Global Possibilities: Harnessing ADGM’s Holding Entity Advantage

A holding entity is a company that is set up by the shareholders set up to hold assets such as shares of private companies, shares in publicly listed companies, real property, intellectual property rights (‘IP rights’), Land, Ship/vessel, Aircraft, Machinery, Art, Crypto Currency, other fixed assets, etc.
Holding entities can be used on a stand-alone basis or form complex structures whereby, for example, there exists a master holding entity and sub-holdings for specific geographies or sectors that specific assets fall under. Holding vehicles offers streamlined investment arrangements with a degree of flexibility.
If the legal framework in the specific jurisdiction permits, individuals have the option to utilize a holding entity based in the UAE for managing their assets in the UK. For instance, an ADGM LTD entity can be employed to oversee the intellectual property rights of well-known brands in diverse consumer markets. RAK ICC and DIFC are other options as well.
Investors looking to bring in their different projects and entities under one single umbrella prefer ADGM as the ideal jurisdiction considering the option of holding structures available.

There are two types of holding structures in ADGM: Operational Holding Companies and Special Purpose Vehicles.

Activities

Operational Holding Companies are those companies whose Principal activity is owning a group, and facilitating an umbrella environment, and can be combined with other operational activities while SPVs are passive holding companies. As the word passive indicates, they are merely set up for holding ownership of equity and non-equity assets, with a specific purpose like issuing investments or investing in real property, and cannot conduct operational activities.

Nexus

One another element is the Nexus Requirements: which means that to incorporate an SPV in ADGM, a connection to the UAE or GCC must be demonstrated, either by way of ownership or by way of facilitating transactions benefitting UAE. Whereas there is no such nexus requirement for Operational holding companies.

Employees and visa eligibility

While operational holding companies can hire employees and issue visas in proportionate to the office space they have taken, SPVs are not eligible for visas and cannot engage employees.

Office Space:

Operational Holding Companies must have a physical address in Al Maryah or Reem Island and this must be evidenced through a Lease Agreement, whereas SPVs, though they require an address, must use the registered address of their CSPs or their parent companies in ADGM.

Appointment of Corporate Service Provider:

As per the CSP framework in ADGM, it is Mandatory for non-exempt SPVs to appoint and maintain a registered Company Service Provider (CSP) throughout the life span of the company. However operational holding companies are not required to appoint a CSP.

ADGM Fees:

Set-up costs are another attractive feature of SPVs when compared to Operational Holding Companies as the incorporation fee for SPVs is USD 1900 while operational company set-up is USD 10,000.

Corporate Governance

ADGM corporate governance requirements like the appointment of shareholders, directors, authorized signatories, and other annual compliances almost remain the same for both companies.

Given the multiple options of establishing a holding entity and the flexibility this corporate provides, investors and businesses have been attracted to ADGM.

To know more about the Holding structures in ADGM and the compliance requirements, connect with MS!

Disclaimer

Registered in Abu Dhabi Global Market (Registered No. 000007218),
We are not an ADGM Registered Corporate Service Provider.