Introduction
Abu Dhabi Global Market (“ADGM”) stands as a prominent international financial centre established in accordance with Abu Dhabi Law No. 4 of 2013.
Within ADGM, The Registration Authority (RA) plays a crucial role in overseeing the licensing, registration, and incorporation processes for entities seeking to establish a presence in ADGM.
Roles of ADGM’s Company Service Providers (CSPs)
ADGM introduced the Company Service Provider framework (CSP), on April 12, 2021, with the aim of establishing a strong regulatory environment for company services, it is designed to support the growth of Special Purpose Vehicles (SPVs) and Foundations structures, two highly popular entities in ADGM.
Crucially, the new framework mandates that all new SPVs and Foundations established in ADGM on or after July 12, 2021, must appoint a licensed CSP. This mandatory appointment ensures a level of expertise and oversight in the formation and ongoing management of these entities, which aligns with ADGM’s commitment to high regulatory standards.
CSPs play key roles in facilitating the setup of companies, ensuring regulatory compliance, and managing ongoing communication with the Registrar.
Exemptions from the mandatory appointment of a company service provider
As an exception to the mandatory appointment of a Corporate Service Provider (CSP) mentioned above, several exemptions are available, allowing certain entities to self-manage their regulatory and compliance obligations. These exemptions enable companies to independently handle their incorporation and compliance responsibilities, ensuring flexibility and efficiency in their operations without the mandatory involvement of a CSP.
- Exemptions under the Companies Regulations (Amendment No. 1) 2023 for SPV
Pursuant to subsection 296 A (3) of the Companies Regulations, (Amendment No. 1) 2023, certain corporate entities are exempt from appointing a Company Service Provider If they fall under the following categories:
- Individuals exempted under the Commercial Licensing Regulations 2015 (Exemptions) Order 2020;
The following entities fall under this category:
- A corporate entity established in accordance with any law or decree issued by His Highness the Ruler of the Emirate of Abu Dhabi. This encompasses laws such as the ADGM Founding Law.
- A corporate entity established under any Federal Law, excluding Federal Law No. 8 of 1984 concerning Commercial Companies (subject to amendments or re-enactments).
- A corporate entity that is a subsidiary undertaking of a body corporate falling within the aforementioned criteria.
- The International Bank for Reconstruction and Development and the International Development Association, collectively referred to as the “World Bank.”
(b) An authorized person, as defined in the Financial Services and Markets Regulations 2015;
This category includes any legal entity currently registered in ADGM and holding current Financial Services Permit issued by ADGM Financial Services Regulatory Authority
(c) Individuals licensed or regulated by the Central Bank of the United Arab Emirates;
This category comprises legal entities that:
- Hold a currently valid license or authorization issued by the Central Bank of the United Arab Emirates (UAE).
- Adhere to the regulatory requirements stipulated by the Central Bank of the UAE.
(d) A company whose shares are listed for trading on a regulated market in the United Arab Emirates, including the Abu Dhabi Global Market;
(e) A company that has satisfactorily demonstrated to the Registrar its substantial presence in the United Arab Emirates.
This exemption is available for companies that, to the satisfaction of the Registrar, can showcase a satisfactory presence in the United Arab Emirates.
This involves considering factors such as:
- The company’s assets, turnover, and workforce within the United Arab Emirates.
- The company’s governance, policies, and procedures.
- Adherence to any rules established by the Board or guidance issued by the Registrar in this context.
2. Exemptions under the Foundations Regulations (Amendment No. 1) 2023
Subsection 18(2) of the Foundations Regulations grants exemptions for Foundations from appointing a CSP if they demonstrate substantial resources, experience, and personnel presence in the UAE, along with the implementation of appropriate governance policies and procedures specified by the Board or Registrar’s guidance.
Conclusion:
The exemptions detailed in the Companies Regulations (Amendment No. 1) 2023 and Foundations Regulations (Amendment No. 1) 2023 provide flexibility for certain entities in ADGM. This framework aims to balance regulatory compliance with the specific needs of well-established and reputable entities, fostering a conducive environment for their continued growth and operation within the ADGM.
Yasmina Al Amm
CSP Associate
04/1/2024
For personalized guidance regarding Exemption from the mandatory appointment of CSP in ADGM, please do not hesitate to contact our team by sending an email to: assiss@assiss.com.
DISCLAIMER: This blog post does not constitute professional advice. Additional facts or future developments may affect the content of this blog post. Before acting or relying upon any information within this document, please seek the advice of a member of our team.