ADGM Special Purpose Vehicles – All Things to Know

Abu Dhabi Global Market (ADGM) has listed out guidance for Special Purpose Vehicles (SPV).

For setting up a Special Purpose Vehicle in ADGM Free Zone the investor must have a connection with UAE and able to provide documentary evidence of the same.

ADGM Special Purpose Vehicles – Key Highlights

The entities in the UAE must be owned or controlled by a UAE or GCC-based private company, family, family office, or individual.

The entities must be located in UAE or the GCC region and must be involved in transactions connected to trade, services, any activity with a real economic benefit to UAE.

The Registration Authority (RA) in ADGM is an independent body with the power to license and register all ADGM entities.

Establishing a Special Purpose Vehicle (SPV) Company in ADGM

Establishing a Special Purpose Vehicle (SPV) and all non-operational entities are easy and quick with a simplified process in ADGM.

ADGM’s SPV focuses on a broad range of categories across business types, industry sector. Corporates, sovereign wealth funds government-related entities, single-family offices, trustees, and individual investors can apply for an SPV.

SPV can be established as a subsidiary, project, or joint ventures. It acts as a separate legal entity and claims by SPV’s creditor are not attached to the shareholders or sister companies under the SPV.

The advantage with SPV is only the assets associated with the project are exposed to liabilities thereby safeguarding shareholders and organizations by mitigating risks with creditors.

Advantages of Registering for an SPV from ADGM

• The fully digital Registration process with easy-to-use portal access for document submission and fee payment
• Cost-effective business setup package – ADGM offers a transparent and affordable company formation package with a choice of a wide range of business activities for the investors
• No physical office requirement, the agent/corporate service provider is authorized to manage the SPV and provide the registered office address
• Common-Law jurisdiction & independent ADGM Courts
• Best-in-class independent regulatory framework
• Access to broad UAE Double Tax Treaty Network
• Variety of legal structures available

Typical Uses for SPVs

1. Securitization

An SPV can be used to securitize loans (or other receivables) by purchasing these assets by issuing debt. which is secured on these underlying assets.

It ensures that the holders of these asset-backed securities will receive priority in receiving the payment on the debt and limited recourse to the originator of the assets.

2. Real Estate Investment

SPV can be used to acquire real estate and limit the recourse of mortgage lenders depending on the location of the asset.

In some countries, the sale of an SPVs share can result in low taxes and transaction fees that transferring the asset as a whole.

3. Financing

It can be used to safeguard investments, permitting financing without increasing debt levels for the parent company, or exposing the parent’s assets to cross-liabilities.

4. Asset Transfer

It is used to transfer assets along with material agreements that may permit the transfer of parts of the ownership of the enterprise. It helps in maintaining the value of the assets for the long term.

5. Risk Sharing

It can be used for Project Companies to form Joint Ventures. The management responsibility will be shared by the companies while legally isolating the joint venture partners from the risks associated with the venture.

6. Raising Capital

An SPV can be used to raise capital at favorable rates in certain situations, with creditworthiness determined by the available collateral of the SPV and not the credit rating of the parent company

7. Intellectual Property

An SPV can be used to separate a valuable IP into a standalone SPV that has minimal liabilities and can be used to raise funds and enter into license agreements with third-party. It can also assist in managing products with a variety of IP components.

Steps to Apply for ADGM SPV Business License

The ADGM SPV company registration is through a fully digital platform governed by the ADGM Free Zone. Companies and individuals can take the assistance of expert business consultants to assist with the setup.

Also, as you proceed with a registered agent there is no requirement of leasing a physical office in ADGM. The registered office address of the registered agent will be your SPV License address.

Simplified Process for Setting Up an SPV Company in ADGM

ADGM has a simplified documentation process with minimum paperwork.

The application completion, document submission, fee payment, all are executed through the online portal simplifying the company registration process.

The notification of the progress will be emailed to the registered email address.

Once the assessment of documents is done, and fee payment is updated, the license for the SPV company (soft copy) will be issued via the link in the email.

The request for setting up an appointment to collect all the original documentation submitted as well as the business license.

SPV Application Documentation Requirements

• Articles of Association
• Registered Office Address
• Copy of Resolution of Board of Directors or Shareholders
• Copy of Passport Information and Signature page
• Copy of UAE Visa Page
• Copy of Emirates ID
• Certificate of Incorporation/ Registration

Interested in Company Formation at ADGM and how to set up a Company as an SPV, get in touch with our expert Business Consultants right away!

Contact Us: Aurion Business Consultants