Setting Up a Special Purpose Vehicle (SPV) in ADGM: A Complete Guide

A Special Purpose Vehicle (SPV) is a legal entity that is established for a limited business purpose such as acquisition and holding of assets, carrying out a transaction or to use as a funding structure.  It allows companies to secure and isolate assets, create and invest in joint ventures, and perform specific transactions.  The main purpose for setting up a SPV is to carry out a business activity while isolating the parent company or the individual shareholder from legal and financial risks (such as bankruptcy and insolvency issues) by ring-fencing certain assets and liabilities.

Special Purpose Vehicles (SPVs) in Abu Dhabi Global Market (ADGM) are set up with investor friendly holding structures, where the owner’s assets and profits can be financially separated and at the same time not have to operate as a separate entity.  SPVs here can act as holding companies or can be used for the securitization of assets and liabilities. In ADGM, Restricted Scope Companies are also available for certain categories of clients which allow for limited disclosure on the public register.

Why Choose ADGM for SPV Setup?

ADGM SPV regime is adopted by businesses, individuals, and the advisory community for a wide variety of purposes, including:

• To isolate a company’s assets or operations from the parent company
• To protect individual shareholders from being exposed to personal liability
• To carry out financial transactions, including joint ventures and asset purchases
• It protects funds and assets as it lowers parent company’s risks and gives more financial flexibility with lower capital requirements
• Protects against bankruptcy and creditors and so the parent company can make high risk financial transactions or investments without endangering the solvency of the entire company
• Can keep projects hidden from competitors and from company investors

SPVs cannot be used to conduct operational business or hire staff.

For a detailed overview of ADGM company setup, you can also check our ADGM Company Setup Guide.

Key Benefits of ADGM SPV Setup

There are many distinguished features and key advantages that ADGM SPV have that entities in other free zones and mainland do not. Some of these are described below:

• Tax residency in UAE. All ADGM registered entities are eligible to apply for a Tax Residency Certificate from the UAE Ministry of Finance (MoF) to benefit from the UAE’s Double Tax Treaty network. Entities will need to meet criteria set out by the MoF.
• Shelf SPVs permitted. ADGM allows the setup of shelf SPVs where a business, law firm or corporate services provider requires SPVs ready and waiting for a transaction, for itself, or its clients.
• Migration and continuance permitted. ADGM allows for the relocation and re-domicile of companies to ADGM from other jurisdictions.
• No office space needed. ADGM allows the use of an agent/ corporate service provider to manage the SPV and to provide the registered office address.
• Tax efficient. Access to broad UAE Double Tax Treaty network.
• No attestation required. No attestation required for corporate document and no requirement to file yearly audited financial accounts.

Flexibility of ADGM SPV Setup

ADGM provides flexible and modern legal framework to setup and operate companies within ADGM.  For instance:

• Multiple classes of shares are allowed. This means that each class can have own voting rights, dividend options, share value, redemption options and more.
• The memorandum can be fully customized.
• No minimum share capital and no maximum number of shares
• Can be established as subsidiaries, project or joint venture vehicles
• No requirements to attest company documents
• No restrictions on nationality and ownership and no minimum share capital required
• Minimum requirement of just 1 shareholder and 1 director

Common Use Cases of SPVs in ADGM:

• Real Estate Investors: SPVs are commonly used to hold property assets, whether a single property or an entire portfolio. Owners can create SPVs based on their property’s location (e.g. Abu Dhabi, Dubai) or asset type (e.g. residential, commercial).
• Business families with complex structures: SPVs help families to organize their interests by sector (e.g. retails, hospitality), ownership (e.g. wholly owned, jointly owned) or geography (e.g. UAE, Kuwait, etc)
• UAE Business Owners: Individuals who hold assets in the UAE in Limited Liability Companies under their personal names, can transfer their share into a SPV. This will enhance privacy, control, and succession planning options.
• ADGM SPV can hold intellectual property like trademarks, patents and copyrights
• Allows for financing without affecting the debt levels of the parent firm or exposing the parent’s assets to cross liabilities
• When creating joint ventures, SPVs can become the specific project-based company so that the venture partners are legally isolated from the venture risks
• Can have separate Intellectual Property which will have minimum liabilities and can enter into license agreements with third parties.

The Nexus Requirement for ADGM SPVs

In addition to all the applicable licensing requirements for ADGM company setup, for SPVs, there’s a special requirement (The Nexus Requirement), where applicants must be able to demonstrate that the SPV will have an appropriate connection (nexus) to:

• ADGM or
• UAE or
• Gulf Cooperation Council (GCC) Region.

This connection can be demonstrated in several ways, including any evidence of the following:

• The SPV is owned by a UAE or GCC based private company, family office or individual.
• The SPV is holding assets that are located in the UAE or GCC Region.
• The SPV facilitates transactions that are connected to the UAE, or provides real economic benefit to the UAE.
• The SPV’s purpose includes the issuance of Securities that will be admitted to the Official List maintained by the Financial Service Regulatory Authority (FSRA), and / or admitted to trading on a Recognized Investment Exchange, MTF3, OTF4 or other licensed platform (including a PFP5) that is established in ADGM.

Special Purpose Vehicle (SPV) Types in ADGM

ADGM offers two main types of SPVs, created to meet several business needs in terms of structure, specially in terms of holding and managing assets, isolating financial risks, and allowing groups structuring. These types include:

1. Private Company Limited by Shares (LTD)

This is the standard SPV form with ADGM. As it functions as the standard private limited company, and the passive holding company.

• Restricted Scope Company (RSC)

This is a unique ADGM legal structure offering a full disclosure to the ADGM Registrar and limited disclosure on the public Registrar, and must be incorporated as below:

• A subsidiary of another body corporate that prepares and publishes group accounts.
• A subsidiary of a company formed by Emiri decree.
• A subsidiary of a Single Family Office.

Important Notes Before Setting up a SPV in ADGM

With ADGM, Setting up SPVs can fall under one of two categories, which indicates from the start how the application should be submitted, that is “Exempt” and “Non-Exempt” applicant.

The main difference between Exempt and Non-Exempt Applicants is requiring a Company Service Provider (CSP), for Exempt applicant, a CSP is not required and can be done directly through ADGM, whilst for Non-Exempt applicants, a CSP is mandatory.

With ADGM, the payments for setting up SPV can fully be done online, and the application can be completed digitally through the online registry solution in ADGM on the website. Additionally, there is no need for the owners to personally visit ADGM, as there is no need for delivering original hard copies of any document.

SPV’s Registered Office Address

SPVs that are registered with ADGM should have a registered office address in Al Maryah Island or Al Reem Island, which can be satisfied in several ways:

1. Non Exempt SPVs can use the appointed Company Service Provider’s office address.
2. Exempt ADGM SPVs can use the ADGM address for its ADGM related entity or it’s parent entity that is registered with ADGM.
3. ADGM registered legal entity with the licensed business activity of ‘registered office provider’ may offer registered office address to Exempt SPVs.

Required Documents for ADGM SPVs

1. Articles of Association (AOA): Where either the owner can use a modeled AOA provided by ADGM, or an amended AOA, or a bespoke AOA.
2. Registered office address: for Non-Exempt SPVs, a signed consent letter for provision of the registered office by the appointed CSP is required.
3. Copy of the Board of directors or Shareholders Resolution.
4. Copy of the passport, UAE visa page for each Signatory (UAE Residents)
5. Copy of the Emirates ID/ for the Signatories which are Emiratis and GCC nationals.
6. Certified Certificate of Incorporation (within the last 3 months) for each Corporate Shareholder or Director.

Cost and Timeframe

Application for reserving a name $200

Incorporation Application $400

Commercial License 1,000$

Total $1,600

Additionally, $ 700 is charged for registration inclusive of $300 Data Protection registration fee.

*Note: The above mentioned fees may be subject to changes, and are not including the professional fees charges by the CSPs.

It takes between 3-4 weeks to establish the Foundation with ADGM from the day all the required documents are delivered by the client.

Conclusion:

At CorpLex, we help clients understand the ADGM SPV setup process clearly, making sure its done with maximizing strategic benefits.

Whether you’re just starting to explore SPVs or you’re ready to launch, Contact CorpLex today for professional guidance and smooth setup.

If you’re also interested in other ADGM structures, explore our guide on Types of Companies in ADGM.

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