional investors.

MAS said the RFMC regime has served its purpose in effecting the transition from the EFM regime. Many RFMCs had upgraded to become A/I LFMCs, while most new entrants seeking to conduct fund management in Singapore tended to apply to be A/I LFMCs rather than RFMCs.

Under the proposals, RFMCs that wish to apply to become A/I LFMCs will need to submit a form during a prescribed application window, setting out their assets under management and confirming their ability to comply with the regulatory requirements for A/I LFMCs.

Existing RFMCs can continue operating as usual during the transition process and MAS will retain the SGD250 million limit on the managed assets for RFMC. RFMCs that successfully transit to the A/I LFMC regime will no longer be subject to any limits on the number of investors and can apply to MAS to uplift the limit on managed assets.

RFMCs that apply to become A/I LFMCs will not have to pay any application fees for transition to become A/I LFMCs. The deadline for consultation submissions is 31 December.

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The Dubai Chamber of Digital Economy formally launched on 2 October a new platform aimed at attracting and supporting digital-focused start-ups as the emirate progresses its plan to become a digital economy powerhouse.

The Business in Dubai programme, which was first announced in June, is being positioned as a one-stop shop that will bridge gaps faced by start-ups in terms of access to funding, workspaces and other opportunities for growth.

Seven new partners – the Dubai World Trade Centre, telecom operator du, Dubai Islamic Bank, Mashreq, Commercial Bank of Dubai, Tecom Group’s start-up incubator in5 and workspace platform Letswork – formalised their participation by signing a preliminary agreement.

They join telecoms operator e& – formerly known as Etisalat – Dubai CommerCity and digital payments platforms Telr and Safexpay, who had previously signed in June.

The Business in Dubai platform will offer a business-matching service to connect companies with partners, investors and customers, and a comprehensive range of institutional services delivered in co-operation with the Dubai Chamber’s partners. Partner banks, for example, will be setting up dedicated teams to assist start-ups.

The programme will also include incentives to attract more local and international digital start-ups to operate in the emirate. The new initiative is also a step towards Dubai’s target of attracting 300 digital start-ups to the emirate by 2024 and boosting its non-oil GDP. The Dubai Chamber of Digital Economy attracted 69 digital start-ups during the first quarter of 2023.

“Digital-focused start-ups are extremely important … so we try to provide what they require,” said Dubai Chamber of Digital Economy vice chairman Ahmad bin Byat. “It won’t be just cost effective – it’s also more efficient. Instead of these companies going to different places, they can access this platform and get the services, with our team also available to help.”

Last year the UAE government announced its Digital Economy Strategy with the goal of increasing the contribution of the sector to GDP by 20% over the next 10 years, up from 9.7% in 2022.

For further information on Dubai digital start-ups, please contact Martin Zubeldia below.

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Malta Enterprise announced the introduction of a new Environment, Social and Corporate Governance (ESG) Grant on 5 September to assist small and medium sized enterprises (SMEs) in reporting and assessing their ESG impact.

Eligible SMEs – from smaller enterprises that employ up to five full-time employees to medium-sized companies employing up to 250 full-time employees, or their equivalent – can receive up to €5,000 over three years to engage the services of an approved ESG advisor to help them in carrying out an assessment of their ESG performance.

Qualifying companies will be eligible for a cash grant of €3,000, capped at 75% of the costs associated with engaging an advisor to assist with ESG reporting. They will also have the option to receive an additional €1,000 cash grant in the subsequent two years.

Minister for the Environment, Energy and Enterprise Miriam Dalli said the new grant implemented a Budget 2023 measure and reaffirmed the government’s commitment to transition the economy towards climate neutrality by 2050.

“Through initiatives like these, every enterprise, regardless of its size, has access to the necessary resources needed to continue advancing toward a sustainable economy, attracting investments, and expanding its operations,” said Dalli.

“Within a short time, businesses that are already reporting their results through the ESG Portal registered an 8% decrease in their carbon dioxide emissions and generated 9% less waste. They also reported an increase of 7% of women in managerial roles, and 13% more independent directors on boards.”

Malta Enterprise seeks to integrate sustainable practices in its support and investment programmes. Malta Enterprise CEO Kurt Farrugia said: “This measure will instigate more environmental consciousness amongst our businesses while pushing for proper internal structures of management and more representative workplaces, where employees are valued for their contributions.”

Malta Enterprise will be accepting applications until 31 October 2023. All applications are to be submitted through the Corporations Client Portal. First time users will be required to create an account and register their business.

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