Overview
The Abu Dhabi Global Market (ADGM) is an international financial centre established in 2013 by UAE Federal Decree. Located on Al Maryah Island in Abu Dhabi, ADGM operates as a separate legal jurisdiction within the emirate — with its own civil and commercial laws based on English common law, its own court system, and its own regulatory authorities.
ADGM’s jurisdictional independence is its primary competitive proposition. Companies and individuals operating within ADGM are subject to English common law rather than UAE civil law. Contracts are interpreted under common law principles. Disputes are adjudicated by ADGM Courts, staffed by internationally appointed judges with common law experience. This framework is designed to provide the legal certainty and predictability that international financial institutions, fund managers, and professional services firms require.
As of the most recent data, ADGM hosts more than 1,800 registered entities, ranging from single-purpose holding vehicles to fully regulated banks, asset managers, and fintech firms.
Three-Authority Structure
ADGM operates through three independent authorities:
1. Registration Authority (RA)
The Registration Authority handles company registration, commercial licensing, and immigration services for all ADGM entities. The RA maintains the register of companies, processes applications, and ensures compliance with ADGM’s Companies Regulations 2020.
Functions:
- Company incorporation and registration
- Trade licensing and annual renewal
- Immigration and visa services for ADGM employees
- Data protection registration (ADGM has its own data protection regulations modelled on international standards)
- Beneficial ownership reporting
2. Financial Services Regulatory Authority (FSRA)
The FSRA is ADGM’s independent financial services regulator. It authorises and supervises financial institutions operating within ADGM, including banks, asset managers, insurance companies, credit rating agencies, and fintech firms.
Regulatory Approach: The FSRA operates a risk-based regulatory framework inspired by international best practices, drawing particularly on the regulatory models of the UK Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC).
The FSRA regulates the following activities:
- Banking (accepting deposits, providing credit)
- Asset management (managing collective investment funds, discretionary portfolio management)
- Insurance and reinsurance
- Securities dealing and brokerage
- Operating exchanges and clearing houses
- Credit rating agencies
- Financial advisory services
- Fintech and digital financial services
Fintech Regulatory Framework: ADGM operates a RegLab (Regulatory Laboratory) — a fintech sandbox that allows companies to test innovative financial products and services under modified regulatory requirements. The RegLab has attracted participants in digital banking, blockchain, distributed ledger technology, robo-advisory, and payment services.
The FSRA has also developed specific frameworks for digital assets and virtual asset service providers, positioning ADGM as a regulated jurisdiction for cryptocurrency exchanges, token issuance, and digital asset custody.
3. ADGM Courts
ADGM Courts operate independently from the UAE federal and Abu Dhabi emirate court systems. The courts apply English common law and have jurisdiction over civil and commercial disputes arising within ADGM or involving ADGM-registered entities.
Court Structure:
- Court of First Instance — hears initial cases and applications
- Court of Appeal — hears appeals from the Court of First Instance
Judges are appointed from common law jurisdictions internationally, including former judges from England and Wales, Singapore, Hong Kong, and Australia. Proceedings are conducted in English. Judgments are publicly available, creating a body of common law precedent specific to the ADGM jurisdiction.
Arbitration: ADGM hosts the Abu Dhabi International Arbitration Centre (formerly the Abu Dhabi Commercial Conciliation and Arbitration Centre), providing alternative dispute resolution services. ADGM-seated arbitrations benefit from the ADGM Arbitration Regulations 2015, based on the UNCITRAL Model Law.
Entity Types
Special Purpose Vehicles (SPVs)
SPVs are the most numerous entity type in ADGM. They are used for:
- Asset holding (real estate, securities, intellectual property)
- Investment structuring (fund vehicles, joint ventures)
- Family wealth management
- Structured finance transactions
- Intercompany lending and treasury operations
SPVs have minimal operational requirements. They do not require office premises (registered agent address is sufficient), do not typically require employees, and benefit from streamlined annual filing requirements.
Cost: Registration fee from $2,000 annually. Registered agent services from $1,500 annually.
Private Companies Limited by Shares (Ltd)
The standard corporate entity for operating businesses in ADGM. Suitable for:
- Professional services firms (law, accounting, consulting)
- Technology companies
- Trading companies (within ADGM’s permitted activities)
- Corporate headquarters and regional offices
Requirements: Minimum one shareholder, one director (who may be the same person). No minimum capital requirement. Annual audited financial statements required.
Cost: Commercial license from $5,000-15,000 annually depending on activity category.
Partnerships
- General Partnership (GP) — all partners have unlimited liability. Used for professional services firms.
- Limited Partnership (LP) — at least one general partner (unlimited liability) and one limited partner (liability limited to contribution). Common structure for investment funds.
- Limited Liability Partnership (LLP) — partners have limited liability. Used for professional services firms that require partnership structure with liability protection.
Fund Structures
ADGM provides a comprehensive framework for investment fund establishment:
- Investment Company — corporate fund structure
- Investment Trust — trust-based fund structure
- Investment Partnership — LP-based fund structure (most common for private equity and venture capital)
- Protected Cell Company — allows segregation of assets and liabilities into separate cells within a single entity
Fund managers require FSRA authorisation. Funds may be offered to qualified investors (minimum $500,000 investment), exempt investors, or retail investors (subject to additional regulatory requirements).
Branches of Foreign Companies
International companies can establish ADGM branches to conduct activities within the jurisdiction. The branch is not a separate legal entity; the parent company retains liability. Branches require registration with the RA and, for regulated activities, FSRA authorisation.
Licensing and Costs
Non-Regulated Entities
| Entity Type | Annual Registration Fee | Annual License Fee | Total Annual Cost |
|---|---|---|---|
| SPV | $750-2,000 | $1,000-2,000 | ~$2,000-4,000 |
| Commercial (non-regulated) | $1,200-2,000 | $5,000-15,000 | ~$6,000-17,000 |
| Tech startup | $1,200 | From $2,000 | ~$3,200+ |
| Branch | $2,000 | $5,000-15,000 | ~$7,000-17,000 |
FSRA-Regulated Entities
Regulated entities pay registration fees plus FSRA supervisory fees that vary by license category:
| Category | Indicative Annual FSRA Fee |
|---|---|
| Category 1 (banking, dealing as principal) | $25,000-70,000 |
| Category 2 (asset management, dealing as agent) | $15,000-50,000 |
| Category 3A (advisory, arranging) | $10,000-25,000 |
| Category 4 (fintech, RegLab) | $5,000-15,000 |
Capital requirements vary by license category and activity type. Banks require substantially higher regulatory capital than advisory firms.
Tax Position
ADGM entities benefit from the UAE’s free zone tax framework:
- Corporate tax: 0 percent for qualifying free zone entities under the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022). Qualifying conditions include deriving qualifying income and maintaining adequate economic substance in the free zone.
- VAT: ADGM entities are subject to 5 percent VAT on taxable supplies, consistent with the UAE VAT framework.
- No withholding tax on dividends, interest, or royalties.
- No personal income tax for ADGM employees.
- Double Taxation Agreements: ADGM entities may benefit from the UAE’s network of DTAs with over 100 countries, subject to substance and beneficial ownership requirements.
Regulatory Philosophy
ADGM’s regulatory approach balances several objectives:
International Credibility: ADGM seeks recognition from international regulators as an equivalent jurisdiction. Mutual recognition agreements with the UK FCA, Singapore MAS, and other major regulators enable passport arrangements for financial products and services.
Innovation Support: The RegLab fintech sandbox, digital asset framework, and progressive approach to emerging financial technologies position ADGM as a regulatory jurisdiction that accommodates innovation within structured parameters.
Proportionality: Regulatory requirements are calibrated to entity size, activity type, and risk profile. SPVs face lighter regulatory obligations than fully authorised banks, reflecting the proportionate risk they present.
Transparency: ADGM publishes all regulations, guidance notes, court judgments, and consultation papers. The regulatory framework is publicly accessible, reducing the opacity that characterises some Gulf jurisdictions.
Assessment
ADGM has established itself as the Gulf’s most credible common law financial centre in the twelve years since its establishment. The combination of English common law, international judiciary, independent financial regulator, and progressive fintech framework creates a regulatory environment that competes directly with the Dubai International Financial Centre (DIFC) and positions Abu Dhabi as a viable alternative to Singapore and Hong Kong for regional financial services activities.
The structural limitation is geographic scope. ADGM-licensed entities operate within ADGM’s jurisdiction. Conducting business in onshore Abu Dhabi or elsewhere in the UAE typically requires dual licensing or partnership with an onshore entity. This jurisdictional boundary — a deliberate design feature that protects ADGM’s regulatory integrity — also limits the operational flexibility of ADGM-only entities.