Setting Up An SPV in the ADGM

The Abu Dhabi Global Market (ADGM) has been serving us as a major ecosystem for many ambitious organizations handling banking, insurance, wealth management, asset management, and capital market activities. Recently the ADGM has implemented a cost-effective and flexible SPV system, which is attracting a significant number of investors in the UAE and MENA region. Special Purpose Vehicles (SPVs) are passive holding companies established with the agenda of isolating financial and legal risk by guaranteeing certain assets and liabilities. These companies can be set up as subsidiaries, projects or joint venture vehicles so any assets related to a transaction are exposed to the liabilities associated with that transaction.

 Major Attractions for setting up a Special Purpose Vehicle (SPV) in the ADGM

• No attestations

Corporate documents do not require any attestation and there is no need for filing audited financial statements.

• Shelf SPVs are permitted

ADGM enables the setup of shelf SPVs wherein a business, law firm or corporate service provider needs ready SPVs for a transaction.

• No restrictions on the nationality of ownership and share capital

There are no restrictions on the nationality of shareholders and minimum share capital. Apart from that there are no mandatory requirements for the maximum number of shares or shareholders; just one shareholder and a director are required.

• No physical office space required

SPVs can keep the address of an agent, existing or holding company, or virtual office. This may reduce set-up costs.

Uses of SPV

• Securitisation

An originating party can offer security for loans by creating an SPV that purchases assets by issuing debt, secured on the underlying assets.

• Real Estate Investment

Can be used for acquiring title to real property and limit recourse of mortgage lenders based on the location of the asset. In some jurisdictions, the sale of the SPV’s shares can reduce taxes and transaction fees.

• Asset Transfer

Can be used for transferring assets along with material agreements.

• Risk Sharing

Joint ventures can form project-based companies and allow equal sharing of risks between both partners.

• Raising Capital

Can be used for raising capital, with creditworthiness determined by the collateral of the SPV

• Intellectual Property

Can be used for separating Intellectual Property into a different structure with less liabilities, increased funds and signing license agreements with third parties.

If you have any questions or need any assistance for setting up an SPV in the ADGM, get in touch with us at +971558432911 or ek@corpinconsultants.com.