Dual License Adgm

[Amatista Sheeley]

TheAbu Dhabi Global Market (the ADGM) and the Abu Dhabi Department of Economic Development (the DED) have recently announced a dual licensing regime for entities established in the ADGM. This is a significant development which enhances the ease of doing business from the ADGM.

Under the new regime, certain entities holding ADGM commercial licences will be eligible for mutual licence recognition with the DED provided that they satisfy and fulfil the respective licensing requirements of each jurisdiction and operate according to their respective rules and regulations. This means that eligible ADGM entities will be permitted to service businesses in onshore Abu Dhabi without having an office presence on the mainland.

ADGM entities providing financial services to customers in onshore Abu Dhabi will remain subject to any other relevant regulatory obligations and applicable laws which may be imposed on the mainland by the Federal regulators (such as the UAE Central Bank).

The announcement comes after a Memorandum of Understanding entered into between the ADGM and DED in 2015. The dual licensing regime aims to encourage business activity from the ADGM into onshore Abu Dhabi, and increase the competitiveness of the ADGM and Abu Dhabi as business centres in the region.

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Abu Dhabi Global Market (ADGM) is an international financial centre in the Emirate of Abu Dhabi. As a Financial Free Zone formed under a federal decree, it is allowed to enact its own legislation. The original jurisdiction and territory of the ADGM was restricted to Al Maryah Island, Abu Dhabi. This is no longer the case.

Please note that branches (as opposed to limited liability companies) existing in Al Reem Island and registered with the DED may not initiate a continuation application with the ADGM Registration Authority. They must register a new branch in ADGM under the same premise in Al Reem Island and proceed with cancellation of their branch license registered with the DED.

In order to address concerns of conducting business in the Abu Dhabi mainland while holding an ADGM license, ADGM and the DED have in place an agreement to facilitate a dual licensing regime for entities registered with ADGM. Under this agreement, certain ADGM entities are eligible for mutual license recognition with the DED, provided they satisfy the respective licensing and regulatory requirements of each jurisdiction. This means that eligible ADGM entities may be permitted to service businesses in onshore Abu Dhabi without having an office presence on the mainland.

At Al Tamimi & Company, we regularly advise local, regional, and global financial institutions on matters concerning the ADGM. We would be delighted to assist you in better understanding this new development, as well as in relation to our services, which include assisting with the establishment within the ADGM, continuance into the ADGM, establishment in the Abu Dhabi mainland, business relocation from Al Reem Island, general advice on the implications of this resolution for your legal entity, and drafting ADGM employment contracts. We are fully committed to providing comprehensive support to HR/legal during the transition.

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The expansion of ADGM to Al Reem Island aims to accommodate rising demand, occupancy rates in Al Maryah Island exceeding 95%, positioning it as a global financial hub. This move enhances ADGM's ecosystem with commercial, residential, and luxury amenities, attracting corporations and talent to Abu Dhabi. It solidifies ADGM's value proposition by complementing its robust legal and regulatory framework.

- Collaborative Efforts: ADGM collaborated with key government stakeholders and local authorities, including ADDED, CBUAE, ADM, MoHRE, and ICP, to establish flexible measures for a seamless transition.

- Ongoing Inquiries: ADGM continues to address inquiries about the impact of the jurisdiction expansion, including the transition period, potential dual licensing, and whether the ADGM regulatory framework will be mandatory or optional for existing entities.

- On March 4, 2024, ADGM held its first community event on Al Reem Island, with over 500 business representatives and officials from ADDED and DMT participating to foster active engagement and support.

MS , to support the Al Reem Expansion is offering 50 Pro Bono migration assistance exclusively for qualifying retailers on Al Reem Island - an initiative to empower and support local businesses. Over-business support; it's a testament to our belief in community strength and mutual growth.

This transition will create a commercial and residential shift in Al Reem Island, with a higher density of HNIs and UHNIs, foreign investment, real estate market booming etc. Handling the short-term difficulties, the Expansion is an impactful move in the long term.

In partnership with Abu Dhabi Judicial Department, ADGM Courts offer a Notary Public service for all ADGM registered entities. ADGM Courts Notary Public is licensed and authorised by Abu Dhabi Judicial Department to notarise and attest documents.

You will need to supply us with the POA text prepared by your advisor in English and we will arrange for this to be legally translated to Arabic. Once we have the draft POA in dual language (English and Arabic), this will need to be reviewed and approved by the ADGM Notary. The POA should be valid for a maximum of 3 years.

We will prepare a Board or Shareholder Resolution that approves the POA and nominates a Director to sign the POA and attend the virtual appointment with the ADGM Notary (Resolution). The POA will be attached to the Resolution and both will be prepared in dual language.

We will arrange an appointment for you with the Notary and provide the Notary with all required documents for their final review ahead of the appointment. A local UAE mobile number will be required for the WebEx link, if this is unavailable, Clara Formations will provide an alternative mobile number and we will forward you the link accordingly.

These amendments reflect the close and collaborative partnerships that ADGM has formed with its governmental partners in Abu Dhabi, in particular with the Abu Dhabi Judicial Department (ADJD) and the Department of Economic Development (DED).

The developments will be welcomed by local and global business and investor communities. The importance of these amendments, from a commercial regulatory perspective, include: formalising the dual licensing regime created with the DED which enables ADGM entities to establish branches, subsidiaries or representative offices in Abu Dhabi without needing a place of residence outside ADGM.

It also obliges legacy entities licensed by the DED on Al Maryah Island (prior to the establishment of ADGM) to surrender their licenses and obtain an ADGM license, unless they are exempted in accordance with ADGM regulations or by a decision from the board of directors.

According to the new regulations, parties without any connection to ADGM will be able to resolve disputes at ADGM Courts. Taking advantage of Common Law Courts, which are presided over in English, will be very beneficial for many companies.

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There was a time when there were certain legal and geographical restrictions on companies that wanted to operate onshore or offshore. The majority of businesses complained that they had to drastically reduce their profit-earning capacity and alter their business model in order to meet this defined set of requirements.

The Abu Dhabi Department of Economic Development or simply called ADDED launched its dual license initiative back in 2018. If you want to know how to obtain a dual license in Abu Dhabi to operate your company onshore and offshore, you are at the right place. Follow the steps given ahead to issue a dual license for your business.

Companies formed in free zones of Abu Dhabi, UAE such as KIZAD, will be able to open a branch onshore thanks to the Dual Licensing system. Previously, it was necessary to rent an office space, go through a laborious incorporation process, and hire local service agents for their services in order to start an onshore branch company in Abu Dhabi.

In the past years, branches situated in a Free Zone of Abu Dhabi needed a completely different address. This would need an extra lease arrangement. Branches are now allowed to conduct business operations in the same location as their parent company but it is still possible for them to have other office addresses.

The dual licensing concept has eliminated the requirement for local agents by allowing parent companies to sponsor businesses that apply for dual licenses. Companies can save extra expenses and the associated hectic paperwork due to this amendment in the dual license.

Depending on the kinds of operations the applicant company engages in, different licenses may be issued. The activities needing a huge number of permissions from governments and are extremely technical in nature will take a lot more time to process completely.

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