Guidance and resources

service
Please use the below tool  as an indicator as to whether your entity would be considered "Exempt" or "Non-exempt".
This is an indicator only. If you are unsure please do not hesitate to contact us at ra@adgm.com.

Will the SPV be a subsidiary undertaking an entity that has been established by law or decree issued by His Highness, the Ruler of the Emirate of Abu Dhabi or any Federal Law?

How do we apply for the new business activity to become a CSP within ADGM?

The relevant business activity to conduct CSP activities in ADGM is named ‘Company Service Provider’ (Activity Code #7025). ADGM registered entities can apply to add this activity to their commercial licence online, by logging into the RA’s online registry solution, and selecting ‘Maintain Business Activities’. Before making an application, please ensure that you review and complete the CSP application checklist available here

Are law firms required to apply for the new CSP activity to enable them to assist clients with company formation?

No.  Law firms who advise on the incorporation and registration of bodies corporate within ADGM as an incidental part of conducting the business activities of

legal consultancy, without providing any other company service, are not providing company services.  This also applies to persons conducting the business activities of financial services advisory activities, management consultancy, compliance consultancy, or accountancy.  Please see Rule 7(4) of the Commercial Licensing Regulations 2015 (Controlled Activities) Rules 2021 - here
Can I continue to provide company services under my existing licenced activity (i.e. Corporate Service Provider/ Legal Consultancy / Management Consultancy)?

Following the transition period, company services, including eligibility for appointment to non-exempt SPVs and foundations, can only be provided by firms that are licensed with the ‘Company Service Provider’ activity (Activity Code #7025). For information on how to apply for this activity see FAQ question 1 (above).

 

 

 

 

What action does the RA take when there is potential risk on client money?

 The Registration Authority takes client money compliance seriously. The misuse, loss or theft of client money can cause significant harm to clients. The penalties for non-compliance with client money requirements may include fines of up to USD 15,000, licence suspension or licence cancellation.

 

 

 

 

What are the requirements for client money related to CSPs?

There are various client money requirements, which are set out in the Commercial Licensing Regulations 2015 (Client Money) Rules 2021 (“Client Money Rules”). They include obligations regarding the opening client accounts, making payments to and from client accounts, segregation of funds from client accounts, reporting and annual reviews. For more information please review the Client Money Rules, and Client Money Guidance Note available here

Where can a CSP keep client money?

A CSP must hold client money either in a separate ‘client account’ established with a bank that is authorized to accept deposits, or in a ‘pooled account’ (subject to client approval).   For more information please review the Commercial Licensing Regulations 2015 (Client Money) Rules 2021, and Client Money Guidance Note available here

 

 

 

 

 

Are CSPs required to be appointed for all entities registered in ADGM?

CSP appointment is compulsory for non-exempt SPVs and non-exempt Foundations and optional for exempt SPVs and exempt Foundations.  For further information on exempt and non-exempt SPVs and Foundations, please refer to self-assessment questionnaire and guidance note on this page.

 

 

 

 

Who notifies the RA that a non-exempt SPV has appointed a particular CSP?

The SPV.  The SPV must with 14 days of the CSP being appointed, or ceasing to be CSP of the SPV, give notice to the Registrar of the change and of the date on which it occurred. In addition, a consent of the CSP to act must accompany a notification of appointment.  See section 296C of the Companies Regulations 2020 and section 18(7) of the Foundations Regulations 2017 for non-exempt Foundations.   For a copy of the relevant notification forms to use, see the link here

 

 

 

 

 

Can the CSP sign on behalf of the SPV on the SPV notification form?

The notification of appointment of a CSP must be completed by a director, partner, manager or authorised signatory of the exempt SPV that is appointing the CSP. 

If the CSP to be appointed is already authorised to act in the capacity of director or authorised signatory of the exempt SPV, the CSP may sign the notification on behalf of the exempt SPV in accordance with that authority.

For a copy of the relevant notification forms to use, see the link here.

 

 

 

 

 

Is CSP a new type of licence or an activity that I can apply to add to my existing commercial licence?

To conduct CSP activities requires a firm to be licensed with the activity, ‘Company Service Provider’ (Activity Code #7025). This is a business activity that can be applied for to add to a firm’s existing ADGM commercial licence. It is not a new type of licence. For information on how to apply for this activity see FAQ question 1 (above).

 

 

 

 

What happens if a CSP, SPV, Foundation does not comply with the regime?

Non-exempt SPVs

If a non-exempt SPV fails to comply with the requirement to appoint company service provider, a contravention of the relevant regulations is committed by (a) the company, and (b) every officer of the company who is in defaults.  A person who commits the contravention is liable to a fine not exceeding a level 7 fine. 

A non-exempt SPV that fails to make available to its CSP such documents and information as required to enable the CSP to comply with its obligations is liable to a fine not exceeding a level 6 fine. 

A non-exempt SPV that fails to notify the Registrar of a change appointment of a CSP is liable to a fine not exceeding a level 2 fine.

Furthermore, under section 864 of the Companies Regulations 2020, if the non-exempt SPV has not appointed a CSP, the Registrar has the power to strike off the non-exempt SPV.

Non-exempt foundations

For non-exempt foundations, if default is made in complying with the relevant subsection of the regulations to appoint a company service provider, a contravention of the regulations is committee by (a) the non-exempt foundation, and (b) every councillor who is in default.  A person who commits the contravention is liable to a fine not exceeding a level 7 fine.

A non-exempt SPV that fails to make available to its CSP such documents and information as required to enable the CSP to comply with its obligations is liable to a fine not exceeding a level 6 fine.

A non-exempt foundation that fails to notify the Registrar of a change appointment of a CSP is liable to a fine not exceeding a level 2 fine.

 

 

Is the CSP activity a controlled activity?

Yes.  “Providing company services” is a controlled activity and includes any one or more of the services set out in Rule 7(1) of the Commercial Licensing Regulations 2015 (Controlled Activities) Rules 2021. Therefore a person must be licensed as a CSP to provide company services.   

“Providing company services” includes the controlled activity of “Registered Officer Provider”.

 

 

How we can measure adequacy for presence in UAE?

Adequacy is measured by presence of operational entities in the United Arab Emirates, presence of physical assets, machinery, factories, others.  It can also be measured by the number of people employed and annual turnover, the number of the board of directors appointed, presence of the board committees, availability of professional skilled personnel in the in-house legal function, compliance function, AML function, risk function, other internal functions which may support maintaining the legal entities incorporated in ADGM in good standing. 

The RA has published a guidance note which prescribes methods of self-assessing the adequacy which can be accessed here.  This guidance note contains a non-exhaustive list of documents that can be presented to the RA for consideration of adequacy by the Registrar. 

For ease of reference, please find below the non-exhaustive list of documentary evidence of adequate resources and presence in the UAE:

 

  1. the company’s assets, turnover and employees in the United Arab Emirates*,
  2. he company’s governance, policies and procedures**, and
  3. any rules made by the Board or guidance issued by the Registrar in this regard.

*In order to demonstrate to the Registrar that the company has sufficient assets, turnover and employees, please see below non-exhaustive list of evidence acceptable to the Registrar (note: documents lodged with the Registrar must be recent and relevant, i.e. issued in the preceding three months prior to submission, and must be translated into English language). 

  • Copies of the current valid commercial licenses (or similar document) issued by the local relevant regulatory authorities of operational legal entities currently operating in the UAE.

     

  • Copies of the latest audited accounts of the operational entities in the UAE or elsewhere.

     

  • List of the company’s assets– physical assets, buildings, machinery, factories.

     

  • Information on the number of employees employed by the company and annual turnover per company per financial year.

     

  • Copies of the current ‘establishment card’ (also known as ‘immigration card’) of each operating legal entity along with the list of the UAE residency visas issued for each legal entity/commercial license holder.

     

  • Organization structure for each operating legal entity clearly demonstrating governance structure and number of full time employees in each operating entity within the group chart.

     

  • Links to the company’s website where information on the board of directors and board committee can be found. Alternatively, please provide information indicating board of directors’ composition and board committees’ structure, including members of the committees, governance of the decisions and reporting lines within the structure.

     

  • Detailed description of the resources available in the compliance and/or in-house legal department or company secretarial division showing number of full time employees, along with their professional qualifications and roles held.

     

  • Other information which may demonstrate substantial assets.

    **In order to demonstrate to the Registrar the company’s governance, policies and procedures, please see below non-exhaustive list of evidence acceptable to the Registrar

  • Business ethics policy;
  • Corporate Governance policy or statement/structure;
  • Compliance policy;
  • Bribery and corruption policy;
  • Economic substance policy;
  • Risk management policy;
  • Anti Money Laundering Policy;
  • Others (please specify).
  • as well as evidence of monitoring and compliance with such policies and procedures.

 

Will the Online Registry Solution have a section related to CSP?

The current Online Registry Solution will not have a specific CSP section for non-exempt SPV’s to complete showing the appointed CSP, however this will be incorporated into the new Online Registry Solution currently being developed.

 

Can a non-exempt SPV appoint a CSP and use different registered office address?

No. The appointed CSP of an SPV must act as registered office provider to that SPV, unless otherwise expressly permitted by the Registrar.  See section 296B(2) the Companies Regulations 2020.

 

What action does the RA take when there is potential risk on client money? Are there any specific procedures?

The Registration Authority’s Monitoring & Enforcement Division conducts compliance assessments of ADGM registered CSPs covering various matters, including compliance with client money requirements. Complaints from clients can also trigger assessments and investigations by the Registration Authority. Non-compliance and/or malfeasance in relation to client money is taken seriously by the Registration Authority and significant penalties apply.

 

What is the difference between an exempt and non-exempt SPV?

An exempt SPV is the one that falls within one of the following categories listed below.  The column ‘description’ refers to the majority shareholder of SPV to be incorporated in ADGM.

 

Description

Explanation who falls into this category

  1. persons exempt under the ADGM Commercial Licensing Regulations 2015 (Exemptions) Order 2020

 

 

A body corporate established pursuant to (i) any law or decree issued by His Highness the Ruler of the Emirate of Abu Dhabi (including the ADGM Founding Law), or (ii) any Federal Law (other than Federal Law No. 8 of 1984 concerning Commercial Companies, as the same may be amended or re-enacted from time to time).

 

A body corporate that is a subsidiary undertaking of a body corporate specified in paragraph above.

The International Bank for Reconstruction and Development and the International Development Association, commonly known as the “World Bank”. 

  1. an authorised person within the meaning of the ADGM Financial Services and Markets Regulations 2015

A legal entity currently registered in ADGM holding a current Financial Services Permit issued by ADGM Financial Services Regulatory Authority

  1. persons licensed or regulated by the Central Bank of the United Arab Emirates

 

Legal entities holding a valid license or authorisation, as applicable, issued by UAE Central Bank. For the current list of the financial institutions currently licensed by the UAE Central Bank, please refer here: https://www.centralbank.ae/en/financial-institutions

  1. a company whose shares are admitted to trading on a regulated market in the United Arab Emirates, including in Abu Dhabi Global Market

 

Legal entities whose shares are admitted to the following regulated markets in the UAE:

https://www.adx.ae/English/Pages/default.aspx

https://www.dfm.ae/

https://www.nasdaqdubai.com/

Other UAE regulated markets

  1. a company that has demonstrated to the satisfaction of the Registrar to have adequate presence in the United Arab Emirates

Please refer to the guidance note published by ADGM RA and questionnaire at the top of the page which will help you to assess whether you have adequate presence in the UAE.

 

Those that do not meet any of the above listed descriptions are categorised as the non-exempt SPVs. 


 

I am a non-exempt SPV, how long do I have to appoint a CSP?

The new regulations came into force on 12 April 2021.  The effective date is 12 July 2021.  There are three categories of non-exempt persons to which the appointment period will differ:

 

Date of the incorporation/registration of non-exempt SPV or Foundation

Date of the appointment of a company service provider

 

Incorporated/registered in ADGM prior to or on 12 April 2021

 

must appoint a company service provider at the date of the next commercial license renewal OR by 12 July 2022, whichever is earlier

 

 

Incorporated/registered in ADGM between 13 April to 12 July 2021

 

must appoint a company service provider at the time of the next commercial license renewal (note: not later than the renewal date)

 

 

Incorporated/registered in ADGM on 13 July 2021 onwards

 

must appoint a company service provider at the time of lodging the application for incorporation. ADGM RA will not accept applications for registration of a foundation or incorporation of a non-exempt SPV without a company service provider appointed. Such company service provider should be the one lodging the application for registration or incorporation with ADGM RA


 

How do I figure out if I am an exempt or non-exempt SPV?

In order to determine if a company or a foundation may be exempt, you can conduct a self-assessment.  The RA has prepared a questionnaire (located at the top of this page) which you can use as an indicator as to whether a company or foundation is considered exempt or non-exempt.  Further, the RA has prepared a detailed guidance note which prescribes what documents to lodge with the RA in order for it to assess whether or not the company or foundation is indeed exempt.