ADGM Regulated License

The Abu Dhabi Global Market (ADGM) free zone is a vital element of Abu Dhabi and is governed by its own regulations, ensuring a biz culture. The ADGM, or the Registration Authority, supports enterprises in becoming registered and through the licensing procedure. Other services offered by the authority to companies entering the market include the business name and trademark certification, paperwork, updates to fundamental company information. The registration authority is also in charge of the liquidation and restoration of ADGM businesses, as well as the cancellation of commercial licenses.  ADGM provides a world-class judiciary system and regulatory environment to the local, regional, and worldwide business sector.

The ADGM is one of the UAE’s two onshore financial centers. It has swiftly risen up the ranks to become one of the top 25 financial hubs in the globe. The success of ADGM may be attributed to its unique SPV regime, fintech activities, and the release of the region’s first crypto-asset regulatory framework.

• Cross-border activities are encouraged by the legal environment.
• 100% foreign ownership is permissible, and capital repatriation is unrestricted.
• There are no restrictions on international workers.
• For the next 50 years, there will be no tax on earnings, capital, or assets.
• Personal income is tax-free and custom duty is exempted.
• Operates under strong data protection policy.

Types of ADGM Licenses

The Financial Services Regulatory Authority, or FSRA, is in responsible for evaluating proposals from companies that want to provide financial services through the ADGM.

The sort of business that the applicant wants to run determines the type of license that is needed. A company that engages in low-risk operations like advising or arranging, for example, will need a Category 4 License, whereas a discretionary portfolio manager will need a Category 3C License. A Category 3A license is required for an STP broker operating on a matched principle basis, but a Category 2 license is required for a market maker or credit provider. A Category 1 License will apply to full-fledged banks that take deposits. The amount of basic capital required is determined on the licensing category.

The following are the five primary categories of regulated license activities:

• Category 1 – Banks
  Base Capital – US$ 10 millionCollecting Deposit and Administering a PSIAu are their activities.
• Category 2 – Market maker, provider of credit
  Base Capital – US$ 2 millionInvesting as a principal and extending credit are examples of activities.
• Category 3A – Brokerage
  Base Capital – US$ 500,000Dealing in Investments as a Matched Principal, Dealing in Investments as an Agent are examples of activities.
• Category 3B – Custodian
  Base Capital – US$ 4 millionOffering Custody for a Fund and Serving as a Trustee for a Fund are examples of activities.
• Category 3C – Asset Manager, Fund Manager
  Base Capital – US$ 250,000Managing Assets, Managing a Collective Investment Fund, Providing Custody, Managing a PSIAr, and Providing Trust Services are examples of activities.
• Category 4 – Investment Advisor, Insurance advisor
  Base Capital – US$ 10,000Organizing Investment Deals, Organizing Credit and Advising on Credit, Advising on Financial Products, Organizing Custody, Insurance Intermediation, Insurance Management, Organizing Custody, Organizing Custody, Organizing Custody, Organizing Custody, Organizing Custody, Organizing Custody, Organizing Cu Operating a Crowdfunding Platform, Providing Fund Administration, Providing Trust Services, Operating an ATS are activities.
• Category 5 – Islamic Business
  Base Capital – US$ 10 million operating an Islamic Business is their activity.

  ADGM License Process Flow Chart

  

  ADGM is committed to ensuring that companies operate in a fair and effective environment, allowing them to thrive. The ADGM Regulator was founded as a result of the center’s efforts to develop a complete financial environment that encourages business and growth. The Financial Services Regulatory Authority is a comprehensive organization that uses worldwide standards and rules to handle possible risks and other negative elements. Regulatory openness is one of its primary principles, which produces a reliable network for both regional and remote ADGM users.

Financial Services Regulatory Authority (FSRA)

The Financial Services Regulatory Authority (FSRA) of ADGM was created to promote a dynamic financial services ecosystem and to ensure the confidentiality of the entire global financial hub by addressing any possible risks and negative consequences. The guidelines of the Financial Services Regulatory Authority (FSRA) and the compliance to ADGM’s rules and regulations, which are based on and coherent with professional standards, guarantee that financial organisations conduct business with clarity, and investors’ specific needs are protected. Also, through public discussions, engagements on the introduction and modifications of rules and regulations, the FSRA takes transparent and proactive attitude to its regulatory activities.

The FSRA must regulate any company that provides financial services from a permanent location in the ADGM. Banks, Brokers and Dealers, Asset Managers, Corporate Financiers, Wealth Managers, Insurers and Insurance Intermediaries, as well as some of the less traditional financial services relating to Virtual Assets, Private Financing Platforms, also known as Crowdfunding Platforms, and Money Service Providers, are all examples of this. The sort of business you want to start will determine the type of license you’ll need and, as a result, the quantity of cash you’ll need to have.

The FSRA uses an open and innovative methodology in its regulatory activities, including public debates and dialogues on the adoption and modifications of laws and regulations, to provide the greatest degree of regulatory openness and participation.

Services provided by the Financial Services Regulatory Authority include:

• Monitoring – The FSRA plays a key role in achieving the ADGM’s goals, acting quickly and forcefully to confront and discourage activity that might jeopardize the ADGM’s credibility.
• Discipline – The FSRA takes a risk-based approach to regulation, concentrating its resources on tasks that require special attention.
• Concerns – The Financial Services Regulatory Authority (FSRA) investigates regulatory complaints alleging probable violations of regulations and norms.
• Financial Services Companies’ Duties – The FSRA has certain framework for financial services businesses incorporated in ADGM. These duties are in addition to the regular responsibilities that all ADGM licensed organisations must fulfill.
• Preventing Financial Crime – ADGM is dedicated to promote best practices in financial crime compliance, such as anti-money laundering and counter-terrorist financing, as well as implementation of global tax reporting responsibilities like as FATCA and CRS.

Frequently Asked Questions – Regulated License

1. How to set up an insurance advisory firm in UAE?

   To start an insurance business in Dubai, you must first register with the Dubai Economic Department and then receive a license from the Insurance Authority. The type of services supplied determines which operating license is awarded.

2. How to apply for a regulated license in DIFC?

   The Department of International Financial Centre, or DIFC, performs a wide range of regulatory functions for the DIFC which are to help protect the financial system and markets in Dubai. As part of its duties to regulate licensing in Dubai, they issue licenses in order to carry out business in Dubai. It is necessary for any company that conducts business in Dubai to be licensed to do so by the DIFC. Given below are the stages for applying a license.

3. How to establish a crowdfunding platform in UAE?

   It may seem like an impossible task, but establishing a crowdfunding platform in UAE isn’t as difficult as you might think.  Before establishing your crowdfunding platform in UAE, it’s best to formulate an idea for a project you want to fund. You can’t just launch a campaign for no reason – people want to know the purpose behind your project and what you hope to achieve by receiving donations. Anyone can now start their own crowdfunding campaign with the help of online platforms. These websites allow entrepreneurs to create profiles where they can post about their planned project, including videos, information about the product or cause, and a deadline for fundraising. A properly executed crowdfunding campaign can be very effective at raising funds. They allow you to connect directly with potential investors or customers, building your brand one person at a time.

4. How to register a private equity firm in DIFC?

   In order to register a private equity firm in the DIFC, you will need to complete the following steps:

   • STEP 1 – Submission of application form.
   • STEP 2 – Provide necessary information about your company and provide copies of relevant documents when requested by the DIFC Authority.
   • STEP 3 – Pay for registration fee at any bank branch in UAE Dirhams or US Dollars via wire transfer/online banking/at any branch of Commercial Bank of Dubai or through credit card.

5. How to set up financial services company in Dubai?

   To set up a financial services company in Dubai, a company needs to have a paid up capital of at least Dh500,000. It needs to be registered with the appropriate authorities and present basic documentation such as a certified copy of passport, trading license and memorandum and articles of association.

6. How to setup a regulated license in ADGM?

   If you would like to set up a regulated ADGM license, it is best to start by consulting with the ADGM licensing and regulatory services. They will be able to tell you whether or not your product requires a license and how to go about getting one. Before they can help you, though, they will need an accurate description of your product.

7. What are the procedures for regulated license in UAE?

   The United Arab Emirates has been working to build a regulated environment for the financial industry. In order to issue a license in the United Arab Emirates, businesses must be registered with their respective central bank as well as sign a Memorandum of Understanding (MoU) with Dubai International Financial Centre Authority (DIFCA). The MoU outlines particular objectives of any given company’s activities and can also allow certain companies to make use of foreign currency transactions.

8. How to establish a representative office in Dubai?

   A Representative Office (Rep Office) is permitted to carry on a very narrow set of activities described as ‘marketing’ of financial services or financial products offered in a jurisdiction outside the DIFC by a ‘related party’ (i.e., its head office, another branch of the head office or a Group member).The ‘marketing’ activities of a Rep Office can include one or more of the following:

   1. Providing information about financial services or products offered by its head office or a Group member outside the DIFC;
   2. Engaging in Financial Promotions (such as holding events and seminars) relating to the financial products or financial services referred to above; and
   3. Making introductions or referrals to its head office or a member of its Group for the financial services or financial products offered by them outside the DIFC

   Activities not permitted

   Arranging deals

   Advising

   Promoting a third–party products

   Marketing financial products of a related party located in DIFC

   Compliance Requirement

   1. Officers required:
   2. A resident authorized representative
   3. Annual AML return filing

   Requirements

   1. A detailed business plan
   2. Corporate documents attested from UAE Embassy in Country of origin
   3. Passport copy of authorized representative (authorized representative must be a resident)
   4. UBO passport copy
   5. Financial Regulatory Authority certificate of the parent

   General Procedure

   1. Submission of intent letter to DIFC
   2. Initial application with DIFC
   3. Submission of Business plan to DFSA
   4. Initial Application with DFSA
   5. Arranging Meeting with DFSA for presentation
   6. Obtaining in Principal approval from DFSA
   7. Identifying office space
   8. Completion of registration of companies with Registrar for companies (Office set-up, Visa, bank account opening etc.)
   9. DFSA inspections
   10. Authorization from DFSA

   Estimated Timeline

   Usually, the time taken for a representative office is 3-5 Months from the date of submission of interest. However, the timeline depends on the approval from authority.

9. What is technology license in DIFC?

   The Dubai International Financial Centre (DIFC) is in the process of issuing licenses to companies in the digital technology sector. They are doing so by way of a licensing framework, which has been designed to encourage innovation and entrepreneurship in different areas. This framework will comprise two different types of license: The Digital Technology Innovation License (DTLI) and the Digital Innovation Business License (DIBL). There are 37 criterias that need to be met for any applicant wishing to obtain one, but these licenses will provide greater legal protection for technology-related matters.

10. How to get central bank approval for a regulated license in UAE?

    The Central Bank of UAE is the country’s financial regulator and is responsible for protecting and developing the economic and financial system of UAE. It oversees the operations of all the banks in the country, as well as operating licenses for financial institutions.UAE has recently announced plans to tighten its already existing regulation for issuing licenses for businesses and financial institutions in the country.Banks are required to submit detailed plans detailing their plans for finances, risk management, effective internal controls for operations for approval. These are all determined by regulation No. 1 of 2002. The regulation was put into place to ensure respect for UAE’s international commitments with regard to transparency, accountability and compliance with international standards in banking systems.

    Based on the review of the regulatory business plan, an in principle approval will be granted, allowing the applicant to proceed with the remaining formalities, such as appointing officers and locating office space. The central bank will grant the final license if all of the conditions have been met.

11. How to register a foundation in DIFC?

    The DIFC Authority has issued the following guidelines to help you set up your own foundation in Dubai International Financial Centre.

    Type of registration: The DIFC Authority recognizes two types of foundations, private and public, which have different requirements for operation and registration. Private foundations must be created to provide a specific charitable or social benefit to a defined group of people, while public foundations are established with a social agenda that can span across borders and geographical regions.

    Scope of work: To set up a private foundation you must demonstrate written evidence of the intended use of the registered funds.

    Determine duration: The term for which the foundation is to remain active can vary depending on its purpose for public and private.

    Obtain approval: The foundation must be registered with the DIFC Authority and be approved by its client. Approval is granted after consideration of the foundation’s objectives, activities and benefit to the DIFC community.

    The Dubai International Financial Centre (DIFC) has established a new license for startups, entrepreneurs, and technology enterprises. The new Innovation License will bring new sorts of enterprises to the Centre and is a crucial project for His Highness Sheikh Mohammed bin Rashid Al Maktoum’s Dubai Future District. The new license will encourage regional innovation, creativity, and entrepreneurship by providing commercial licensing choices at a reduced cost. Companies will also get discounted entry to DIFC co-working spaces.