ADGM: Common Law, Premises, and the SPV Exemption

ADGM is not a single counterparty. The Registration Authority incorporates entities and issues commercial licences; section 1 of the ADGM Commercial Licensing Regulations 2015 prohibits carrying on business or economic activity in or from ADGM without one, unless exempt. The Financial Services Regulatory Authority authorises and supervises financial services. ADGM Courts sit independently and operate an electronic filing platform.

For a financial-services firm the sequence matters: in-principle approval is obtained before registration and incorporation, so the FSRA conversation comes first and the Registration Authority follows.

ADGM states plainly that having a physical presence within the jurisdiction is a requirement for ADGM entities, and that the only exception is special purpose vehicles. Applicants register their lease and provide proof of it as part of the application, and the entity must maintain a physical office address in ADGM at all times.

The tech start-up licence shows how firmly this is applied: it requires physical office space in the jurisdiction, with at least one dedicated desk or office, and a hot-desk is expressly not accepted. Evidence takes the form of an executed lease or membership agreement.

This is the single most common reason an ADGM plan collapses at the last step. If your budget assumed a virtual address, ADGM is not the zone — unless the entity is an SPV.

ADGM's corporate solutions category covers head offices, treasury vehicles, holding companies, SPVs, professional associations, and foundations. SPVs are exempt from the physical-presence requirement, which is what makes ADGM workable as a holding jurisdiction rather than only an operating one.

Administration is the point to check. SPVs and foundations that demonstrate to the Registrar that they meet the exemption criteria — set out under section 296A(3) of the Companies Regulations 2020 or section 18(2) of the Foundations Regulations 2017, as amended — are not required to appoint a Company Service Provider. Those that do not meet the criteria must appoint one, and that is a recurring cost that belongs in the structure's budget from the outset.

For an exempt foundation, adequacy is assessed against substance in the UAE: operational entities, physical assets, machinery or factories, employees and turnover, board composition and committees, and skilled personnel in internal functions. It is a real test, not a form.

ADGM applies English common law directly, the first jurisdiction in the Middle East to do so, with its regulations and rules built around that direct application. ADGM Courts have exclusive jurisdiction over civil and commercial claims involving ADGM, an ADGM authority, or an ADGM-licensed entity, and over disputes arising from contracts or transactions performed wholly or partly in ADGM.

The geographic footprint changed materially when Cabinet Resolution No. 41 of 2023 extended ADGM to Al Reem Island with effect from 24 April 2023. Businesses already operating on Al Reem were brought within the jurisdiction and required to hold an ADGM commercial licence. If you are on Al Reem, or considering premises there, that history is worth checking against your current licensing position.

Both are common-law financial centres with independent regulators and courts. ADGM applies English common law directly; DIFC has developed its own body of law within a common-law framework. ADGM is in Abu Dhabi under the FSRA; DIFC is in Dubai under the DFSA.

The decision usually turns on two things. If the structure is a holding vehicle or an SPV, ADGM's exemption from the premises requirement makes it the more practical jurisdiction. If the business is early-stage technology looking for a light entry, DIFC's innovation licence and Innovation Hub route is the easier landing. Where the activity is regulated, engage the relevant regulator before choosing either.