ADGM LEGAL FRAMEWORK

Abu Dhabi Global Market was established pursuant to Abu Dhabi Law No. 4 of 2013 as a financial free zone in the Emirate of Abu Dhabi, with its own civil and commercial laws. ADGM will offer market participants a world-class legal system and regulatory regime.

Federal Legislation which established ADGM as a Financial Free Zone are:

UAE Constitution

An amendment was made to Article 121 of the UAE Constitution. This article deals with the division of powers between Federal and Emirati authorities and which allows the Federation to enact a Financial Free Zone Law. Once enacted, the Government of an Emirate is permitted to create a Financial Free Zone in that particular Emirate.

Federal Law No (8) of 2004

This Law allows a Financial Free Zone to be established in any Emirate of the UAE, by Federal Decree. Importantly, it exempts Financial Free Zones and Financial Activities from all Federal civil and commercial laws however UAE criminal law still applies.

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Federal Decree No (15) of 2013 & Cabinet Resolution No (4) of 2013

The Federal Decree and Cabinet Resolution established the ADGM as a Financial Free Zone on Maryah Island in the Emirate of Abu Dhabi with an area of 1,680,323 square metres.

Please click here for Federal Decree No (15) of 2013

Please click here for Cabinet Resolution No (4) of 2013

Cabinet Resolution No 28 of 2007

A Cabinet Resolution in regard to implementing Regulations of Federal Law No 8 of 2004 concerning Financial Free Zones.

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Abu Dhabi Law No. 4 of 2013

The Abu Dhabi Law No. 4 of 2013 sets out in the detail the governance, legislative and regulatory framework and activities to be carried on in the Global Market.

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ADGM COURTS REGULATIONS & RULES

Please click here to view ADGM Courts Regulations and Rules enacted on 11 December 2015.

 

ADGM COURTS PROCEDURES

Please click here to view ADGM Courts Procedure Rules, Practice Directions, Forms, Fees and Guides enacted on 30 May 2016.

 

ARBITRATION REGULATIONS

ADGM enacted its Arbitration Regulations on 17 December 2015.

Please click here for the Arbitration Regulations 2015.

 

COMMERCIAL REGULATIONS

Please click here for more details on Commercial Regulations.

ADGM published its first set of commercial rules & regulations that were enacted by its Board of Directors on 3 March 2015. Pursuant to section 12(1) the Interpretation Regulations, regulations in ADGM shall come into force (a) where a particular day is specified by or under the regulations, on the expiration of the previous day; or (b) where the date of commencement is the date of publication, on the expiration of the day on which the regulations are published. Accordingly, the Commercial regulations came into force on the expiration of the day of their respective publication.

 

FSRA REGULATIONS & RULES

Please click here for more details on FSRA Regulations and Rules.

Regulations

Financial Services and Markets Regulations ("FSMR")

  • The FSMR establishes the legislative and regulatory framework for financial services in ADGM. In particular, FSMR has been broadly modelled on the UK’s Financial Services and Markets Act 2000 ("FSMA") and other related legislation.
  • FSMR contains provisions including the Financial Services Regulatory Authority (“the Regulator”) structure and powers, authorisation, recognition, market infrastructure bodies, enforcement and information gathering powers, accounting/auditing, listing and prospectuses, collective investment funds, settlement finality, disclosure of information, financial services transfers etc.

RULES

FSMR is supplemented by the FSMR Rulebook consisting of various modules as well as a Guidance and Policies Manual.

These modules detail the requirements that firms in the financial services sector must meet following their authorisation by the FSRA.

Rules

  • Anti-Money Laundering and Sanctions Rules and Guidance (AML)
  • Captive Insurance Business Rules (CIB)
  • Conduct of Business Rulebook (COBS)
  • Fees Rules (FEES)
  • Fund Rules (FUNDS)
  • General Module (GEN)
  • Glossary (GLO)
  • Islamic Finance Rules (IFR)
  • Market Infrastructure Rulebook (MIR)
  • Markets Rules (MKT)
  • Prudential – Insurance Business (PIN)
  • Prudential – Investment, Insurance Intermediation and Banking Rules (PRU)

 

Anti-Money Laundering / Countering the Financing of Terrorism and Targeted Financial Sanctions

As an international financial centre, Abu Dhabi Global Market (ADGM) recognises its responsibility to support the global efforts to combat money laundering, terrorism financing and proliferation financing. Under section 7(6) of the Financial Services and Markets Regulations 2015 (FSMR), the ADGM Financial Services Regulatory Authority (FSRA) has jurisdiction for the detection, prevention and avoidance of these activities within the ADGM. The Anti-Money Laundering and Sanctions (AML) Rulebook sets out the requirements which are imposed by the FSRA under section 7(6) of the FSMR.

In developing the AML Rulebook, the FSRA has had regarded for the Financial Action Task Force (FATF) Recommendations and the Basel Committee on Banking Supervision guidelines, published in 2014 and are intended to supplement the FATF Recommendations for banks. The U.A.E. criminal law also applies in the ADGM and, therefore, Persons in the ADGM must be aware of their obligations in respect of the criminal law as well as the rules which apply in the ADGM. Relevant U.A.E. criminal laws include Federal Law No. 4 of 2002 regarding the Criminalisation of Money Laundering, Federal Law No. 1 of 2004 regarding Combatting Terrorism Offences, Federal Law No. 7 of 2014, and the Penal Code of the United Arab Emirates. Accordingly, Relevant Persons must ensure that procedures comply with the requirement for Suspicious Activity Reports (SARs), to be made in the required format to the Anti-Money Laundering Suspicious Cases Unit (AMLSCU), located in the Central Bank of the UAE.

The U.A.E., as a member of the United Nations, is required to comply with Sanctions issued and passed by the UNSC. These UNSC obligations apply in the ADGM and their importance is emphasised by specific obligations contained in the AML Rulebook requiring Relevant Persons to establish and maintain effective systems and controls to make appropriate use of UNSC Sanctions and resolutions. Relevant Persons are required to establish robust controls to monitor for, detect, and deter the flow of illicit funds through ADGM's financial system.

 

Waivers and Modifications

An authorised entity may apply to the FSRA for a waiver of an existing rule, which means that the rule does not apply to the entity, or a modification of a rule, which amends a rule to fit the circumstances of the entity. Any application for a waiver or a modification is considered on a case-by-case basis by the FSRA on its merits, taking into account any precedents, and will only be granted if the entity can demonstrate both that (i) complying with the rule is unduly burdensome or would not achieve the intention of the rule and, importantly, (ii) the granting of a waiver or modification would not adversely affect the advancement of the objectives of the FSRA.”

The FSRA publishes a log of waivers and modifications on a quarterly basis where new waivers or modifications have been granted in the preceding quarter; where none have been granted in that period the log will remain unchanged.”

 

Guidance and Policy Statements

The FSRA issues Guidance on certain aspects of the financial sector regulatory and supervisory framework in ADGM including:

  • the authorisation process and requirements, to assist applicants seeking to undertake business in the financial sector in ADGM;
  • the interpretation of the Regulations and the Rulebook, to assist market participants, including Authorised Persons and Recognised Bodies, to meet their obligations; and
  • practices expected of market participants in relation to recently developed areas of the regulatory framework.

Being Guidance, these communications are not legally binding and are intended to provide information, above and beyond that included in the Regulations and the Rulebook, which will help authorised entities meet their obligations more effectively.

The FSRA also issues Policy Statements where existing requirements in the regulatory framework have been revised and/or new ones have been introduced. The purpose of a Policy Statement is to provide background and guidance on the associated requirements that market participants will be subject to and/or the approach that the FSRA will take in relation to various aspects of the regulatory framework. Policy Statements, like Guidance, are not legally binding.