Tag: ADGM

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HoldCos within Family Foundations: How the MoF Update on Family Foundations Enhances Tax Relief and Simplified Compliance for HoldCos? 

HoldCos within Family Foundations 

In recent years, the UAE has continuously refined its corporate tax regime to enhance its appeal as a global business hub and a destination for wealth management. Among the latest developments is the introduction of a new tax framework under Ministerial Decision No. 261 of 2024, which takes effect retroactively from June 1, 2023, aimed at making holding companies within Family Foundations even more attractive for asset management and succession planning. 

This move significantly impacts how Holdcos within family foundations are taxed and managed, simplifying compliance while ensuring that UAE remains a leading jurisdiction for family wealth structures. 

The New Tax Transparency Framework for UAE HoldCos within Family Foundations 

Under the new regime, holding companies that are part of UAE Family Foundations can opt to be treated as an Unincorporated Partnership for the purposes of UAE corporate tax (CT). This is a significant shift, as it enables holding companies with assets such as bank accounts, real estate, and portfolios to avoid corporate tax, without having to meet the 12-month holding period requirement that traditionally applied for tax relief. 

Key Benefits:  

  • Exemption from Corporate Income Tax: Holding companies will not be subject to UAE CT, provided they are structured as part of the Family Foundation. This is a notable advantage compared to other types of corporate structures. 
  • Simplicity in Asset Management: This move simplifies the management of family wealth, particularly in private wealth structures that involve holding assets like real estate or financial portfolios. 
  • Flexibility: Families and individuals can better structure their assets, without the complexities of traditional tax relief requirements or corporate tax obligations. 

Simplified Accounting and Audit Compliance for HoldCos within Family Foundations 

The recent changes to UAE tax regulations bring significant ease to the accounting and audit requirements for holdcos within Family Foundations. Previously, businesses in the UAE were required to undergo an annual financial audit and comply with International Financial Reporting Standards (IFRS). However, under the new framework, holdcos within family foundations are no longer subject to these stringent audit requirements. This means that they are not required to conduct an annual audit, which saves valuable time and reduces operational costs. Additionally, holding companies can now adhere to basic accounting standards similar to those used by the family foundation itself, streamlining operations and further reducing the burden of compliance. The removal of the mandatory audit and simplified accounting standards translates into substantial cost savings, allowing families to manage their wealth structures more efficiently. 

DIFC: A Strategic Hub for Family Wealth Management

The Dubai International Financial Centre (DIFC) remains a top choice for families seeking efficient wealth management and succession planning. With its strong global reputation, DIFC provides a secure and compliant environment for structuring family wealth through holdcos within family foundations. The recent regulatory updates simplify succession planning, offering straightforward tools for wealth transfer, while streamlined governance and reduced compliance burdens enhance operational efficiency. These changes make DIFC an even more attractive and flexible solution for families aiming to protect and grow their wealth across generations. 

Building a Lasting Legacy: Tailored Support for Family Foundations by MS 

At MS, we are dedicated to supporting family offices and foundations through this pivotal transition, providing customized strategies that align with your vision for the future. With our expertise, you can confidently take full advantage of the new Ministry of Finance update on Family Foundations, unlocking valuable opportunities even by setting up holdcos within family foundations while protecting your family’s legacy. Let us work with you to establish a resilient and efficient foundation structure that ensures your wealth and values are preserved for generations ahead. 

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Updated ADGM Employment Regulations! Remote work, part-time definitions and visa guidelines to be effective from April 1, 2025 

Updated ADGM Employment Regulations

The Abu Dhabi Global Market (ADGM) has updated ADGM Employment Regulations 2024 (the “New Employment Regulations”), which bring forward significant improvements that align with global best practices, offering benefits to both employers and employees. With a focus on clarity, flexibility, and fairness, these regulations create a more balanced and progressive work environment. For businesses, the changes offer the opportunity to refine employment policies, enhance employee relations, and ensure compliance with modern workplace standards. As the regulations come into effect on 1st April 2025, employers have a valuable window of time to implement the necessary adjustments, positioning themselves for a smoother, more compliant future while fostering a supportive workplace culture. 

Let’s dive into the key insights of updated ADGM Employment Regulations that will shape the future of employment in ADGM. 

1. Introduction of Flexible Employment Models 

One of the significant updates in the ADGM employment regulations is the introduction of more flexible working arrangements. Employers will now be able to hire remote employees, and the definition of an “employee” has been expanded to accommodate this shift. This change provides more room for businesses to operate in a global landscape, allowing them to hire talent from outside the UAE without needing a local residence visa or work permit, as long as the employee doesn’t reside in the UAE. 

2. Enhanced Employee Rights and Clarifications 

The updated ADGM employment regulations provide greater clarity on employee entitlements, particularly for part-time employees. These changes aim to ensure that part-time workers are given their fair share of benefits, including leave entitlements. Employers will need to adjust their records and contracts to account for these nuances, ensuring that all employees, regardless of hours worked, are treated fairly and consistently. 

3. Probationary Period Updates 

The probationary period remains capped at six months, but the regulations now specify that employees during this period are entitled to sick leave, though not sick pay. During probation, certain provisions of the regulations do not apply, and the employee must have written approval from the employer to take annual leave. These updates provide greater transparency for both employers and employees regarding their rights during this trial period. 

4. Parental Leave and Family Rights 

The regulations extend important parental rights, including maternity leave of 65 working days, and now include provisions for employees who adopt children under the age of five. Maternity leave also extends to cases where a stillbirth or miscarriage occurs after the 24th week of pregnancy. Paternity leave remains at five working days. These updates ensure that employees receive the necessary support during significant life events. 

5. Anti-Discrimination and Anti-Victimisation Provisions 

The updated ADGM employment regulations place a greater emphasis on protecting employees from discrimination and victimisation in the workplace. Victimisation, as defined in the regulations, includes actions like dismissal or other detrimental treatment following an employee’s participation in protected acts, such as whistleblowing or filing a complaint regarding discrimination or harassment. Employers must take proactive steps to prevent such behaviour and must provide employees with a safe space to report wrongdoing. 

6. Whistleblower Protection 

The new regulations strengthen whistleblower protections by ensuring that employees who make protected disclosures are not subject to retaliation. Employers are prohibited from retaliating against employees who report violations of law, including harassment, discrimination, or health and safety concerns. If retaliation occurs, the employee can seek compensation and a court remedy. 

7. Working Hours and Overtime 

The maximum weekly working hours remain set at 48, but employees must provide written consent to work overtime. The law also stipulates a 25% reduction in working hours during Ramadan for Muslim employees, with no reduction in pay. While there are currently no specific provisions for overtime pay, the ADGM may issue further guidelines in the future. 

8. Termination and End of Service Gratuity 

The updated ADGM Employment Regulations introduce detailed provisions around the termination of employment. Employers will need to provide employees with written reasons for termination, and the notice period remains the same as under the old law. Notably, end-of-service gratuity is now payable in all cases where the employee has more than one year of service, even if the termination is for cause. Employers will also need to offer repatriation flights to eligible employees who are terminated, unless the employee is dismissed for cause. 

9. Settlement Agreements 

Settlement agreements, which are used when terminating an employment relationship, continue to be recognized under the new regulations. However, for a settlement agreement to be valid, it must include a clause that the employee has had the opportunity to receive independent legal advice. Additionally, the employer cannot make the cancellation of the employee’s visa conditional on waiving any rights according to the updated ADGM Employment Regulations. 

10. Vicarious Liability for Employers 

Employers will be held vicariously liable for the actions of their employees if these actions breach the new employment regulations, provided the act occurred during the course of employment. This means employers must be diligent in creating clear policies and training programs that prevent misconduct, including discrimination, harassment, and victimisation, to mitigate the risk of legal liabilities. 

11. Remote and Part-Time Employees 

The concept of “remote employees” and “part-time employees” is now formalized in the updated ADGM Employment Regulations. Remote employees, who work outside the UAE, will be subject to different rights and obligations, and their work arrangements will not require a UAE residence visa or ADGM work permit. Meanwhile, part-time employees will benefit from clearer guidelines around leave entitlements and other employment benefits, making it easier for employers to manage such employees. 

Updated ADGM Employment Regulations 2024: A New Era of Workplace Flexibility and Fairness 

The updated ADGM Employment Regulations 2024 usher in a new era of workplace fairness, flexibility, and compliance that benefit both employers and employees. Employers have the opportunity to refine their policies, adapt to modern workplace trends, and ensure they meet legal requirements before the regulations take effect in April 2025. These changes not only enhance employee satisfaction and support but also offer businesses a chance to stay ahead of the curve in a competitive and evolving market. It’s an exciting time for companies in ADGM to prepare for a future where fairness and flexibility are at the forefront of work experience. 

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ADGM Annual Accounts Compliance Requirements You Should Know

ADGM Annual Accounts Compliance requirement image.

As a world-class international financial centre, Abu Dhabi Global Market (ADGM) has set a high bar for corporate governance, transparency, and financial reporting. Companies operating within ADGM are required to meet stringent standards to maintain their good standing and ensure that their financial statements reflect accuracy, accountability, and integrity.

When it comes to preparing your company’s annual accounts, getting the numbers right is just the beginning. From currency denomination standards to ensuring the right signatures are in place, each compliance detail plays a crucial role in shaping the accuracy, credibility, and reliability of your financial reporting. Whether you’re a startup or an established enterprise, meeting these key requirements isn’t just compliance —it’s about building trust with investors, aligning with international standards, and setting the stage for future growth.

Explore the key aspects of ADGM annual account compliance requirements.

1. Currency Denomination: Accounts Must Be in USD

One of the fundamental requirements for preparing annual accounts is that all financial statements must be denominated in U.S. Dollars (USD). This standardization ensures consistency and comparability, particularly for companies that operate across borders or engage with international stakeholders. Presenting accounts in USD helps to avoid currency translation issues and provides a clearer picture of financial performance on a globally recognized scale.

Key Points to Consider:

  • Consistency: All transactions, assets, liabilities, income, and expenses should be recorded in USD.
  • Conversion Rates: For companies dealing in multiple currencies, it’s essential to use consistent exchange rates and disclose the rates used in the notes to the accounts.
  • Regulatory Compliance: Adhering to USD denomination aligns with international accounting standards, particularly for companies registered in jurisdictions that mandate USD for financial reporting.

2. Balance Sheet Signatures: Director’s Responsibility

The balance sheet is one of the most critical components of the annual accounts, providing a snapshot of the company’s financial position at a specific point in time. To ensure accountability and authenticity, the balance sheet must be signed by a director of the company, with the director’s name clearly stated. This requirement highlights the director’s role in overseeing financial accuracy and attests to the reliability of the information presented.

Key Points to Consider:

  • Legal Accountability: The director’s signature on the balance sheet signifies that the accounts have been reviewed and approved by the company’s management.
  • Transparency: Including the name of the signing director fosters transparency and reinforces stakeholder confidence in the company’s financial disclosures.
  • Documentation: The signed balance sheet should be properly archived as part of the company’s official records.

3. Audited Accounts: Director’s Report Signature

For audited accounts, the Director’s Report is a critical narrative that accompanies the financial statements, providing insights into the company’s performance, strategy, and outlook. This report must be signed by a director or the company secretary, with the name of the individual clearly stated. This requirement ensures that senior management takes ownership of the content, emphasizing the importance of the report in providing context to the figures presented.

Key Points to Consider:

  • Clarity and Accountability: The Director’s Report outlines the key activities, risks, and governance matters of the company, and its authenticity is validated through the signature.
  • Insightful Information: It provides shareholders and other stakeholders with a comprehensive view of the company’s operations beyond the numbers.
  • Compliance: The signature requirement ensures that the report complies with relevant corporate governance standards.

4. Auditor’s Report: Naming the Audit Firm and Senior Auditor

The Auditor’s Report is a crucial element of the annual accounts, offering an independent evaluation of the company’s financial statements. This report must include the name of the audit firm and the senior auditor responsible for the audit. Naming the audit firm and the senior auditor adds credibility to the financial statements and assures stakeholders of the rigor of the audit process.

Key Points to Consider:

  • Independence and Assurance: An external audit provides independent verification of the company’s financial statements, enhancing their credibility.
  • Transparency: Naming the audit firm and the senior auditor offers transparency and accountability, especially in case of any discrepancies or audit qualifications.
  • Professional Standards: The inclusion of the audit firm and auditor’s names aligns with international auditing standards and fosters trust among investors and regulators.

Ensuring ADGM Annual Accounts Compliance with Expert Guidance from MS

Understanding the complexities of ADGM annual accounts compliance requirements can be daunting, but MS is equipped to make the process seamless and stress-free. At MS, we offer specialized support to help your company meet all ADGM compliance standards for annual accounts preparation. With our comprehensive approach, you can avoid compliance pitfalls, streamline your annual reporting, and strengthen the credibility of your financial statements. Trust us to be your partner in compliance, ensuring that your ADGM annual accounts are prepared with precision and in full alignment with regulatory expectations.

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What Should Companies Focus on for a Successful ADGM Annual Audit?

ADGM Annual accounts
ADGM Annual accounts

Today, compliance is far more than a box to tick. Companies that master the art of regulatory adherence don’t just avoid penalties; they thrive, gaining the trust of stakeholders and reinforcing their reputation in a competitive landscape. Compliance, especially in financial reporting, demands a sharp eye for detail and a forward-thinking strategy, turning what may seem like an obligation into a powerful tool for growth.

At the forefront of regulatory adherence is the Abu Dhabi Global Market (ADGM), a visionary force in the UAE known for its rigorous standards and commitment to transparency. For companies and LLPs registered under ADGM, the preparation of annual accounts is not just a routine task. These financial statements, thoroughly prepared in line with International Accounting Standards (IAS), provide a clear lens into a company’s fiscal health, offering critical insights for both internal decision-makers and external stakeholders.

With the September 30th deadline for submitting these accounts fast approaching, businesses must understand the audit process with care and precision, ensuring that their financial records not only meet ADGM’s regulatory requirements but also stand as a testament to their financial integrity.

In light of the RA’s 2023 assessments, it is crucial for company directors, especially those serving on audit and risk committees, along with audit partners, to carefully scrutinize and approve the ongoing audit work on company accounts.

Accurate, timely, and insightful corporate reporting is fundamental to the proper functioning of capital markets, investor confidence, and the protection of public interests. The RA places a strong emphasis on high audit quality as a regulatory priority and may hold audit firms, audit principals, and company directors responsible for any deficiencies in the preparation or auditing of financial statements.

Key Findings by ADGM Annual Audit 2023 on How Audits Can Go Wrong

ADGM’s commitment to maintaining a strong regulatory environment extends to its audit requirements. Companies must align their audit practices with ADGM’s stringent standards, which prioritize several key areas:

  1. Tailored Audit Approaches: One of the most critical aspects of an ADGM audit is the use of methodologies tailored to incorporate ADGM’s specific requirements. Limited or improper application of these methodologies can lead to significant gaps in the audit process, particularly concerning financial statement disclosures. Utilizing a financial statement disclosure checklist that factors in ADGM requirements is essential for ensuring accuracy and completeness.
  2. Strategic Audit Planning: A well-structured audit begins with strategic planning. However, common issues such as inadequate understanding of the entity, its environment, and risk factors can hinder the audit process. Effective planning procedures, including a comprehensive risk assessment, are crucial for identifying potential challenges early in the audit process and ensuring all relevant areas are covered.
  3. Revenue Verification: Revenue is often a focal point in financial audits, and ADGM audits are no exception. Insufficient audit evidence on key audit assertions can arise from weak audit tests and inadequate planning. Ensuring robust audit tests and well-documented procedures can mitigate these risks, providing a clearer and more accurate representation of the company’s financial performance.
  4. Comprehensive Group Audits: For companies operating as part of a group, group audits present additional complexities. Common challenges include inadequate work by the group auditor, especially in areas such as scoping, materiality, and communication with component auditors. To address these issues, group auditors must establish clear communication channels and ensure a thorough understanding of the component auditors’ work.
  5. Thorough Journals Testing: Journals testing is a critical component of any audit, particularly when there is a significant risk of management override of controls. However, some audit teams fail to conduct adequate work in this area, leading to potential oversight of key risks. Implementing rigorous journals testing procedures can help auditors detect and address these risks effectively.
  6. Assessing Going Concern and Subsequent Events: Auditors must also evaluate the entity’s ability to continue as a going concern and identify any post-period events that require disclosure or adjustment in the financial statements. Inadequate work in this area can lead to significant misstatements. Auditors should conduct thorough reviews and analyses to support the going concern assumption and ensure all relevant events are accounted for.
  7. Ensuring Quality Control: Lastly, maintaining high standards of quality control throughout the audit process is paramount. This includes the active involvement of the ADGM Registered Audit Principal from the planning stage through to completion. Additionally, the engagement partner responsible for issuing and signing the audit report should be consistently involved to ensure continuity and oversight.

Preparing for Your 2024 ADGM Annual Accounts

As the September 30th deadline approaches, it’s vital for companies in ADGM to review their accounting and audit processes and ensure they meet all regulatory requirements. By focusing on the key areas highlighted above, companies can not only comply with ADGM standards but also enhance the accuracy and reliability of their financial statements.

Streamline Your ADGM Annual Accounts Filing with Expert Support from MS

At MS, we specialize in ensuring seamless compliance with the annual filing requirements of the ADGM. Our team of experts guides you through every step of preparing and submitting your annual accounts, aligning with ADGM’s stringent regulatory standards. From accurate financial reporting to timely submissions, we handle the entire process, reducing your administrative burden and ensuring that your business remains in good standing with the regulatory authorities. With our tailored approach, we make sure your financial statements are precise, compliant, and reflective of your company’s financial health.

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What’s New: Proposed Amendments to ADGM Employment Regulations Explained

What’s New: Proposed Amendments to ADGM Employment Regulations Explained

The Abu Dhabi Global Market (ADGM) is poised to update its Employment Regulations, initially enacted in 2019. These regulations were designed to set minimum employment standards, ensure a fair balance between employee and employer rights, and foster effective employment practices within ADGM. Since their inception, the Regulatory Authority (RA) has recognized the need for adjustments to better reflect evolving global work practices and to provide clearer guidance on rights and obligations for both employees and employers.

The RA has recently issued a Consultation Paper inviting public feedback on these amendments to ADGM Employment Regulations. This consultation is crucial for all ADGM-licensed employers, their employees, and prospective employees, as well as their legal advisors.

Here’s a breakdown of the key changes being proposed:

Proposed Amendments to ADGM Employment Regulations

1. Employee Entitlements and Definitions

  • Probationary Period Entitlements: Clarification on employee entitlements during probation.
  • Broadening the Definition of ‘Employee’: Updated to include full-time remote workers and flexible arrangements.
  • Part-Time Employee Definition: Introduction of a new definition and method for calculating entitlements.

2. Working Arrangements

  • Remote and Hybrid Working: Explicit permission for remote and hybrid working arrangements.
  • Simplified Overtime Calculation: Removal of complex overtime calculation methods.

3. Leave Entitlements

  • Enhanced Parental Leave: Additional entitlements for adopting parents and paid paternity leave for adopting fathers.
  • Nursing Breaks for Female Employees: Entitlement to nursing breaks.
  • Bereavement Leave: Leave entitlement for the death of close family members.

4. Employment Duties and Termination

  • Expanded Employee Duties: Broadening the list of employee duties.
  • Termination Due to Unauthorized Absence: Employers’ right to terminate employment for unauthorized absences.
  • Certificate of Experience: Eligibility for a certificate of experience upon employment termination.
  • End of Service Gratuity: Clarity on gratuity payments regardless of the reason for termination.

5. Discrimination and Compensation

  • Discrimination and Victimization: New provisions addressing these issues and vicarious liability.
  • Integration of Compensation Awards Rules: Integration of compensation awards rules into the main regulations.

6. Work Permit and Identity Card Requirements

  • Work Permit and Identity Card: Requirements for obtaining and canceling work permits and identity cards in ADGM.

Next Moves for Proposed Changes to ADGM Employment Regulations

The RA is seeking comments on these proposals by 26 August 2024. Following this, the RA and the ADGM Board of Directors will review the feedback and make any necessary adjustments before finalizing and enacting the updated regulations. These changes are set to enhance employment practices within ADGM, providing clearer guidelines and more equitable entitlements.

Stay tuned for further updates on the proposed changes to ADGM Employment Regulations and if you want to know more about the existing key requirements and best practices ADGM Employment Regulations, dive into our article.

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ADGM announces fee revision for non-financial and retail licenses effective from 2025

non-financial and retail license fees
non-financial and retail license fees

The Abu Dhabi Global Market (ADGM) has announced a significant reduction in its existing commercial license fees as part of its ongoing support for businesses transitioning to Al Reem Island. The new fee structure will take effect from 1st January 2025, featuring substantial reductions of 50% or more for obtaining non-financial and retail licenses within its jurisdiction.

Revised non-financial and retail license fees – key updates

The initiative’s intention is to enhance ADGM’s business ecosystem making it accessible and attractive for various businesses. Under the revised schedule:

  1. Registration fees for new businesses in the non-financial category will be reduced from $10,000 to $5,000.
  2. The annual license renewal fees for the same category will be lowered from USD 8,000 to USD 5,000.
  3. Registration fees for the retail category have been slashed from USD 6,000 to USD 2,000.
  4. License renewals for the retail category will also see a 50% reduction, lowering annual fees to USD 2,000.

The revised licensing fees will take effect on 1st January 2025, aligning with the conclusion of the current transition period on 31st December 2024. This new fee structure will apply throughout ADGM’s jurisdiction, covering both Al Maryah and Al Reem Island.

Hamad Sayah Al Mazrouei, the CEO of ADGM RA said “To facilitate a seamless transition, ADGM and its Registration Authority have proactively introduced various initiatives, prioritising our business community at the core of every decision. We assessed the financial impact on different business categories and previously implemented a fee waiver for qualifying non-financial and retail businesses on Al Reem Island. Building on these efforts, we have now revised our fee structure to include significant reductions for the same categories starting next year. Our aim is to minimise potential disruptions for businesses transitioning to an ADGM licence, enabling them to operate efficiently within our jurisdiction.”

Changes across categories

The fee exemption for qualifying non-financial and retail businesses on Al Reem Island ends on October 31, 2024. In other categories, ADGM’s financial registration fees will rise to USD 20,000 with renewals at USD 15,000 annually. Tech and fintech startups will experience minor adjustments in fees, with both new registrations and renewals set at USD 1,500. Fees for Special Purpose Vehicles (SPVs) remain steady at USD 1,900. A detailed fee schedule applicable from January 1, 2025, will be published in December.

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ADGM Strengthens Market Trust with New Whistleblower Framework

ADGM Strengthens Market Trust with New Whistleblower Framework
ADGM Strengthens Market Trust with New Whistleblower Framework

Abu Dhabi Global Market (ADGM), a key financial hub in the UAE, has introduced a new whistleblowing framework to strengthen the market integrity. This initiative aims to promote transparency and accountability across ADGM entities and is a combined initiative of the ADGM authorities. The framework outlines a comprehensive system for reporting suspected breaches of ADGM laws or financial crimes while ensuring protection for whistleblowers who come forward with information about misconduct.

Key Features of the ADGM Framework

Clear Regulations: ADGM has established specific rules to protect and encourage the reporting of ‘protected disclosures’ made in good faith.

Reporting Channels: Both internal and external reporting channels are available for reporting suspected breaches of ADGM laws or financial crimes.

Anonymous Reporting: Protection is ensured for those who report misconduct anonymously and in good faith.

Non-Retaliation: Stricter employment regulations safeguard employees across all ADGM entities from retaliation for whistleblowing.

Governance Standards: All ADGM entities must adhere to good governance requirements that support effective whistleblowing practices.

Written policies and procedures: Required for firms licensed by the Financial Services Regulatory Authority, designated non-financial businesses or professions, and large entities within the financial centre.

Requirements for ADGM Entities

  • By May 31, 2025, all entities within ADGM must establish proportionate systems to facilitate whistleblowing.
  • These systems must be documented, particularly for larger entities and those with higher financial crime risks.

This framework underscores ADGM’s commitment to uphold global business standards and continuously improve its regulatory environment. It provides a solid foundation for maintaining trust and integrity in the financial markets.

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ADGM Annual Accounts: Deadlines, Extensions, and Penalties

ADGM Annual Accounts: Deadlines, Extensions, and Penalties
ADGM Annual Accounts: Deadlines, Extensions, and Penalties

Operating within the Abu Dhabi Global Market (ADGM) offers a dynamic and internationally recognized platform for businesses. As a premiere international financial centre, companies and Limited Liability Partnerships (LLPs) are required to file annual accounts in the ADGM. These accounts serve a critical purpose: fostering transparency and ensuring compliance with financial regulations.

Let’s explore more about the ADGM Annual Accounts.

What is ADGM Annual Accounts?

ADGM annual accounts are comprehensive financial statements prepared by companies and Limited Liability Partnerships (LLPs) registered under the Abu Dhabi Global Market (ADGM) framework. These accounts adhere to International Accounting Standards (IAS) and provide a detailed picture of the entity’s financial performance and position for the preceding financial year.

Types of Accounts to File

The nature of the accounts you need to submit depends largely on the size and type of your business. Generally, ADGM requires the submission of audited annual accounts, which include:

  • An Auditor’s Report
  • A Director’s Report
  • A Board resolution approving the accounts

Small businesses that qualify under the small company’s regime can file a simplified version of their accounts, including an unaudited balance sheet. To qualify as a small company or LLP, your business must have:

  • A turnover not exceeding USD 13.5 million
  • No more than 35 employees

Public interest entities and financial service providers are excluded from this regime. The unaudited balance sheet must include a statement indicating it has been prepared according to the provisions applicable to small companies.

Filing Deadlines

Every ADGM business has an Accounting Reference Date (ARD) which sets the deadlines for filing. New companies must file their first annual accounts within nine months of their ARD, while existing businesses must adhere to a nine-month filing deadline following their ARD.

Also, the deadlines for filing annual accounts vary depending on the type of company:

  • First Annual Accounts: New companies must file within nine months of their ARD if the financial year is 12 months or less. If the financial year exceeds 12 months, accounts must be filed within nine months of the first anniversary of incorporation.
  • Subsequent Annual Accounts: Existing companies must file within nine months of their ARD for each subsequent year.

For instance, a company incorporated on 11 November 2022 with an ARD of 31 December 2023 must file by 11 August 2024 for its first financial year. For the following year, the deadline would be 30 September 2025. For public companies, the filing period is six months instead of nine.

Filing Procedure

All accounts must be submitted via the ADGM online registry solution. Log into your firm’s account, select “Maintain Company,” and then choose “Lodge Annual Accounts.” Follow the instructions to upload your accounts and any supporting documents. You will receive an automatic acknowledgment upon submission. The Registration Authority may review your accounts before accepting them.

Changing an ARD

Companies can request a change to their ARD, provided they meet the eligibility requirements. This change must be supported by a resolution from the directors and submitted to the Registration Authority. Businesses can change their ARD by notifying the Registration Authority and submitting a supporting directors’ resolution.

Extensions and Penalties for Filing Accounts

In exceptional circumstances, businesses can apply for an extension to the filing deadline, but these applications must be submitted before the original deadline and are evaluated on a case-by-case basis. If annual accounts are not submitted on time, businesses can face penalties of up to USD 15,000.

Detailed Requirements for Annual Accounts

When preparing annual accounts, the following requirements must be met:

  • All accounts must be denominated in USD
  • Balance sheets must be signed by a director, with the director’s name stated
  • For audited accounts, the director’s report must be signed by a director or company secretary, with the name of the signer stated
  • The auditor’s report must include the audit firm’s name and the senior auditor’s name

Filing ADGM annual accounts is not just a regulatory obligation, but a valuable tool for businesses. Timely and accurate accounts increase your credibility with stakeholders, provide insights to guide strategic decisions, and potentially ease access to funding. Moreover, staying compliant with filing deadlines reduces the risk of sanctions and demonstrates your commitment to good corporate governance. By prioritizing early preparation for ADGM annual accounts, you unlock a range of benefits that position your company for success within the thriving Abu Dhabi Global Market.

Disclaimer

*Registered in Abu Dhabi Global Market(RegisteredNo.000007218). We are not an ADGM Registered Corporate Service Provider.



		


	


	

		
		


			

		


		
	


	






	



	


		
			

				
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ADGM Employment Regulations: Key Requirements and Best Practices

		


			

		


		
	





	


		


			ADGM Employment Regulations: Key Requirements and Best Practices
				
ADGM Employment Regulations: Key Requirements and Best Practices


				
		


	


	
	


		


			

The United Arab Emirates has long been a leader in advocating for both employee and employer rights. Within this progressive landscape, the Abu Dhabi Global Market (ADGM) distinguishes itself with advanced employment regulations that ensure compliance while fostering a mutually beneficial environment for all stakeholders. This premier financial centre provides a sophisticated legal framework, integrating local and international best practices. For businesses, this means streamlined operations and efficient workforce management. ADGM’s dedication to transparency and balance enables businesses to attract and retain top talent, driving them towards greater success.





ADGM Employment Regulations 2019





ADGM’s employment regulations are governed by the ADGM Employment Regulations 2019, which ensure a fair balance between employer and employee obligations, including payroll. Unlike other parts of the UAE, the UAE Federal Law No. 33 of 2021 concerning labor relations does not apply to ADGM. Instead, ADGM has its own set of employment regulations, making precise and comprehensive payroll management crucial for compliance.





Key aspects of these regulations include:





    

  • Timely Payment of Wages: Employers must ensure timely payment of wages to employees.
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  • Pay slips: Employers are required to provide detailed pay slips to employees.
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  • End-of-Service Gratuity: This is calculated based on an employee’s tenure and is a mandated benefit.
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Employment Contracts and Visas





ADGM generally follows a contract-based employment system. Employers and employees must have a written contract outlining the terms and conditions of employment, remuneration details, probation, benefits, duties, working hours, notice periods, and termination conditions. This contract must be provided within one month of the commencement of employment.





Employers are responsible for obtaining work permits for their employees and covering all associated costs. Visa applications in ADGM are handled through the Corporate Relations Office at ADGM.





Duties and Obligations





The ADGM Employment Regulations detail the duties and obligations of both employers and employees. Employers must ensure health insurance coverage for their employees and adhere to health and safety standards in the workplace. Discrimination and harassment based on gender, race, religion, or disability are prohibited, promoting a safe and inclusive work environment.





Overtime:





    

  • The maximum working time is 48 hours per week with no opt-out option.
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  • Overtime applies to employees, excluding managers and supervisors, for hours worked over 832 in four months.
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  • Overtime compensation can be monetary, time in lieu, or both, with rates of 25% (daytime) and 50% (9 pm to 4 am).
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  • Payments must be made within one month after the four-month period.
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  • Employers must keep time records for employees nearing or exceeding the Threshold.
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Sick Pay:





    

  • Sick leave is divided into:

      

    • 10 business days at full pay.
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    • 20 business days at half pay.
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    • 30 business days without pay.
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  • Employers can terminate employees exceeding 60 business days of sick leave in 12 months, except for Disability-related leave.
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Minimum Notice Period:





    

  • The notice must be in writing:

      

    • Seven days for employment under three months.
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    • 30 days for employment of three months or more.
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Fines and Potential Compensation:





    

  • Employers failing to pay wages within 14 days may be ordered to pay compensation up to the last Daily Wage for each day of delay.
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 Discrimination:





    

  • Color is now a protected class according to ADGM Employment Regulations.
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  • Breaches can result in compensation for up to three years of Basic Wages and fines of up to USD 20,000 for non-compliance with court recommendations.
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Termination of Employment and End-of-Service Gratuity





Termination procedures in ADGM require a 30-day notice period. Immediate termination without notice is permissible for justifiable cause. Employees are entitled to end-of-service gratuity if they have completed at least one year of continuous employment, provided the termination is not due to employee misconduct.





Non-Employee Engagement





The Registrar of ADGM has outlined rules for engaging non-employees, including secondees, outsourced individuals, interns, and temporary freelancers. These rules set conditions for temporary work permits, applicable fees, and fines for non-compliance.





The UAE, with its diverse jurisdictions, operates under various rules and regulations that form the backbone of its business environment. Understanding these regulations is essential for achieving business excellence. The Abu Dhabi Global Market (ADGM), in particular, has established employment regulations that provide a robust framework for employment within its jurisdiction, setting minimum employment standards, balancing employer and employee rights and obligations, and aligning with international best practices. This comprehensive framework covers aspects such as employment contracts, visas and work permits, duties and obligations, remuneration, working hours, leave entitlements, labor rights, and termination procedures.





For businesses operating in ADGM, precise and comprehensive payroll management is crucial to ensure compliance with these unique regulations. Adhering to these standards not only ensures legal compliance but also fosters a fair and conducive working environment, safeguarding the rights and interests of both employers and employees. By maintaining high standards in payroll management, businesses can contribute to a stable and attractive labor market within ADGM, promoting long-term success and sustainability.





MS for Payroll Precision in ADGM





Understanding the ADGM Employment Regulations ensures compliance with regional regulations, mitigating risks of non-compliance such as fines, legal issues, and reputational damage. Compliance with the ADGM builds trust and credibility, crucial for attracting and retaining international stakeholders. By using our expert payroll services in MS, you can confidently manage payroll and focus on driving business success, one of key factors of the ADGM Employment Regulations.


		


	


	

		
		


			

		


		
	


	






	



	


		
			

				
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Payroll Best Practices in the UAE Financial Freezones: ADGM and DIFC

		


			

		


		
	





	


		


			Payroll Best Practices in the UAE Financial Freezones: ADGM and DIFC
				
Payroll Best Practices in the UAE Financial Freezones: ADGM and DIFC


				
		


	


	
	


		


			

The UAE Constitution and societal values are foundational in upholding and protecting workers’ rights. As a member of the International Labor Organization (ILO), the Arab Labor Organization, and other international bodies dedicated to employment rights, the UAE remains committed to transparency and fairness in its obligations toward all workers. The UAE continuously reviews various work-related aspects, including recruitment, hiring processes, and the living conditions of expatriate workers. Significant strides have been made to ensure that workers are treated with respect and equality and have accessible, confidential avenues for reporting labor disputes and abuse.





Employment Benefits and Sector Differences in the UAE





Employees in the UAE, whether local or expatriate, are generally entitled to a range of benefits. However, some benefits are exclusive to local employees, and there are notable differences between public and private sector employment. Furthermore, specific regulations apply to employees working in areas such as the Dubai International Financial Centre (DIFC), the Abu Dhabi Global Market (ADGM), and the other UAE Free Zones.





While the UAE constitution and its membership in international labour organizations establish strong employee rights, these rights translate into concrete obligations for employers. One key area of obligation is ensuring fair and transparent compensation and benefits. This is where payroll services come into play. Understanding UAE labour laws related to payroll, such as minimum wage, overtime, and end-of-service benefits, is crucial for employers to fulfill their obligations and maintain a compliant and positive work environment.





Wage Protection System in the UAE





In the UAE, the Wage Protection System (WPS) is a government initiative designed to ensure timely and full payment of employee wages. Implemented by the Ministry of Human Resources and Emiratisation, WPS mandates that all private sector employers pay their employees’ salaries through an approved electronic system, typically through banks or financial institutions. This system aims to enhance transparency, protect workers’ rights, and streamline payroll processes by providing a reliable and secure mechanism for wage disbursement. Compliance with WPS is crucial for businesses to avoid penalties and ensure adherence to labor regulations.





Grasping Legal Essentials for Payroll Services in the UAE





Know the UAE Labor Laws: Understanding the UAE’s labor laws and regulations related to payroll, such as minimum wage standards, overtime rules, and end-of-service benefits, is crucial. Ensuring compliance helps avoid penalties and legal issues.





Keep Informed: Stay updated on any amendments or new regulations from relevant UAE authorities, such as the Ministry of Human Resources and Emiratization (MOHRE).





Maintain Detailed Records: Accurately document employee information, including personal details, contracts, salary structures, and attendance. Errors in this data can lead to payroll mistakes and legal issues.





Regular Updates: Update employee records regularly to reflect changes in salary, benefits, allowances, and tax status, ensuring payroll calculations are accurate and compliant.





Follow Payroll Schedules: Ensure salaries are paid on time according to employment contracts and UAE labor laws. Delayed payments can hurt employee morale and lead to legal disputes.





Automate Payments: Implement automated payment systems to ensure prompt salary disbursements, considering banking holidays and other relevant factors.





Secure Payroll Data: Ensure the confidentiality of payroll information in compliance with UAE data protection laws, such as Federal Law No. 2 of 2019 on Information and Communication Technology.





Implement Security Measures: Use robust security measures to protect payroll data from unauthorized access, breaches, and cyber threats, including encryption, access controls, and regular backups.





Flawless Payroll: Ensuring Smooth Operations in ADGM





The significance of payroll services in ADGM is multifaceted, addressing both legal compliance and operational efficiency in this prominent international financial center. ADGM operates under a regulatory and legal framework, which includes its employment laws and standards distinct from other parts of the UAE. The ADGM Employment Regulations 2019 ensure a fair balance between employer and employee obligations including the payroll. Other key aspects include timely payment of wages, and payslips, along with a mandated end-of-service gratuity calculated based on an employee’s tenure. This uniqueness necessitates precise and comprehensive payroll management and employee rights to ensure full compliance with local regulations, including specific requirements for salary disbursements, end-of-service gratuities, and tax obligations.





Efficient DIFC Payroll Solutions with DEWS





In the DIFC, the importance of payroll services extends beyond mere compliance to encompass critical aspects of regulatory adherence and operational efficiency. The DIFC maintains a distinct legal and regulatory environment, encompassing specific employee compensation mandates such as the DIFC Employee Workplace Savings (DEWS) scheme. DEWS is a mandatory savings plan designed to provide financial security to employees upon the termination of their employment.





Under DEWS, DIFC employers are mandated to contribute a percentage of their employees’ salaries, including allowances and benefits, into a designated savings account. Accurate management of these contributions is essential for regulatory compliance, as failure to adhere to DEWS requirements can lead to substantial fines and legal issues. Professional payroll services play a pivotal role in this process by ensuring that DEWS contributions are correctly calculated, processed, and reported in line with DIFC regulations. These services also facilitate clear communication with employees about their DEWS entitlements and streamline the integration of DEWS management with overall payroll operations. By ensuring precise DEWS administration, businesses in DIFC can enhance employee satisfaction and retention while maintaining a competitive edge in the global financial market.





Payroll Precision with MS





Professional payroll services of MS in ADGM and DIFC are equipped to handle all the complexities, ensuring that all statutory requirements are met accurately and on time. This mitigates the risk of non-compliance, which can result in substantial fines, legal disputes, and damage to a company’s reputation. Given ADGM and DIFC’s global stature and most reputed regulatory environment, maintaining compliance is not just about avoiding penalties but also about fostering trust and credibility among international stakeholders and clients.