Setting Up an ADGM Special Purpose Vehicle Company

Setting up ADGM SPV Company

The United Arab Emirates is turning into a commercial hub for all types of business in the world. There are several companies, from small startups to corporate giants, are getting immense benefits from their presence in this nation.  Apart from the traditional business models, the UAE has numerous holding corporations, which allows business owners to hold their assets while running their companies. Setting up ADGM SPV company means starting a similar holding business.   SPV or Special Purpose Vehicle allows business owners to restrict liability and prevent financial risks. ADGM ( Abu Dhabi Global Market) provides business owners with the SPV legal structure. If you want to set up your Special Purpose Vehicle or SPV in the Abu Dhabi Global Market (ADGM), you have visited the right place. We will provide an in-depth guide to start your ADGM SPV company. In addition, we will cover every crucial aspect of Setting up ADGM SPV company.

ADGM Special Purpose Vehicle Company - Overview

SPV is also known as a special purpose vehicle, special purpose company (SPC), or special purpose entity (SPE). The SPV is an LLC formed under the legislation of the ADGM.  It is a business entity used as a subsidiary if the company undergoes bankruptcy and is protected in the event of the opposite.  Apart from Subsidiaries, the SPV can also be established as projects or joint venture vehicles to ensure that only the assets involved with a transaction are exposed to the liabilities associated with that transaction.  An SPV can be used to finance, buy, and sell assets that are frequently held off-balance sheets. By ring-fencing liabilities and assets, an ADGM Special Purpose Vehicle (SPV) is created to isolate financial and legal risks.  The Special Purpose Vehicle (SPV) is intended for asset holding and investment. Remember, the SPV may only function as a holding company. However, these companies cannot conduct operational business, hire employees, or give services.   

Features of ADGM SPV

There are a few features of the ADGM Special Purpose Vehicle Company. Let us take a quick look at the top features of the  ADGM SPV:  

• Separate regulatory framework
• ADGM courts
• No physical office space is needed based on the appointed agent
• Apply for a tax residency certificate and benefit from the UAE's double tax treaty network.
• Various legal structures
• Any number of shareholders
• The quick and effective setup process with Flyingcolour Business Setup consultants
• Cost-effective fees and transparency 
• Common law jurisdiction

Benefits of ADGM SPV

You can avail of uncountable benefits by starting your ADGM SPV. The following is the list of the top Benefits of ADGM SPV:  

1. Organized Financial Tools

Companies may get a financial tool to restructure debt, transfer their assets, manage risks, and raise capital while Setting up ADGM SPV company. These issues cannot be addressed in the conventional financing.  

2. Favorable tax treaties

You can access the favorable tax treaties between the United Arab Emirates and more than 50 countries available to companies through the ADGM’s network of double tax treaties. These treaties make ADGM a desirable location for international tax planning and investment by preventing double taxation and easing cross-border corporate operations.   

3. Barrier and sharing of risk 

Ring-fencing is a term that describes a virtual “barrier”  to separate a business’s financial assets from each other. This strategy is protective and lets you legally isolate the risk of any project and share these risks with other investors.   

4. No restriction 

Companies that are registered in ADGM can repatriate their capital and profits without restrictions. This factor makes it easy for companies to effectively manage their accounts and transfer money as required.  

5. Fractional ownership structure

When you set up your  ADGM Special Purpose Vehicle Company, you can sell the ownership asset shares to the individual shareholders. This factor allows them to share the benefits while keeping lower costs at complete ownership. 

What are the uses of ADGM SPV company?

ADGM Special Purpose Vehicle (SPV)  company is used to hold shares in other companies. Apart from this, there are other uses of ADGM SPV company formation. The following is the list of other uses of ADGM SPV:  

1. Risk shares

SPV allows companies to legally isolate their financial risk. This is used as a project company for joint ventures that reflect management responsibilities. However, it isolates the partner’s risk associated with the venture.    

2. Real Estate Investment

Depending on the location where the asset is located, it can be used to get a real estate title and limit the mortgage lenders’ right to recover. As compared to transferring the asset, the sale of the SPV’s shares may incur fewer taxes and transaction costs in some nations.   

3. Financing 

Business owners can also use SPVs to achieve financing without increasing the actual debts of the company. These companies allow investors to invest in any particular project where the parent company cannot invest.   

4. Asset transfer

Last but not least, the SPV companies can also be used to transfer assets. There are a few assets that are difficult to transfer.  Therefore, a parent company develops an SPV company to own these assets.  If they want to sell these assets to others, SPV companies sell them as a self-contained package. Apart from these uses, there are a few other uses of  ADGM Special Purpose Vehicle Company. In short, you can use these companies in several ways.

The process of the formation of ADGM SPV company 

You have to follow a few steps to set up ADGM SPV company. The following is the list of the steps for starting an ADGM Special Purpose Vehicle Company:  

1. First, you must create a profile and review the required documents for the online application process. 
2.  After creating your profile, you must fill out the application through an online registry solution and submit the application with the required documents and fees. 
3. Once a successful submission of the application, you should view the status from the dashboard on the online registry solution. You will be notified in case of any extra charge via email. In addition, you will receive a notification following the registrar’s decision. 
4. If everything goes well, you will receive an ADGM SPV license via email.

How can Flyingcolour Business Setup help you?

An SPV company in ADGM is a legal structure to keep the parent’s company balance sheet safe. However, you must understand several aspects of this structure before starting SPV company in ADGM.  Flyingcolour Business Setup can help you to under each aspect of an SPV. In addition, we can help you to set up this company in the ADGM.  To learn more about the Setting up ADGM SPV Company, book a free consultation with one of the Flyingcolour team advisors, Simply call  +97144542366 or send WhatsApp messages to +971554413566. you can also drop an email to info(at)flyingcolour(dot)com. Please note that this article was published on 25/03/2024 by the federal policies and updates at the time of writing. For the latest info please talk to our consultant.