It was the same day we decided to write this article when we heard the news that Abu Dhabi was named the world’s richest city for sovereign wealth funds with $1.7tn in assets. We then thought:
“Now is the best time to write about the ADGM, located in the heart of this big rich city.”
Countries such as Singapore, Hong Kong, Luxembourg, and Switzerland have been racing for years to attract investors and funds from different parts of the globe. The UAE has emerged as a serious competitor and by unveiling the Abu Dhabi Global Market, the world knew that the Arab country is all-in for the top spot.
There is one certain feature that blows away investors and makes the ADGM stand out among all of UAE’s jurisdictions. In this blog, we will introduce this feature and other benefits of the ADGM, tell you how and why you can get established there, and what we at Tokenova do to make it easier for you.
What Exactly is the ADGM?
The ADGM, or the Abu Dhabi Global Market, is an International Financial Centre in the capital of the UAE. It is a free zone, with lots of opportunities for companies, namely if they offer financial services.
In another blog, we have explained the advantages of getting established in the UAE’s free zones, including generous tax exemptions and enabling foreign ownership.
Established in 2013, the ADGM is one of the two international financial centers in the United Arab Emirates (the other one being the DIFC).
It became fully operational in just three years and in 2015 and 2016, it was ranked the “Financial Centre of the Year (MENA)”.
And if that isn’t enough for an investor or entrepreneur to consider starting a company there, let us tell you that the ADGM is:
⦁ The world’s FIRST comprehensive crypto asset regulatory framework
⦁ The world’s FIRST fully digital courtroom
⦁ The FIRST jurisdiction in the Middle East/North Africa (MENA) to directly apply Common law
⦁ The FIRST Digital Sandbox with a participating regulator
Abu Dhabi, the Richest City in the World
When hearing the word “UAE”, almost every investor and even visitor, thinks of either Dubai or Abu Dhabi. And it’s no surprise because of the incredible milestones they have reached.
As appealing as Dubai is to everybody, Abu Dhabi boasts qualities that make it hard to resist because that’s where the BIG MONEY is.
60% of the UAE’s investable wealth is in Abu Dhabi, and as we said in the intro of our blog, it is home to the world’s largest sovereign wealth funds.
But don’t let this limit you if you are thinking about establishing a firm in the UAE. Depending on your company and conditions, another jurisdiction may be the best option for you.
Anyway, despite all of these, we still haven’t revealed why it is the Ace of company setup in the UAE.
How Does Abu Dhabi Compare to Dubai?
Both Abu Dhabi and Dubai offer exceptional investment environments, but they cater to different strengths and opportunities.
Abu Dhabi stands out with its strong focus on innovation, regulatory support for fintech, and rapid growth metrics within its financial sector, particularly through the Abu Dhabi Global Market (ADGM). Its commitment to economic diversification and a supportive ecosystem makes it a compelling choice for investors looking at high-growth sectors.
On the other hand, Dubai, while also highly attractive due to its strategic location and diverse economy, tends to focus more on traditional sectors such as real estate and tourism. It provides a vibrant business environment but may not match Abu Dhabi’s pace in emerging technologies like fintech.
So it’s a toss-up between innovation and fintech opportunities or a broader range of established sectors when choosing between these two dynamic emirates.
| Criteria | Abu Dhabi | Dubai |
| Ease of Doing Business | Ranked 12th globally; streamlined business setup processes, including free registration for two years and reduced fees. | High ranking for ease of doing business; transparent processes and numerous free zones available. |
| Investment Environment | 100% foreign ownership allowed; zero personal income tax; strong support from the Abu Dhabi Investment Office (ADIO). | Also allows 100% foreign ownership in free zones; with no personal or corporate income tax. |
| Economic Diversification | Focus on sectors like fintech, healthcare, and technology, with significant government investment in innovation. | Diversified economy with strong sectors in real estate, tourism, finance, and logistics. |
| Regulatory Framework | Home to ADGM, which offers a robust regulatory framework for fintech and tokenization; a proactive approach to innovation. | DIFC provides a stable regulatory environment but is less focused on emerging technologies compared to ADGM. |
| Infrastructure | World-class infrastructure with excellent connectivity to global markets; strategic location for access to MENA region. | Exceptional infrastructure; centrally located with connections to over 240 cities worldwide. |
| Talent Pool | A growing talent pool supported by educational institutions and initiatives like Hub71; aims to attract global expertise. | Diverse talent pool due to its status as an international city; that attracts skilled professionals globally. |
| Market Growth Potential | Rapid growth in operational entities (2,088 as of March 2024) and significant increase in assets under management (AUM). | Rapid growth in operational entities (2,088 as of March 2024) and a significant increase in assets under management (AUM). |
| Quality of Life | High quality of life with advanced healthcare and education systems; long-term residency options available for investors. | High living standards with a vibrant lifestyle; numerous cultural events and activities available. |
| Fintech Leadership | Ambition to become the primary fintech hub in the region; established regulatory sandbox for innovation. | Developing a fintech ecosystem but less emphasis on regulatory support for emerging technologies compared to Abu Dhabi. |
| Government Support | Strong government backing for innovation through programs like the AED 2 billion Innovation Programme. | Active government support for business growth through various initiatives and incentives for investors. |
ADGM’s Mission
Become a bridge: Connect the vibrant economies of the Middle East, Africa, and South Asia (MEASA) with established financial hubs.
Foster innovation: Cultivate a fertile ground for financial technology (FinTech) and other cutting-edge solutions.
Attract global players: Offer a world-class legal and regulatory framework that entices international companies to set up shop in Abu Dhabi.
Develop local talent: Nurture a skilled workforce equipped to navigate the complexities of the modern financial world.
The Regulations and Law Framework
It is of utmost importance for the ADGM to have its laws aligned with international standards and be able to compete with global financial centers such as London, Hong Kong, and Singapore.
That is why the ADGM is controlled by three independent authorities – the Registration Authority, the Financial Services Regulatory Authority (FSRA), and the ADGM Courts.
1. Financial Services Regulatory Authority (FSRA)
ADGM has its independent regulatory authority and its own legal and regulatory framework. The Financial Services Regulatory Authority (FSRA) operates as the jurisdiction’s ts court system and regulatory body, which oversees and regulates financial activities there.
2. Registration Authority (RA)
The Registration Authority in ADGM is responsible for providing guidance and support when registering and licensing legal entities. The Registrar has the authority to issue licenses and ensure compliance with ADGM regulations, overseeing various business activities.
3. ADGM Courts
The ADGM Courts operate independently from other UAE courts and apply English common law directly, providing a familiar legal framework for international businesses. These courts handle civil and commercial disputes within ADGM efficiently and transparently, appealing to foreign investors.
The English Common Law
ADGM operates its own common-law legal and court system, distinct from the legal system of the wider UAE. This legal framework is based on English common law principles, providing transparency and familiarity to businesses accustomed to international legal standards.
The ADGM adopts English common law on an “evergreen” basis, which means that as English case law evolves, so does the applicable law in the ADGM.
Special Purpose Vehicle (SPV) regime
The ADGM has established a comprehensive, cost-effective, and flexible Special Purpose Vehicle (SPV) regime. An SPV is a corporate vehicle created to isolate financial and legal risk by separating assets and liabilities. SPVs can be set up as subsidiaries, project vehicles, or joint ventures to ensure that only the assets related to a specific transaction are at risk for the associated liabilities.
Benefits of Forming a Company in the ADGM
The creators of the ADGM designed it to be a global business hub that offers a broad range of financial services and facilitates economic diversification in the region.
Abu Dhabi has attracted global investment firms and hedge funds such as Brevan Howard, Fiera Capital, TCI Fund Management, and Morgan Stanley due to its strong economy, strategic initiatives, infrastructure investments, and regulatory reforms.
ADGM’s Financial Services
The ADGM is the region’s primary financial hub and directly incorporates the legal system. It offers a wide range of financial services, including banking, asset management, insurance, and capital markets. This allows businesses to access various financial products and services within the ADGM.
The Non-Financial Side
Professionals seek a well-rounded lifestyle that goes beyond work. They look for personal services like tailoring, salons, gyms, and retail outlets including restaurants and coffee bars. Additionally, there are fine dining options available to entertain clients at ADGM.
ADGM also provides a variety of non-regulated activities such as corporate offices, regional headquarters, family offices, holding companies, and proprietary investment companies. Consultancies, service providers, and product providers can also be set up in the center. These entities are not regulated by the FSRA and are authorized directly by the ADGM Registration Authority.
Retail Outlets
The Abu Dhabi Global Market (ADGM) is located in a prime area on Al Maryah Island, adjacent to the Galleria Mall and Reem Island. This presents numerous opportunities for retail concepts, including high-end and bespoke stores. The Galleria Mall and its newly-created extension already host a variety of fine dining options, tailoring services, shopping outlets, and cafes.
The Stats Are Smiling at the ADGM
As of March 2024, the ADGM hosts 1,950 active entities, marking a 30% increase from 2023. Also, its Assets Under Management (AUM) grew as the following:
⦁ 2022: AUM grew by 56%.
⦁ 2023: AUM increased by 35%.
⦁ Q1 2024: A remarkable surge of 211% in AUM compared to Q1 2023.
Even better, the ADGM issued 1,271 new licenses in the first half of 2024, representing a growth of 20.5% compared to the same time frame last year. Over 25,000 individuals make up its workforce and it’s growing rapidly.
A number of prominent companies contribute to ADGM’s reputation as a leading international financial center. Some of these major firms include:
⦁ Goldman Sachs
⦁ Blackstone
⦁ Tikehau Capital
⦁ Brevan Howard
⦁ Asian Infrastructure Investment Bank (AIIB)
⦁ ADQ
⦁ G42
⦁ Gulf Capital
⦁ Investcorp
In 2022, the number of active licenses went up from 4,262 in 2021 to 5,546, reflecting a growth rate of 30%.
The Role of FinTech in The ADGM
There are 3 Key Features of ADGM’s Fintech Ecosystem. They are:
Regulatory Sandbox (RegLab)
The ADGM RegLab is an innovative program that enables fintech companies to test their new ideas in a controlled environment. This sandbox approach allows startups and established firms to develop and improve their products without the immediate burden of full regulatory compliance. It fosters a culture of innovation and collaboration within the financial sector.
ADGM Digital Lab
This virtual environment connects fintechs, financial institutions, and regulators, facilitating collaboration on new technologies. It includes an API Gateway and a Digital Testing Environment, enabling participants to create and test solutions efficiently.
Partnerships and Ecosystem Support
ADGM collaborates with various stakeholders, such as Hub71, a tech ecosystem that provides startups with mentorship, funding, and resources. This network enhances the growth potential for fintech companies by offering access to investors and industry experts.
What Are the ADGM’s Advantages Over Other Jurisdictions?
Regulatory Innovation: ADGM is recognized as a progressive regulator in the region, known for its pioneering RegLab. This is in contrast to DIFC, which has a regulatory framework but may not offer the same tailored support for emerging fintech businesses.
Holistic Ecosystem: ADGM’s strategy involves collaborating with local authorities and investment organizations to provide strong support for all fintech activities, fostering synergy among stakeholders.
Global Connectivity: ADGM offers access to a global network of financial regulators and fintech hubs, enabling businesses to expand their products internationally. This connectivity is essential for startups seeking to grow beyond domestic markets.
Supportive Environment: ADGM offers regulatory flexibility, local capital, and streamlined business establishment, making it attractive to investors. Global financial institutions further enhance its credibility.
Growing market potential: Abu Dhabi has seen significant growth in venture capital investments, particularly in technology-driven sectors, thanks to the rapidly expanding fintech ecosystem. The city’s annual Fintech Festival showcases its potential as a leading hub for financial technology.
Educational initiatives: Collaborations with educational institutions like the Mohamed Bin Zayed University of Artificial Intelligence ensure a skilled workforce is available to support the fintech sector by the ADGM.
How to Get Established in the ADGM: The Process + Cost
1. Preparation and Planning
Choose Your Business Activity & Legal Structure: The ADGM mainly welcomes financial services, professional services, and technology. You have to specify the nature of your business and its structure. Options in the ADGM include:
⦁ Limited Liability Company (LLC)
⦁ Branch Office
⦁ Representative Office
⦁ Special Purpose Vehicle (SPV)
Pick a Company Name: Ensure the name complies with ADGM’s naming regulations and is available through an online check.
2. Application and Documentation
Submit an Online Application: The ADGM has an online registry system for efficient processing.
Prepare Required Documents:
⦁ Passport copies and Emirates ID (if applicable) for all shareholders and directors.
⦁ A detailed business plan clearly outlining objectives, market analysis, and financial projections.
⦁ Proof of share capital meeting minimum requirements.
⦁ Lease agreement for physical office space within ADGM (mandatory).
⦁ Memorandum and Articles of Association (MoA & AoA).
⦁ Board resolutions and director consent forms.
3. Approval and Registration
Review and Approval: The ADGM Registration Authority will review your application. Please address any clarification requests promptly. Upon approval, you will receive a Certificate of Incorporation, officially establishing your company.
Additional Considerations
The ADGM establishment process is usually as we mentioned above. But do take the following into consideration just to be sure:
Resident Secretary: Appoint a licensed resident secretary to handle administrative tasks and ensure compliance.
Visas: Initiate visa applications for foreign workers or yourself after company formation. The more visas you apply for, the higher the total cost.
Registration Fees: Open a corporate bank account with a licensed bank in the ADGM. Typically, the registration fee ranges from AED 10,000 to AED 15,000 depending on business type.
Time Frame: Initial approval takes about 5-7 working days. Full licensing can take an additional 15-20 working days.
Overall, the complete setup process may take approximately 2-4 weeks.
Types of Business Entities and Licenses in ADGM
Business Entities
⦁ Limited Liability Company (LLC): Commonly used for commercial activities.
⦁ Professional Firms: For licensed professionals such as lawyers or accountants.
⦁ Branch Office: For foreign companies wishing to operate in Abu Dhabi.
Types of Licenses Issued by The ADGM
| License Type | Description |
| Financial Services License | Required for banks, investment firms, insurance companies, etc. |
| Professional Services License | For legal, accounting, and consulting firms providing professional services. |
| Commercial License | For businesses engaging in trading, retail, and manufacturing activities. |
The ADGM also offers dual licensing options allowing businesses to operate both within ADGM and onshore in the UAE.
Wrapping up With Comprehensive & Flexible Solutions
Abu Dhabi’s economy heavily relies on oil but it has invested in real estate, and tourism too for new sources of income. But most importantly, the emirate has entered the field of financial services, boosted by the ADGM.
The ADGM boasts a strong infrastructure for companies active in different fields with some serious competitive advantages.
What we do at Tokenova, is paint a whole picture of company establishment in the UAE, and make the whole process significantly easier.
So, soak in as much data as you can about the ADGM and other jurisdictions from our blogs, and get a free consultation right now!
One Response
Thanks for sharing such a valuable information