Setting Up Of ADGM Funds
Overview - ADGM Funds
The ADGM has put in place a world-class funds framework that is based on Common Law. It offers fund managers an efficient, zero-tax rate business environment operating to international regulatory standards. ADGM funds can be set up with minimum capital requirements, one of the lowest available compared to any other regime globally. There are no remuneration restrictions on fund managers.
What’s on Offer? – For Fund Managers
- Legal certainty – direct application of Common Law
- 0% tax for corporates and individuals
- Effective and cost-effective authorization
- Low minimum capital requirements
- No remuneration restrictions
- Flexible arrangements for delegation of duties
- Access to world-class infrastructure & skilled workforce
- Ability of foreign fund managers to establish & manage ADGM funds
Authorization of ADGM Fund Managers
The FSRA applies a risk-based assessment to the authorization criteria, with a less rigorous and risk-proportionate approach applied to a fund manager’s application when non-retail funds are being managed, in comparison to a more rigorous approach that is applied to the authorization of a ADGM fund manager seeking to manage and sell Public Funds.
What are the Benefits?
The Fund that is set up in ADGM will enjoy several benefits. Many of these are not available in other jurisdictions.
- 0% tax on fund vehicles
- Efficient and cost-effective establishment process
- No maximum investor restrictions
- No minimum AUM requirements
- Master/Feeder/Umbrella fund structures available
- Access to world-class service providers
- Can use the office/registered address of the fund manager
Types of ADGM funds
Type of funds that can be set up in ADGM are as follows:
Exempt Funds
- Professional clients only
- US$ 50,000 minimum investment
- Private placement
- Reduced regulatory requirements for fund manager
- Notification to FSRA
Qualified Investor Funds
- Sophisticated Professional clients only
- US$ 500,000 minimum investment
- Private placement
- Minimal regulatory requirements for fund manager
- Notification to FSRA
Public Funds
- All client types, including retail clients
- No minimum investment requirements
- Increased level of regulatory oversight
- Restricted investment/borrowing powers
- Registration with FSRA
How Can We Help?
- Advice on fund structuring
- Fund documentation, including Private Placement Memorandums
- Fund authorizations and setups
- Fund accounting and audit
- Fund compliance
Why KPI as your Trusted Advisor?
For a successful application of your Fund set up in ADGM, you will need an experienced consultant.
Here is what we bring to the table for your Fund setup
- We helped authorize the first Foreign Fund Manager at the ADGM
- We have advised on fund structures in multiple offshore & onshore jurisdictions
- Our strong background in finance helps provide bespoke recommendations
- We have been at the ADGM since it’s inception - the 1st entity to register at the centre.
Frequently Asked Questions
ADGM is an International Financial Centre based in Abu Dhabi, UAE with rules and regulations aligned with international best practices. ADGM follows English Common Law framework. ADGM offers fund managers efficient business environment and with globally competitive minimum capital requirements. In addition, there are no remuneration restrictions on fund managers.
ADGM offers fund managers wide options for structuring the funds, such as:
- - SPVs
- - Restricted Scope Companies
- - General Partnership SPV
- - Master/Feeder structure
- - Umbrella funds
ADGM recognises that this industry depends significantly on third party service providers. Fund managers are allowed to hire third party service providers from both, ADGM or non-ADGM service providers.
Fund Management companies are required to maintain certain minimum capital as follows:
- - Public funds USD 150,000 or expenditure based requirement, whichever is higher
- - Exempt or QIFs: USD 50,000 or expenditure based requirement, whichever is higher
- - Venture capital funds are exempted from maintaining minimum capital
There are two costs involved in setting up of a fund; one is towards incorporation of fund and fund management companies, and the other onwards regulatory approvals from FSRA.
The fees depends on the category of license one requires. However, the incorporation costs would be around USD 15,000 and the FSRA approval fees would vary from USD 5,000 to USD 15,000 depending on the category and activities applied for.
An ADGM firm must have a physical presence on Al Maryah Island, the jurisdiction of ADGM. FSRA has no requirement in terms of the size of office but it should be big enough to conduct the business activities it is authorised for.