What’s a special purpose vehicle? And why Abu Dhabi?
A Special Purpose Vehicle (or SPV) isn’t some sort of sport utility vehicle used for driving through rough terrain. It’s actually a legal entity or subsidiary that allows businesses to shield themselves from liability if a parent company should ever face any financial or legal troubles. Also known as a Special Purpose Entity (SPE) or Special Purpose Company (SPC), SPVs can be used to buy or sell assets which are then placed in an off-balance sheet, with the intent of limiting and isolating any potential fiscal risk.
Why Abu Dhabi? The Abu Dhabi Global Market (ADGM) is an international Free Zone which operates by English Common Law. Open since 2015, the ADGM offers a wide range of services, including wealth management, insurance coverage, and much more. This business-friendly ecosystem is governed by three independent authorities: the Financial Services Regulatory Authority (FSRA), the Registration Authority (RA), and the ADGM Courts system. The ADGM is recognized as one of the most trusted, most reliable financial centers in the region. It includes a workforce of over 22,000 people, and currently manages assets worth well over $26 billion USD.
Benefits of ADGM SPV business setup
SPVs in the ADGM present many benefits to businesses. You can set your SPV up as a subsidiary, a special project, or even as a joint venture. SPVs are a cost-effective route to UAE company ownership, too. They require no minimum share capital, and don’t have a requirement for a physical office, either.
Of course, one of the biggest attractions for business owners and investors is that an ADGM SPV allows for greater freedom, while still maintaining a measure of separation when it comes to financial and legal risks. In fact, an SPV maintains a completely separate legal identity from that of its owner or owners.
There are more benefits worth noting about ADGM SPVs, too:
• Based on English Common Law
• No restrictions on the nationality of owners
• No physical office space requirement
• No minimum share capital
• No maximum number of shares or shareholders
• Multiple classes of shares available
• Only one shareholder and one director are required
• Articles of Association can be customized
• Preferred UAE Tax Residency status
• Can be used to migrate or continue existing corporate entities
• No required attestation of documents
Typical uses of an ADGM SPV
We’ve explained that a Special Purpose Vehicle is a special application of a passive holding company that serves to help protect assets, and also limits financial and legal risks for the owner(s). But how are SPVs typically used in the ADGM?
This approach is well-suited to a wide range of business operations and industries, including finance, investment, wealth management, leasing ventures, and more. Here are some of the more common uses of ADGM SPVs:
• Maintaining shares of active companies
• Holding real estate investments
• Maintaining intellectual properties
• Securing investments
• Securing loans
• Dividing shared risk through the pursuit of joint ventures
• Raising of capital independent from that of the parent company
The ADGM SPV company setup process
Creating an SPV in the ADGM is a fairly straightforward process. Here are the steps you’ll need to follow in order to get your SPV up and running in Abu Dhabi.
1. Initial processing of paperwork
Prepare all required documentation for the application process, including your KYC, incorporation documents, and a letter of consent from a registered office provider. You’ll also need to include a business plan with purpose, structure, and proposed shareholders in order to receive pre-approval.
2. Submission of the official application
Ensure that all needed forms are completed, and then submit your application and payment through the official portal.
3. ADGM application review
The ADGM authorities will review your application at this point; in many cases, the approval process only takes a few days. You can check the status of your application status on the online dashboard, and you’ll be contacted by email should any adjustments or changes be required. You’ll also receive an email notification once a decision has been made about your application.
4. Issuing of license
Upon obtaining approval of your application, you’ll receive an immediate soft copy of your new license, along with a link that allows you to schedule an appointment to collect your official licensure documentation.
Required documentation for ADGM SPV application
When submitting an SPV application to the ADGM, you’ll typically be required to include the following:
1. Articles of Association
You’ll need model articles (with or without amendments) at a minimum, or you can go ahead and submit a fully-customized AOA.
2. Registered office address (when required)
If required, you’ll need to submit a copy of the signed consent letter or lease agreement for your registered office address.
3. Resolution of Board of Directors, or Shareholders Resolution
You’ll need to provide proof of your BOD’s decision regarding the initiation of an SPV. Originals aren’t required for this step; you’ll only need to submit a copy of this document.
4. Passport information and signature for each (authorized) signatory, shareholder, director, or beneficial owner
Originals aren’t required; you only need to submit a copy of these documents.
5. UAE visa and passport for each authorized signatory (when required)
This step only applies to UAE permanent residents, and you only need to submit a copy of these documents.
6. Emirates ID for your UAE nationally-authorized signatory
As is the case with the other documents mentioned above, only a copy of the original is required.
7. Certificate of incorporation and registration for each shareholder and director
For this, you’ll just need a certified copy of the needed documents, covering a period of the previous three months.
Cost to set up an ADGM SPV
What’s the price of getting your Special Purpose Vehicle set up in Abu Dhabi?
The ADGM SPV company registration process can actually be split into two costs, for your convenience. In the first year, there is the ADGM fee of USD 1,600, and in the second year there’s an additional fee of USD 1,200. There’s also an additional ADGM office address and professional services fee, for a combined USD 1,400 per year. So, in the first year your total ADGM SPV company setup cost is approximately USD 3,000, and it will then cost you roughly USD 2,600 in the second year. Just note that these specific pricing numbers are subject to any subsequent changes in any governing UAE laws and regulations.
How MSZ Consultancy can help
Special Purpose Vehicles are a fantastic strategy for getting your new business set up in Abu Dhabi. Even so, it’s best not to try and tackle this process by yourself. Our experts at MSZ Consultancy are experienced in helping with business setup in Abu Dhabi, as well as in the other six Emirates of the UAE.
1. What we do
We’re your one-stop shop for everything needed to get a business set up in the UAE. Our expert consultants will guide you through all the necessary steps in order to get your business up and running smoothly. We help with everything from company formation, to secure a space and a sponsor (if needed), to answer any financial questions you have, and to make sure you have all your necessary legal paperwork finished on time.
2. How we can help
At MSZ Consultancy, we’re in the business of helping turn your business dreams into reality! There’s no need to worry about losing sleep over whether you have everything in place or not, because MSZ Consultancy is here to help do the hard work for you. We’ll guide you through all of the necessary administrative, financial, and legal processes needed for approving and launching a business in the UAE.
3. Why choose MSZ Consultancy
It’s not our place to brag, but it’s fair to say that we know what we’re doing! We have an award-winning team of specialists that’s been able to help generate positive results for clients for well over a decade. The secret to our success? We actually care about our clients! We customize our services for you and your business in order to make sure you get everything you need, at the best price possible. We’re more than just a business services provider. We’d prefer you to think of us as a long-term partner for your success.
Our headquarters are located right here in Dubai, and we know what it takes to get a business successfully launched in the UAE.
Ready to get started? Connect today to book your free consultation! You can give us a call at +971 52 544 1248, or you can also get the conversation started by simply shooting us an email at email@example.com. Don’t wait any longer; let’s get to work on making your dreams of opening a business in the UAE finally come true together.