ADGM Special Purpose Vehicles – All Things to Know

ADGM has recently published comprehensive guidelines for establishing Special Purpose Vehicles (SPVs) within the ADGM Free Zone. To establish an SPV, investors must demonstrate a connection with the UAE and provide supporting documentary evidence. These guidelines ensure a streamlined process while maintaining the integrity of the regulatory framework.

Key Highlights of ADGM Special Purpose Vehicles

All businesses operating in the UAE must be owned or controlled by a private company, family, family office, or individual based in the UAE or GCC region. Furthermore, these entities should be physically located within the UAE or GCC and engage in activities related to trade, services, or any endeavor that contributes tangible economic advantages to the UAE.

The Registration Authority (RA) in ADGM is an independent organization with the authority to issue licenses and register all entities within ADGM, ensuring compliance and legal recognition.

Creating a Special Purpose Vehicle (SPV) Company in ADGM

Establishing a Special Purpose Vehicle (SPV) and other non-operational entities in ADGM is a seamless and efficient process. ADGM’s SPV accommodates a diverse range of businesses across various industry sectors, catering to corporates, sovereign wealth funds, government-related entities, single-family offices, trustees, and individual investors. Whether established as a subsidiary, project, or joint venture, an SPV functions as an independent legal entity. This ensures that claims made by SPV creditors remain separate from shareholders or sister companies. The primary advantage of an SPV lies in its ability to limit liabilities to the assets associated with the project, effectively safeguarding shareholders and organizations by mitigating risks posed by creditors.

Registering for an SPV with ADGM

Streamline your registration process with a user-friendly digital portal. Accessible for document submission and fee payment, it ensures a seamless experience for all users.

• ADGM presents a cost-effective business setup package, providing investors with a transparent and affordable company formation solution. Choose from a diverse range of business activities to suit your needs.
• There is no requirement for a physical office. The agent or corporate service provider is authorized to manage the SPV and provide the registered office address.
• The independent courts of the Abu Dhabi Global Market (ADGM) operate under a common-law jurisdiction. This unique legal framework ensures fairness, consistency, and adherence to established precedents, making ADGM a trusted hub for legal matters.
• An exceptional and autonomous regulatory framework that sets the standard.
• Leverage the extensive Double Tax Treaty Network of the UAE for enhanced access and benefits.
• There is a wide range of legal structures available to choose from.

Typical Uses for SPVs

1. Securitization

An SPV has the ability to securitize loans or other receivables by acquiring these assets through debt issuance, which is then backed by the underlying assets. This framework ensures that holders of asset-backed securities receive priority in debt payments and have limited recourse to the asset originator.

2. Real Estate Investment

Special Purpose Vehicles (SPVs) provide a strategic method to acquire real estate while minimizing liabilities for mortgage lenders, based on the asset’s location. Additionally, in specific jurisdictions, selling shares of an SPV can offer significant tax benefits and reduced transaction fees compared to transferring the entire asset.

3. Financing

By adopting this approach, investments can be safeguarded, allowing for financing without increasing the debt levels of the parent company or exposing its assets to cross-liabilities. This strategy not only ensures financial security but also maintains the integrity of the parent company’s resources and liabilities.

4. Asset Transfer

It enables the seamless transfer of assets, including material agreements that facilitate partial ownership transfer of the enterprise. This practice ensures the long-term preservation of asset value, fostering stability and facilitating growth.

5. Risk Sharing

Joint ventures offer a highly effective avenue for Project Companies to foster collaboration. Through strategic partnerships, companies can share management responsibilities while ensuring joint venture partners are shielded from associated risks. This approach not only boosts operational efficiency but also minimizes potential legal liabilities, resulting in a win-win situation for all parties involved.

6. Raising Capital

In specific situations, an SPV has the ability to utilize its collateral to obtain capital at favorable rates, regardless of the parent company’s credit rating. This approach enables a more nuanced assessment of creditworthiness, guaranteeing access to optimal financing alternatives.

7. Intellectual Property

An SPV offers an efficient solution to segregate valuable intellectual property into a standalone entity, minimizing liabilities. This independent entity can raise funds and establish license agreements with third parties. Moreover, it can provide support in managing products comprising diverse IP components, enhancing overall efficiency and effectiveness.

Guide to Applying for an ADGM SPV Business License

Registering an ADGM SPV company is now a breeze, thanks to our fully digital platform governed by the ADGM Free Zone. With the guidance of seasoned consultants, both businesses and individuals can effortlessly navigate the setup process. Plus, by enlisting the services of a registered agent, there’s no need to worry about leasing a physical office in ADGM. The registered agent’s office address will conveniently serve as your SPV License address. Experience a seamless registration journey with us.

Streamlined Procedure for Establishing an SPV Company in ADGM

ADGM offers a streamlined documentation process that minimizes paperwork. Through the online portal, you can easily complete applications, submit documents, and make fee payments, simplifying the company registration process. Progress updates will be sent to your registered email address. Once document assessment and fee payment are completed, you will receive the soft copy of the SPV company license via a link in the email. You can also schedule an appointment to collect the original documentation and the business license.

Documentation Requirements for SPV Applications

• Articles of Association
• Registered Office Address
• Copy of Resolution of Board of Directors or
  Shareholders
• Copy of Passport Information and Signature page
• Copy of UAE Visa Page
• Copy of Emirates ID
• Certificate of Incorporation/ Registration

Interested in Company Formation at ADGM and how to set up a Company as an SPV, get in touch with our PRO Consultancy expert’s right away!