Tag: ADGM

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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.
  • Pay slips: Employers are required to provide detailed pay slips to employees.
  • End-of-Service Gratuity: This is calculated based on an employee’s tenure and is a mandated benefit.

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.
  • Overtime applies to employees, excluding managers and supervisors, for hours worked over 832 in four months.
  • Overtime compensation can be monetary, time in lieu, or both, with rates of 25% (daytime) and 50% (9 pm to 4 am).
  • Payments must be made within one month after the four-month period.
  • Employers must keep time records for employees nearing or exceeding the Threshold.

Sick Pay:

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

Minimum Notice Period:

  • The notice must be in writing:
    • Seven days for employment under three months.
    • 30 days for employment of three months or more.

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.

 Discrimination:

  • Color is now a protected class according to ADGM Employment Regulations.
  • 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.

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.

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Simplify your success: How to file ADGM Annual Accounts to avoid penalties

Simplify your success: How to file ADGM Annual Accounts to avoid penalties
Simplify your success: How to file ADGM Annual Accounts to avoid penalties

Running a business in the Abu Dhabi Global Market (ADGM) offers exciting opportunities. But with those opportunities come responsibilities, including filing your annual accounts with the ADGM Registration Authority. Failure to comply with these requirements can lead to hefty penalties. So, it is important to comply on time to avoid the penalties.

Let’s break down the key points of these filings for your better understanding.

Who needs to file ADGM Annual Accounts? Not everyone…

While most ADGM entities are required to file annual accounts, some are exempt. Here’s a quick breakdown:

  • Must File: Companies (both private and public) and Limited Liability Partnerships (LLPs).
  • Exempt: Branches of foreign companies, Foundations, and entities registered under the Regulatory Laboratory regime.

What to file ADGM Annual Accounts? Depends on your company…

The type of accounts you need to submit depends on the size and activities of your business:

  • Standard Filing (Most Companies):
    • Audited accounts prepared by an ADGM-approved auditor.
    • A Director’s Report outlining your company’s performance for the year.
    • A Board Resolution formally approving the annual accounts before submission.
  • Simplified Filing (Small Companies):
    • Companies with a turnover below USD 13.5 million and less than 35 employees can file a simpler version with just an unaudited balance sheet.

Formal requirements to file ADGM Annual Accounts

There are specific formatting and content requirements to ensure clarity and compliance:

  • Currency: All accounts must be denominated in US Dollars (USD).
  • Signatures: The balance sheet needs to be signed by a director with their name clearly stated. For audited accounts, the Director’s Report requires a signature from a director or the company secretary, along with their name.
  • Auditor’s Report (if applicable): This report must mention the audit firm and the senior auditor responsible for the review.

Filing Deadlines: Meeting the Requirements on Time

The deadlines for filing your annual accounts depend on your company’s Accounting Reference Date (ARD), which is set during incorporation and can be viewed on the ADGM online registry. Here’s a breakdown:

  • First Annual Accounts:
    • For a financial year of 12 months or less, file within 9 months of your ARD.
    • For a financial year exceeding 12 months, file within 9 months of the first anniversary of your incorporation.
  • Subsequent Annual Accounts: File within 9 months of your ARD each year (reduced to 6 months for public companies).

Need Flexibility? Changing ARD or Extensions

  • Changing ARD: If eligible, you can request a change to your ARD through the online registry, along with a supporting resolution from your board of directors.
  • Filing Extension: In exceptional circumstances, you can apply for an extension before the filing deadline. However, it’s best to plan ahead and avoid last-minute applications.

Filing electronically: A streamlined process

Thankfully, filing your annual accounts is a digital process handled through the ADGM online registry solution:

  1. Access your company’s account on the online registry.
  2. Click on “Maintain Company” and then select “Lodge Annual Accounts” from the drop-down menu.
  3. Follow the on-screen instructions and upload your prepared accounts and any supporting documents.
  4. You’ll receive an acknowledgment email confirming your submission.
  5. The Registration Authority may review your accounts for accuracy. If revisions are needed, they’ll contact you.
  6. Upon approval, you’ll be notified via the online registry system.

Ensuring accuracy and avoiding penalties: Tips for success

Filing your annual accounts accurately and on time is crucial. Here are some helpful tips:

  • Understand the Requirements: Familiarize yourself with the specific filing obligations before you begin the process.
  • Prepare Necessary Documents: Gather all financial statements, including the balance sheet, profit or loss statement, and cash flow statement (if applicable).
  • Accuracy is Key: Double-check all figures and information before submitting your accounts. Errors can lead to delays or penalties.
  • Time Management is Crucial: Be mindful of the filing deadlines (9 months for private companies, 6 months for public companies) to avoid late filing fees.
  • Maintain Good Records: Keep accurate and up-to-date financial records throughout the year. This makes preparing your annual accounts a smoother process.
  • Seek Professional Help: If navigating the filing process seems daunting, consider consulting a qualified accountant or business advisor for assistance.

ADGM Annual Accounts filings made easy with MS

MS can help your business in Abu Dhabi Global Market (ADGM) ensure compliant and timely annual account submissions. We offer professional guidance based on your company’s specific requirements, prepare and submit your financial statements, and keep you informed of any regulatory changes. Additionally, we provide timely reminders and ensure submissions are filed on time.

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One year of ADGM’s Al Reem Island expansion – a snapshot

One year of ADGM’s Al Reem Island expansion – a snapshot
One year of ADGM’s Al Reem Island expansion – a snapshot

A year ago, the UAE government expanded ADGM to include Al Reem Island, making it one of the world’s largest financial hubs. Under the UAE Cabinet Resolution No. 41 of 2023 issued on April 24, 2023, this bold initiative saw the integration of Al Reem Island alongside its original location on Al Maryah Island, signifying a major milestone in ADGM’s growth since its establishment merely eight years ago.

ADGM’s Al Reem Island Expansion and Growing Demand

Due to high demand, occupancy rates on Al Maryah Island in ADGM surpassed 95%, leading to the incorporation of Al Reem Island to accommodate more companies flocking to Abu Dhabi’s lively financial hub. This expansion has filled ADGM’s ecosystem with rich amenities that solidified its position as a preferred destination for corporates, professionals, and global talents from across the world.

Transition Initiation

ADGM closely collaborated with government stakeholders and local authorities including the Abu Dhabi Department of Economic Development (ADDED), Central Bank of UAE (CBUAE), Abu Dhabi City Municipality (ADM), Ministry of Human Resources and Emiratisation (MoHRE) and Federal Authority for Identity, Citizenship, Customs, and Port Security (ICP) to ensure a seamless transition.

To facilitate a smooth transition, ADGM authorities have implemented flexible measures and license processing guidelines to support Al Reem Island Businesses.

Current Phase

Since November 1, 2023, all new businesses on Al Reem Island are required to get a commercial license from ADGM instead of Abu Dhabi Department of Economic Development (ADDED). Thus, all the new businesses are obliged to adhere to ADGM’s laws and regulations.

Existing businesses on the Island can continue with their ADDED license until December 31, 2024. After that, they must comply with ADGM’s licensing requirements as the ADDED license will become invalid from January 1st, 2025.

Transition Incentives

During this transition period, companies including the non-financial and retail sector can benefit from significant fee waivers and incentives based on the completion of the transition process.

Al Reem businesses, spanning healthcare, hospitality, retail, construction, real estate, professional services, etc. (excluding financial services) can obtain an ADGM license without any registration fee until October 31, 2024. They need to ensure that their license lists an Al Reem address and is free of outstanding fines.

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Al Reem Island Businesses: Assess your Business Activity and Category for ADGM License Advancement

Al Reem Island Businesses: Assess your Business Activity and Category for ADGM License Advancement
Al Reem Island Businesses: Assess your Business Activity and Category for ADGM License Advancement

Establishing and operating a business in Al Reem Island involves navigating through various categories and licensing requirements. As the transition to ADGM is ongoing, knowing your business category and the pre-application steps is crucial. Simplifying this process ensures compliance and sets the stage for smooth growth and success in the vibrant Al Reem Island business scene. Plus, it paves the way for an easy license conversion process before the deadline, ensuring a seamless transition to ADGM.

The Activities are classified into 3 categories by the ADGM authorities:

  • FINANCIAL – CATEGORY A
  • NON-FINANCIAL – CATEGORY B
  • RETAIL – CATEGORY C

i)Category A: Financial Businesses

Financial businesses fall under Category A and are required to obtain an Investment Promotion Approval (IPA) from the Financial Services Regulatory Authority (FSRA) of ADGM before proceeding with the commercial license registration. The FSRA oversees financial activities and ensures compliance with regulatory standards. For more information and contact details, applicants can refer to the FSRA’s official resources and rulebook.

ii)Category B: Non-Financial Businesses

Non-financial businesses, categorized under Category B, contain a range of activities subject to additional regulations and license conditions, particularly Controlled Activities. One sub-category within this group is the Designated Non-Financial Businesses and Professions (DNFBPs), which includes:

  1. Real estate agencies
  2. Dealers in precious metals or stones
  3. High-value item dealers
  4. Accounting, audit, insolvency, or taxation consulting firms
  5. Law firms, Notary firms
  6. Company Service Providers (CSPs)

Each sub-category from (a to f) has specific requirements and may require the appointment of a Money Laundering Reporting Officer (MLRO) and adherence to Anti-Money Laundering (AML) rules.

Additional Criteria for DNFBPs Under Sub-Categories (d to f)

  • Audit firms:

They need to comply with the ADGM audit regime.

  • Law firms:
  1. Be a registered company or a branch/subsidiary of an existing legal entity.
  2. Operate for at least 8 years.
  3. Maintain at least two offices, either in different jurisdictions or within the same country.
  4. Each managing partner must have a minimum of 10 years of post-qualification experience.
  5. Employ at least 8 partners and 25 qualified legal professionals.
  6. Possess professional indemnity insurance covering activities in Al Reem Island upon registration.
  • CSPs:

Although currently under moratorium until June 30, 2024, CSPs facilitate business incorporation and serve as the main contact for ADGM. Eligible entities may explore the dual licensing regime, enabling them to operate in mainland Abu Dhabi without physical office presence, subject to regulatory requirements.

iii)Category C: Retail Businesses

Retail businesses fall under Category C and operate in the retail sector. These businesses may need to adhere to general commercial licensing regulations and any specific requirements for retail operations in Al Reem Island.

Dual Licensing

Additionally, Al Reem Island businesses have the opportunity for dual licensing, allowing eligible entities holding ADGM commercial licenses to operate in mainland Abu Dhabi without needing a physical presence on the mainland. This arrangement aims to promote business activity between ADGM and mainland Abu Dhabi, enhancing competitiveness in the region.

However, it’s essential to ensure compliance with both ADGM regulations and those imposed by mainland authorities, such as the UAE Central Bank or Securities and Commodities Authority. Depending on your business activities, you may need further licenses from onshore authorities.

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ADGM Wins the ‘Most Trusted Financial Centre Brand’ at Global Brand Awards 2024

ADGM Wins the 'Most Trusted Financial Centre Brand’ at Global Brand Awards 2024
ADGM Wins the 'Most Trusted Financial Centre Brand’ at Global Brand Awards 2024

ADGM secures the prestigious title of the ‘Most Trusted Financial Center Brand’ in the Middle East, winning the esteemed 2024 Global Brand Award.

On April 2, 2024, the global stage was set alight with the prestigious Global Brand Awards Ceremony, hosted annually by Global Brands Magazine (GBM), bringing together a precious gathering to celebrate international brands that excel across diverse industries. Among the awardees, ADGM stood out, proudly securing the esteemed title of the ‘Most Trusted Financial Centre Brand, Middle East’ for the distinguished year of 2024.

ADGM’s outstanding performance was showcased through GBM’s assessment of factors like Customer Trust, Innovation, Regulatory Compliance, and Brand Value. This recognition emphasizes ADGM’s dedication to excellence and integrity, solidifying its reputation as a trustworthy leader in the Middle East’s financial sector. This recognition from GBM not only acknowledges ADGM’s past successes but also serves as a guiding force directing its future endeavors toward sustained growth and prominence in the global financial arena.

Jay Reddy, Director, Global Brands Magazine mentioned that “We are delighted to recognize ADGM as the winner of the ‘Most Trusted Financial Centre Brand’ in the Middle East. ADGM’s commitment to excellence, innovation, and integrity has positioned it as a beacon of trust and reliability in the region’s financial landscape, setting a benchmark for others to follow.”

Salem Mohammed Al Darei, CEO of ADGM Authority said, “Trust is not just a value but the cornerstone of ADGM’s identity. Being recognized by the reputed Global Brands Magazine as the ‘Most Trusted Financial Centre Brand, Middle East’ underscores the remarkable growth of ADGM and Abu Dhabi as a financial powerhouse, extending our influence beyond regional boundaries. We are on a path to keep soaring high as we set new ambitious goals and elevate Abu Dhabi as the ‘Capital of Capital,’ solidifying its position among the world’s premier international financial centres.”

ADGM: The Financial Powerhouse

Founded on October 21, 2015, Abu Dhabi Global Market (ADGM) serves as the international financial center (IFC) of the United Arab Emirates’ capital city.  In 2023, ADGM emerged as a true financial powerhouse. Positioned as a strategic link between the flourishing economies of the Middle East, Africa, South Asia, and the world, ADGM has elevated Abu Dhabi’s prominence as a leading financial hub and a dynamic business gateway in the region for two consecutive years.

With ADGM’s strategic expansion to Al Reem Island, international companies started embracing this tax-friendly jurisdiction. This development not only strengthens ADGM’s position but also elevates Abu Dhabi’s status as the ‘Capital of Capital’.

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How to Establish a Holding Company in ADGM with Ease

How to Establish a Holding Company in ADGM with Ease
How to Establish a Holding Company in ADGM with Ease

Over the course of decades, Abu Dhabi has undergone a remarkable transformation, evolving from a desert expanse into a prominent financial center surrounded by flourishing residential areas. With a diverse pool of talented professionals and positioned at the forefront of global sustainability efforts, the city is dedicated to pioneering green initiatives and strategic planning for future generations.

Central to Abu Dhabi’s ascent as a premier financial hub is the Abu Dhabi Global Market (ADGM), which plays a pivotal role in establishing the city as a global benchmark for financial excellence. ADGM’s commitment to harmonization, transparency, and clarity fosters a climate of confidence and trust among stakeholders, enticing businesses to establish roots in Abu Dhabi. There are different financial, non-financial, and legal activities promoted by ADGM in Abu Dhabi. Among these structures, Special Purpose Vehicles (SPVs) and Holding Companies stand out as prominent options.

An ADGM Holding Company typically serves as a parent entity, operating as a Private Limited Company (Ltd) with the capacity to own subsidiaries, as well as various assets including real estate, intellectual property rights, stocks, and more, regardless of their location. SPVs, on the other hand, function as passive holding entities established to mitigate financial and legal risks by segregating specific assets and liabilities. ADGM’s SPV framework is crafted to deliver flexibility, resilience, simplicity, and efficiency, drawing inspiration from leading models worldwide.

Let’s have a deeper understanding about Holding companies.

Holding Companies– What and Why?

A holding company is a business entity primarily engaged in holding controlling stocks of other companies, known as subsidiaries, which conduct operational activities such as manufacturing and service provision. The role of the holding company’s management is to oversee the operations of these subsidiaries, rather than directly engage in production or service delivery.

Holding companies can take various legal forms, including LLCs, partnerships, trusts, or foundations, with LLCs being the most commonly preferred structure.

These entities are established for several reasons:

  • Asset Protection and Liability Shielding: By maintaining a clear separation between the holding company and its subsidiaries, assets held by the former are shielded from liabilities incurred by the latter. In the event of a subsidiary’s financial distress or bankruptcy, the assets are safeguarded from creditors’ claims.
  • Facilitating Growth, Development, and Innovation: Holding companies offer a platform for diversifying investment portfolios and entering and exiting ventures with greater flexibility. The holding-subsidiary model facilitates the establishment of global credit limits, enabling easier access to funding for smaller subsidiaries.
  • Tax Optimization: Depending on the jurisdiction in which it is established, a holding company may benefit from tax advantages associated with its structure and relationship with subsidiaries. This can result in reduced tax burdens and enhanced profitability for the overall corporate group.

Why set up a Holding Company in ADGM?

ADGM, emerging as a prominent financial hub for business and fintech, offers several compelling advantages for such ventures. Here’s a breakdown:

Legal and regulatory framework

  • The legal framework facilitates cross-border activities.
  • Full foreign ownership is permitted.
  • There are no restrictions on foreign talent or employees.
  • Capital repatriation faces no restrictions.

Tax benefits

  • Profits, capital, and assets enjoy zero tax for 50 years.
  • Employee income is also tax-free.

Counterparty confidence

  • ADGM is a respected, independent regulator.
  • Its independent, English common law judicial system stands out.
  • It operates separately from the UAE legal system, adopting a risk-based regulatory approach.

Diverse ecosystem

  • It serves as a regional deal-making hub.
  • A multitude of international firms, investment funds, banks, and financial institutions are concentrated here.
  • Professional services like law and auditing firms are of world-class quality.
  • The region sees a growing trend in fund domiciliation.

Geographic epicenter

  • Management offices, holding companies, and family offices benefit from proximity to their assets.
  • The Middle East, Africa, and South Asia (MEASA) are increasingly pivotal in the global economy.
  • The UAE’s role in South-South trade, particularly between Asia and Africa, is significant.
  • ADGM is strategically positioned to tap into emerging market potential.

Costs Of Setting Up a Holding Company In ADGM

The Registration Authority helps to set up the legal structure of the ADGM Holding Company. In most cases, this would be a Private Company Limited by Shares. Shareholders can be individual, or corporate. Establishing a Holding Company in ADGM involves various procedures and associated costs as outlined below:

Registration Process:

  • Name Reservation Application: $200
  • Incorporation Application for a Private Company Limited by Shares: $1,500
  • Commercial License upon Incorporation: $4,000 (annual fee)
  • Business Activity Fees: $4,000 (annual fee)

Data Protection:

  • Registration: $300
  • Annual Renewal: $100

Office Space:

  • Business Centre: Starting from $19,000 for a one-desk office.
  • Fitted Offices: Starting from $55 per square foot.

Visas:

  • Establishment Card Application: $273
  • E-channel: $1,100 (one-time)
  • E-channel Deposit: $1,360
  • Visa Fees (per visa): Starting from $1,500

Summary of Costs:

  • Name Reservation: $200
  • Incorporation Application: $1,500
  • Commercial License: $4,000
  • Business Activity Fee: $4,000
  • Data Protection Registration: $300
  • Office Spaces (Business Center): Starting from $19,000
  • Fitted Offices: Starting from $40,000
  • Establishment Card Application: $273
  • E-channel: $1,100
  • E-channel Deposit: $1,360

MS for Setting up a Holding Company in ADGM

MS provides all-inclusive advice for setting up a holding company within the ADGM. Ranging from consultancy to guiding through authorization processes and legal document preparation, our team assists clients in navigating the complexities of incorporation. We ensure that applications are thorough, compliant, and submitted with confidence, streamlining the establishment process for our clients in the ADGM.

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Deadline Approaching: Ensure compliance with crucial DFSA & FSRA filings by April 30th, 2024

Deadline Approaching: Ensure compliance with crucial FSRA & DFSA filings by April 30th, 2024
Deadline Approaching: Ensure compliance with crucial FSRA & DFSA filings by April 30th, 2024

The Abu Dhabi Global Market’s and Dubai International Financial Centre’s vision for a fair, efficient, and transparent marketplace is always advocated by the Financial Services Regulatory Authority (FSRA) and Dubai Financial Services Authority (DFSA) by upholding compliance standards and making a progressive global financial hub. The regulatory requirements mandated by these bodies play a major role in bringing the registered entities in line with the standards of these international financial centres.

Both authorities have an upcoming deadline: April 30th, 2024, for several crucial filings this year. It is imperative for businesses to ensure they fulfill these obligations promptly to maintain compliance and avoid potential penalties.

What are DFSA & FSRA?

FSRA and DFSA stand as significant pillars in the financial landscape, each playing a crucial role in regulating and safeguarding the financial services of ADGM and DIFC.

The Dubai Financial Services Authority (DFSA) operates as an independent regulatory body within the Dubai International Financial Centre (DIFC). Its jurisdiction spans a wide array of financial activities including asset management, banking, securities, insurance, and more. Moreover, it diligently enforces anti-money laundering (AML) and counter-terrorist financing (CTF) measures, ensuring the integrity and security of the financial environment within the DIFC.

On the other hand, the Financial Services Regulatory Authority (FSRA) holds sway in the Abu Dhabi Global Market (ADGM). This regulatory body is dedicated to upholding internationally recognized standards and best practices, ensuring that financial entities operate on a level-playing field while prioritizing the interests of customers and investors.

What sets the FSRA apart is its adaptive regulatory framework. It keeps pace with evolving global standards and market innovations, maintaining a keen eye on international standard-setting bodies. FSRA actively engages with stakeholders through public consultations, fostering transparency and inclusivity in its regulatory processes.

We have made the list of filings due on April 30th, 2024, that you must follow and comply with.

  • Regulatory Returns Auditor’s Report – FSRA & DFSA Regulated Entities
  • Financial Statements and Auditor’s Report – FSRA & DFSA Regulated Entities
  • Internal Risk Assessment Process (IRAP) – FSRA & DFSA Regulated Entities
  • Internal Capital Adequacy Assessment Process (ICAAP) – FSRA & DFSA Regulated Entities
  • Client Money Auditor’s Report – FSRA & DFSA Regulated Entities
  • Safe Custody Auditor’s Report – FSRA & DFSA Regulated Entities
  • Annual Report on Controllers – FSRA & DFSA Regulated Entities
  • Public Listed Company Auditor’s Report – FSRA & DFSA Regulated Entities
  • Quarterly EPRS Returns – FSRA & DFSA Regulated Entities
  • AML Return – FSRA & DFSA Regulated Entities & DNFPB Entities
  • ADGM FATCA & CRS SCF – For all ADGM entities

MS as your compliance partner in both ADGM and DIFC

Our team comprises finance, compliance and legal professionals equipped with the expertise, competence, and up-to-date regulatory knowledge necessary to support your finance function. MS is committed to ensuring absolute compliance with ADGM and DIFC’S regulatory requirements without fail. Take the first step towards planning your crucial filings for the month ahead with our seamless plan and proactive guidance.

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Blogs

How ADGM is empowering Tech Startups in Abu Dhabi to rise and shine

How ADGM is empowering Tech Startups in Abu Dhabi to rise and shine
How ADGM is empowering Tech Startups in Abu Dhabi to rise and shine

Abu Dhabi’s transformation into a global economic powerhouse is nothing short of extraordinary. Reflecting this success, Abu Dhabi Global Market (ADGM) has emerged as an epitome of growth and progress in the financial world. In just eight years, ADGM has become one of the world’s largest financial districts and the fastest-growing international financial center in the region, securing its place as a Falcon economy. The journey of ADGM is a testament to the power of vision and unwavering commitment. It underscores the remarkable results that come from consistent effort, persistence, and alignment with economic goals. As ADGM declared 2023 as a “year of success” for the international financial center of the UAE, the role of tech startups in building ADGM’s ecosystem cannot be overstated.

Hub71: The launchpad of tech startups in ADGM

Hub71, a vibrant tech ecosystem based in ADGM, offers global startups access to capital, market opportunities, longer-term visas, and a highly skilled talent pool. ADGM provides competitive tech startup licenses that enable entrepreneurs to grow and scale their businesses within an award-winning regulatory framework. Abu Dhabi’s strategic advantages make it an ideal launchpad for tech startups. With a multi-billion Dirham commitment to programs like Ghadan 21, the government is actively supporting innovation, committing AED 1 billion to help startups and entrepreneurs build a technology-enabled future.

Here’s why tech startups should consider ADGM as their hub:

  1. Cost-Effectiveness: ADGM’s Tech Startup License is incentivized for up to three years, providing a favorable environment for startups to establish themselves.
  2. Visa Benefits: Entrepreneurs can avail 3-year and 5-year visas, facilitating their stay and operations in Abu Dhabi.
  3. Sector Agnosticism: The ADGM Tech Startup License is open to startups across all sectors, fostering diversity and innovation.
  4. Access to Ecosystem: Through Hub71 and ADGM’s innovation cluster, startups benefit from a strong network of government entities, corporates, funders, and industry partners.
  5. Access to Investors: ADGM hosts a growing community of venture capital firms, banks, financiers, and investors, providing capital for growth.
  6. Rule of Law: ADGM offers a robust legal framework based on English common law, ensuring transparency, fairness, and enforceability of contracts.

ADGM Tech Startup License

The ADGM Tech Startup License offers an expedited setup process for entrepreneurs in the UAE, with two distinct stages: Seed and Emergent. Notably, this license is for innovative tech startups, excluding technology service providers.

Eligible applicants include local, regional, and international startups with innovative tech business models that leverage technology to solve customer challenges and address specific market needs. These startups should demonstrate potential for regional or global scalability and support sustainable economic development.

Benefits of the Tech Startup Commercial License in ADGM are comprehensive, including:

  • An operational commercial license irrespective of sector.
  • Competitive annual license fees, with USD 1,000 for the seed stage (up to two years) and USD 4,300 for the emergent stage (up to three years) within the first five years of operation in ADGM
  • Provision of three visas for every desk space.
  • Eligibility to apply for dual license recognition with the Abu Dhabi Department of Economic Development, subject to meeting criteria.
  • Access to potential funding and equity-free subsidies through the Hub71 Incentive Program.
  • Potential access to the Hub71 community, including accelerator programs like Plug & Play.
  • Access to a network of local and international entrepreneurial mentors and experts.
  • The assurance of an independent jurisdiction under an internationally recognized English common law framework.

Furthermore, eligibility for the incentivized license is determined upon application, with a fixed duration. For instance, approval for the seed stage incentivized license grants two years in the seed stage, automatically transitioning into the emergent stage in the third year of operations, irrespective of full-time employee count.

 Applying for a tech startup license in ADGM is seamless. Here is how to do that:

Application Process for Obtaining a Tech Startup License in ADGM

Submission: To obtain the ADGM Tech Startup License, startups can apply online. Along with the application, a business plan, office space lease, initial annual license fee, as well as other necessary documentation mentioned by ADGM is required.

Review: ADGM will assess the application and notify applicants via email if additional information is needed.

Approval: Upon completion of the evaluation, applicants will receive an email informing them of the status of their application.

Incorporation and License Issuance:  Once approved, the registration and incorporation process are handled by the ADGM Registrar and the license is issued. Applicants will receive email confirmation of the license issuance and can proceed with their operations.

Why MS in ADGM?

With extensive knowledge of local regulations and established connections within ADGM, we can guide you. Through personalized advisory services, we guide startups through licensing requirements, fostering collaboration and networking opportunities within Abu Dhabi’s tech industry. This support contributes significantly to the success of ambitious entrepreneurs in the startup community.

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News & Press Releases

MS launches social initiative to facilitate small businesses in ADGM’s Al Reem Island expansion

MS Launches Social initiative to support ADGM Al Reem Island expansion

MS, UAE’s premier single-source solution provider launches a first-of-its-kind social initiative ‘Refiguring Reem Retail’ to assist Al Reem Island businesses in their migration journey to ADGM.

As MS marks its seventh year and reaffirms its commitment to community welfare, the company proudly extends its helping hand to small retail businesses through this humble social initiative. The campaign focuses on offering pro bono license conversion and transition advisory services to 50 eligible retailers at Al Reem Island and increasing their visibility by equipping them with tailored services to meet their needs.

With the advent of ADGM’s license conversion regulation for Al Reem Island businesses, the company have already pledged their commitment to assist them with incorporation and related services. MS is dedicated to empowering retailers by connecting with them to identify their transition challenges and pain points and offering expert guidance and advice to help businesses facilitate a smooth journey through the transition process. With the backing of a proficient team, the objective is to engage with small enterprises, meticulously evaluate their eligibility criteria using a dedicated review committee and provide individualized assistance within MS’s service excellence framework. 

“As a company with a sound history of empowering SMEs through different initiatives and community events, we’re proud to champion the country’s retail sector as well,” said Mohammed Shafeek, Group CEO, MS. “This initiative symbolizes more than just a temporary effort; it reflects our enduring dedication to providing small businesses with a seamless experience throughout their incorporation journey. As we celebrate our seventh year in the industry, we embrace the opportunity to transform challenges into opportunities, fostering growth and collaboration every step of the way. Together, we empower businesses, excel, and reach milestones for a thriving entrepreneurial ecosystem.”

The mission extends beyond mere visibility; it encompasses empowerment and awareness and aims to ensure retailers flourish in an ever-evolving landscape. In a city marked by progress and transformation, this initiative stands as a pillar of support, fostering growth and prosperity for all who call Al Reem Island home. As the community approaches the tail end of this sacred time of fasting and reflection, the opportunity is seized to deepen the bonds of kinship within the society.

“With our extensive and diverse experience across both mainland and free zones, particularly in the capital of capital, Abu Dhabi, we have witnessed the remarkable growth of the business community, especially among SMEs. With ‘Refiguring Reem Retail’, we’re hence on a mission to make the process of joining ADGM, an effortless process in Al Reem Island.  Recognizing the vital role small businesses play in our community, we strive to offer them clear guidance and unwavering support, ensuring a smooth journey into the ADGM ecosystem,” expressed Munawar Salih, CGO at MS.

“We’re fully committed to supporting ADGM and its Al Reem Island Expansion by being a longstanding partner in this landmark transition. It’s essential to emphasize that this isn’t just a temporary initiative. Our aim is to continuously strengthen the business community on Al Reem Island and foster enduring relationships in this dynamic capital. This initiative marks the beginning of that journey, and we aspire to empower more SMEs, thereby enhancing Abu Dhabi’s international standing as the ‘Capital of Capital’.” said Anas Ibrahim, Director, MS