How to Get an ADGM Business License in UAE
Established as the premier centre for finance in MENA region, Abu Dhabi Global Market (ADGM) is built upon strong legal framework, unrivalled investor set-up and exceptional global standing. ADGM has become an attractive choice among entrepreneurs, financial service firms, and multinational corporation who are seeking to do business in Abu Dhabi- UAE.
If you want to set up a new company in the UAE, obtaining an ADGM business letter can provide many benefits such as access to other Emirates such as Dubai markets through an ADGM business letter or regulated financial services license; it is important that you are familiar with the process.
In this thorough guide, we will outline how you can obtain an Abu Dhabi Global Market (ADGM) business license, include information about the requirements, the process, and the cost involved in obtaining an ADGM business licence as well as other essential factors to consider.
What Is an ADGM Business License
An ADGM Business License is a legitimate authorization from the ADGM Registration Authority that enables enterprises to conduct business in the jurisdiction of an ADGM. The ADGM Business License outlines your business classification and identifies your responsibilities with respect to regulatory compliance.
The ADGM registration authority issues three principal classes of licenses:
Non-financial or Professional
All three are appropriate for different categories of businesses. For instance, banks would require a financial license from the Financial Services Regulatory Authority (FSRA) before starting up, while consulting firms and other non-financial types of business will generally qualify for a Non-financial License.
Benefits of Setting Up a Company in the Abu Dhabi Global Market
Setting up a company in Abu Dhabi Global Market (ADGM) has many advantages and is very attractive to international businesses and investors.
The primary advantage is 100 percent ownership by foreign investors. Businesses are not required to use a local sponsor when establishing an ADGM corporate structure; they can fully repatriate profits back to their country, and they will benefit from a tax-efficient jurisdiction.
The existence of a legal system is another substantial advantage. The use of English common law as the foundation for ADGM's legal system provides many benefits to international business, including certainty, transparency, and predictability. This legal system provides greater confidence for investors, and it also simplifies the resolution of disputes.
Finally, companies that set up in the Abu Dhabi Global Market have access to the global financial markets through many banks, fintechs, and a generally thriving business ecosystem.
Types of ADGM Licenses Explained
Before applying, it is important to understand the different license categories.
The ADGM financial license is required for businesses offering regulated financial services. These include banking, asset management, insurance, and fintech activities.
Companies must obtain approval from the Financial Services Regulatory Authority. This process involves strict compliance checks and capital requirements.
This license is suitable for businesses offering professional or corporate services. Examples include consulting firms, holding companies, and family offices.
It is easier and faster to obtain compared to a financial license, as it does not require FSRA approval.
Retail licenses are designed for businesses operating in retail and commercial sectors within ADGM.
Step-by-Step Process to Get an ADGM License
Setting up a business in ADGM involves a structured process. Each step must be completed carefully to avoid delays.
Step 1: Choose Your Business Activity
The first step is to determine your business activity. ADGM offers a wide range of permitted activities across financial, professional, and retail sectors.Â
Selecting the correct activity is crucial because it determines:
The type of license requiredÂ
Step 2: Select the Legal Structure
Once the activity is defined, you must choose a legal structure.
ADGM allows several types of entities, including:
Branch of a foreign companyÂ
The structure you choose will impact ownership, liability, and operational flexibility.Â
Step 3: Reserve Company Name
Your company name must comply with ADGM naming rules. It should not conflict with existing entities and must avoid restricted or sensitive terms.
In some cases, you may need to provide additional documentation if your chosen name includes specific keywords.Â
Step 4: Prepare Documentation
Proper documentation is essential for approval.
Typical documents include:
Passport copies of shareholders and directorsÂ
Memorandum and Articles of AssociationÂ
Accurate and complete documentation helps speed up the approval process.Â
Step 5: Submit Application to ADGM
The application is submitted through the ADGM Online Registry portal. This is the preferred method and ensures faster processing.
The Registration Authority reviews the application to ensure compliance with ADGM regulations.
Step 6: Obtain Regulatory ApprovalÂ
If your business involves financial services, you must apply for approval from the Financial Services Regulatory Authority.
Submission of business planÂ
Once approved, you can proceed with licensing.Â
Step 7: Lease Office Space
ADGM requires companies to have a physical office within its jurisdiction. This can include co-working spaces or dedicated offices.
Proof of lease is required before the license is issued.
Step 8: Receive Your ADGM License
Once all requirements are met and approvals are granted, the ADGM Registration Authority issues your business license.
In many cases, the license can be issued within a few days after final submission, provided all documents are in order.Â
ADGM License application requires preparation of documentation ahead of time for a smooth application process:
Source of Funds Declaration
Providing documentation to the best of your ability will greatly increase the chances of your application being approved.
Depending on their type of business activity and their specific type of ADGM license they are applying for, it may be possible to obtain an ADGM license for different costs, which typically include:
Registration fee - starting at around USD $1500
Annual fee for ADGM license - starting at around USD $4000
Visa/administrational costs
Generally, financial sector licences have higher costs associated with the regulation (regulatory costs) and capital threshold requirements.
Timeline for ADGM Company Setup
The length of time it takes to set up an ADGM company can differ based on the type of company.
Companies which do not provide financial services can take between a few days and a few weeks to set up their ADGM company, providing that they have all of the correct documents required for setting up their ADGM company.
Companies which provide financial services can take several months to set up their ADGM companies, as many documents will need to be prepared prior to obtaining a financial services regulatory license from the ADGM.
A well-planned and documented ADGM company setup can greatly reduce the period of time it takes to set up an ADGM company.
Compliance Requirements in ADGM
After you obtain your ADGM business license, you are obligated to continue adhering to the ongoing requirements of the respective regulator.
Keep accurate and complete financial records.
File annual returns every year with the ADGM.
Adhere to anti-money laundering (AML) and know your customer (KYC) regulations.
Also complete the annual renewal application for your ADGM license.
Failure to comply with any of these obligations could result in penalties, including fines and possible suspension of your ADGM license.
Benefits of Getting an ADGM License
Having an ADGM license will provide multiple strategic benefits.
International Credibility
Establishing an entity in the ADGM can help enhance your credibility as a company in the international marketplace.
The ADGM gives you access to banks and other financial institutions as well as investors.
You can operate your business in a highly business-friendly tax environment with a potential for 100% repatriation of profits to you or your shareholders.
Now, you can conduct business in multiple sectors or to expand outside of the United Arab Emirates.
Comparing ADGM and Dubai Free Zones
Many entrepreneurs make comparisons between the Abu Dhabi Global Market (ADGM) and other Dubai Free Zones due to the options provided by Dubai’s Free Zones.
Although Dubai offers a vast array of Free Zones, one of the biggest distinguishing factors of ADGM in comparison to other Free Zones is its strong regulatory environment, along with its focus on providing high-quality financial services.
Companies wishing to gain credibility on a global scale and have access to the financial markets will largely focus on the ADGM while many businesses engaged in trading will likely look to other Dubai Free Zones for support.
Gaining ADGM Licensing Impediments
There are many benefits associated with setting up your business in the ADGM; however, there are challenges associated with setting up a business in the ADGM as well.
Some of these impediments include:
Complicated Regulations to attain financial licenses
Higher set-up costs versus other Dubai Free Zones
Strict compliance with regulations.
Despite these challenges, the long-term benefits of operating a business within a globally recognized financial centre far outweigh these challenges.
Advice For Getting Approved for An ADGM Business Licence
Ultimately, in order to get approved for an ADGM business licence, you must follow the guidelines below.
-Â Specify what you intend to do.
-Â Create a complete and accurate application package.
-Â Know at least some of the rules before you apply for a permit.
-Â Use a professional if you need assistance,
The right approach to your business licence application will help you obtain your licence faster and with less hassle than you would expect.
In summary, applying for a business licence from ADGM is an excellent choice for any type of enterprise that wants to establish their presence within the ADGM financial centre on behalf of themselves, and/or on the behalf of the jurisdiction in which their company is registered.
