Setting Up Special Purpose Vehicles in the Abu Dhabi Global Market

What is a Special Purpose Vehicle? No, it’s not a Land Rover or some four-wheel-drive made for a specialized purpose like traveling in snow or driving through standing water. In fact, it really has nothing to do with transportation at all. Instead, it’s a legal entity or subsidiary which allows businesses to shield themselves should a parent company ever face any type of financial or legal trouble. A Special Purpose Vehicle, also known as a Special Purpose Entity (SPE) or a Special Purpose Company (SPC), can be used to buy and sell assets which are carefully placed in an off-balance sheet, with the intent to limit and isolate any potential fiscal risk.

What is the ADGM? The Abu Dhabi Global Markets is an international financial free zone for numerous local, intermediate, and national institutions. Operating since 2015, the ADGM provides a wide-ranging set of services ranging from wealth management to insurance coverage, and much more.

The ADGM jurisdiction extends across Al Maryah Island, and is governed by three independent authorities: the Financial Services Regulatory Authority, the Registration Authority, and the Abu Dhabi courts.

Additionally, the ADGM offers simple, efficient SPV services crafted and tested against international standards. They cater to the needs and requirements of businesses and industries alike, with no restrictions on who is eligible to set up their own SPV!

 

 

Why SPVs Are an Important Tool for Business in the ADGM

So, why use an SPV? There are many reasons a Special Purpose Vehicle may be a great tool to give you an extra advantage in the business world. For one, an SPV company might make it more favorable to exist as a limited company in terms of taxation, versus a sole entity taxed under self-assessment. Additionally, investors are far more likely to see a limited company as a lower-risk investment.

SPVs are also considered “bankruptcy-remote,” with financial risks isolated in the event a parent company were ever to face financial or legal issues. Regarded as a highly adaptable and efficient solution for planning holdings and investments, SPVs give shareholders and owners more freedom without any added financial and legal risk. And with the application of English Common Law, SPVs are dictated by the company’s rules and regulations, rather than by any separate protocols – thus ensuring more consistency across the board.

Setting Up an ADGM SPV

Creating an SPV can be a relatively simple process! Below, we’ll take you through the steps you’ll need to follow to get your SPV up and running in Abu Dhabi’s International Financial Center.

• Create A Profile

Prepare all required documentation for the application process and create a profile. A business plan with purpose, structure, and planned shareholders is also a necessity for your application to receive pre-approval.

• Application Completion

Ensure that you have completed all required forms and submit your application with all needed documentation and payment.

• Notification

With an application correctly submitted, the approval process may only take a few days. Your application status will be available for view on your online dashboard, and you can expect to be contacted via email should any adjustments or changes be necessary. Once the registrar has made their decision about your application, you should receive a prompt email notification.

• License Issuance

Upon obtaining approval for your application, you will receive an immediate soft copy of your new license, along with a provided link which allows you to schedule an appointment to collect your official documentation.

Required Documentation

When submitting an SPV application in Abu Dhabi’s International Financial Centre, you will be required to:

• Provide Articles of Association

You will need model articles (with or without amendments), or a fully customized AoA for submission.

• Registered office address

You will also be required to submit a copy of the signed consent letter or lease agreement for your registered office address.

• Resolution of Board of Directors, or Shareholders Resolution

You will need to provide this proof of your BoD’s decision regarding the initiation of an SPV. Only a copy of this document is necessary for your application (originals aren’t required to be submitted).

• Passport information and signature for each (authorized) signatory, shareholder, director, or beneficial owner

You will only be required to submit a copy of these documents.

• UAE visa and passport for each authorized signatory

This only applies to UAE permanent residents, and only a copy is required.

• Emirates ID for your UAE nationally-authorized signatory

Only a copy of this documentation is necessary.

• Certificate of incorporation and registration for each shareholder and director

For this form, you will need a certified copy from the previous three months.

The Benefits of Choosing ADGM SPV

Deciding to enact a Special Purpose Vehicle for your business setup in Abu Dhabi can benefit your business in many ways.

• With lower risks, an SPV is more attractive to potential investors.
• An SPV company can encourage better financing terms.
• SPV’s can make the mortgage process easier to navigate, too.

How MSZ Consultancy Can Help Your Business

Special Purpose Vehicles are a vital strategy for helping to navigate the international financial free zone. As such, SPVs offer an excellent way for businesses to manage their assets without fear of losing it all. The process is simple & straightforward, with no restrictions on who can apply!

Abu Dhabi’s International Financial Center operates by providing a wide range of services, including wealth management, banking, insurance, and more! Aligned with international standards of best practices, the ADGM is a progressive, robust, and adaptable system that is one of the most trusted financial centers in the Gulf Cooperation Council.

Now that you know more about Special Purpose Vehicles and their role in helping to establish companies in the ADGM, let’s talk about how MSZ Consultancy can help you create your own business, including the formation of your own SPV!

MSZ Consultancy has extensive experience in the creation of SPVs in Abu Dhabi’s free zones. We’re also incredibly proficient in providing swift and cost-friendly assistance with the incorporation of your business. In short, MSZ Consultancy is really here to help you build your UAE business from the ground up! We’ll help you navigate all the potential red tape, potholes, & pitfalls, and we can help to set your new business enterprise up for greater success. Ready to get the conversation started? Just give us a call at +971 52 544 1248 today, and get connected with one of our knowledgeable experts!