Author(s):Several

Company Formation in Abu Dhabi Global Market

The impact of globalization and elimination of trade barriers is considered to be an economic merit that consolidated the domestic markets of the world under one roof. However, there also exists an opposing view to this concept. Some financial pundits have argued that this global phenomenon may have paved the path for instability and competition hitches in domestic markets. Further, they also contend that the entry of international players into the domestic markets often leads to a misbalance in the local sectors and industries.

Nevertheless, minimal trade restrictions and government intervention have increasingly become synonymous with the success of an entity. This requirement equally applies to modern financial centres. The Abu Dhabi Global Market (the ADGM) is currently the most prominent and subsisting example in this regard. The financial free zone became predominant in the region due to scarce trade barriers and absence of restrictions imposed on mainland companies in the United Arab Emirates. Further, the adaptation of international corporate governance techniques along with global financial norms and standards have only acted as a catalyst to this process.

Setting up a Legal Entity in ADGM

The ADGM offers investors with superior location and a dynamic business environment to attract investors from the global financial community. Multinational corporations approach the financial free zone with the intention of establishing themselves in the region; whereas, new investors view this as an opportunity to establish themselves at par with the former. Further, the common-law legislations and legal structure of the free zone acted a magnet to the investors who were looking to either, expand or establish their business in the region. The ADGM also covers in-house courts and dispute resolution bodies to avoid the implication of Shariah Law onto civil and commercial disputes that arise within the free zone. The free zone also offers a variety of real estate solutions to meet the high-end and dynamic needs of different types of entities established in the free zone. Customizable office spaces and retail outlets are only a new start to a long list of attractions in the ADGM.

The robust and extensive set of ADGM company laws that largely mirror the UK Companies Act of 2006 but carefully cover requirements of the region and local regulations. The interesting feature of 'restricted scope entity' providing for minimal disclosure requirements will open doors to holding company structures where investors prefer safeguarding sensitive information and trade secrets and same time prefer a regional holding company.

ADGM has made substantial development in collaborating with the bigwigs both - domestically as well as overseas. Collaboration with prominent authorities including the Economic Department in Abu Dhabi, the UAE's Central Bank, Insurance Authority, the Securities and Commodities Authority, Abu Dhabi Municipality, the Financial Services Commission in Jersey has set a benchmark.

ADGM has evolved to be the pivotal point for investors who are looking to undertake financial activities in Abu Dhabi. The dedicated Financial Services Regulatory Authority (the FSRA) regulates and overlooks the licensing of all the entities that are engaged in the financial sector and are looking to establishing their presence in the free zone. The FSRA has endeavored to provide the investors with an ineffable experience by adopting international standards employed in global financial centers in Hong Kong, London, and Singapore. Ergo, the risk-based financial sector would be governed by the FSRA while conducting various activities such as banking, hedge funds, wealth and asset management and other financial services.

Further, investors in ADGM have the option of setting up one of the following types of companies to conduct their activities in the free zone:

Type of Entity Remarks Limited by Shares § At least two directors (minimum one should be a natural person); § At least one secretary. Limited by Shares (Limited by Guarantee, Unlimited with Shares, Unlimited without Shares, Restricted Scope, Protected Cell Company & Incorporated Cell Company) § At least two directors; § Secretary is not mandatory. Branch of (non-ADGM Company) Suitable for establishing presence or representative office. Partnerships (General Partnerships, Limited Partnerships & Limited Liability Partnerships) *depends on the type of partnership Branch of (a non-ADGM General Partnership, a non-ADGM Limited Partnership & Limited Liability Partnership) *depends on the partnership model

Applicants looking forward to setting up a company in the ADGM must submit an application form (online) along with the following documents to expedite the application process:

copy of passport, visa page or immigration entry stamp and Emirates ID of director(s), authorized signatory, secretary and shareholder(s);

application form for reservation of proposed name of the company;

the business plan of the proposed company;

statement of capital and initial shareholding (for companies limited by share capital);

statement of guarantee (for companies limited by guarantee);

statement of proposed officers of the entity;

tradename reservation document;

a statement with the intended address of the proposed company;

a copy of proposed articles of association;

a copy of the resolution of Board of Directors;

a copy of lease agreement for office space;

confirmation of restricted scope of the company;

duly filled and signed data protection form (DP-01)

duly filled and signed beneficial or ultimate owner form (BO-01); and

any other document(s) that may be required by the authorities based on the scope of activities that the company proposes to undertake.

However, companies looking to conduct financial activities in the free zone may have to undergo a strict company formation process since the FSRA would review their application. Further, the relevant authority (FSRA for financial services and ADGM Registration Authority for non-financial and retail services) would issue a license once the application form has been submitted and reviewed by them. Subsequently, the applicant would have to apply for the FAWRI account (e-visa online application system) and an establishment card to apply for the visas of the investors and officers who would be working in the proposed company.

Company formation in ADGM could be an elaborate process (especially for entities undertaking financial activities) with extensive documentation and compliance procedures. Ergo, investors are advised to take assistance from a law firm that provides bespoke legal advice while setting up a company in the ADGM due to the lengthy regulatory procedures and documentary compliances that have been established by the free zone to conform to international corporate norms.