Guidance and Resources

The relevant business activity to conduct CSP activities in ADGM is named ‘Company Service Provider’ (Activity Code #7025). Existing ADGM registered entities can apply to add this activity to their commercial licence online, by logging into the RA’s online registry solution, and selecting ‘Maintain Business Activities’. Applicants applying to set up in ADGM would need to apply for licence activity, ‘Company Service Provider’ (#7025) as part of the set up application process, via the RA’s online portal. Before making an application, please ensure that you review and complete the CSP application checklist available here.

No. Law firms who advise on the incorporation and registration of bodies corporate within ADGM as an incidental part of conducting the business activities of legal consultancy, without providing any other company service, are not providing company services. This also applies to persons conducting the business activities of financial services advisory activities, management consultancy, compliance consultancy, or accountancy. Please see Rule 7(4) of the Commercial Licensing Regulations 2015 (Controlled Activities) Rules 2021 - here.

There are various client money requirements, which are set out in the Commercial Licensing Regulations 2015 (Client Money) Rules 2021(“Client Money Rules”). They include obligations regarding the opening client accounts, making payments to and from client accounts, segregation of funds from client accounts, reporting and annual reviews. For more information please review the Client Money Rules, and Client Money Guidance Note available here.

Any money held by a Licensed Firm on behalf of a Client in the course of, or in connection with, the carrying on of any Controlled Activity in or from the Abu Dhabi Global Market must be held in a Client Account.

A CSP must hold client money either in a separate ‘client account’ established with a bank that is authorised to accept deposits, or in a ‘pooled account’ (subject to client approval). For more information please review the Commercial Licensing Regulations 2015 (Client Money) Rules 2021, and Client Money Guidance Note available here.

You are required to maintain robust systems and controls to manage your client accounts. You are required to perform reconciliations frequently and subject to consideration of relevant factors such as volume, frequency and value of transactions, a reconciliation should be carried at least on a monthly basis.

No, client money must be held in a Client Account separate from the firm’s own money.

The Registration Authority’s Monitoring & Enforcement Division conducts regular compliance assessments of ADGM registered CSPs covering various matters, including compliance with client money requirements. Complaints from clients can also trigger assessments and investigations by the Registration Authority. Non-compliance and/or malfeasance in relation to client money is taken very seriously by the Registration Authority. The penalties for non-compliance with client money requirements may include fines of up to USD 15,000, licence suspension or licence cancellation.

ADGM licensed CSPs are required to file audited accounts with the Registrar. The audit must cover the firm’s overall financial statements as per the Companies Regulations 2022. The auditor must be an ADGM registered auditor – find an ADGM auditor here.

Where a firm is licensed to conduct multiple activities including CSP, the requirement is not an audit of only the accounts or transactions related to a firm’s CSP line of business, but rather the firm’s accounts overall.

The obligation to file audited accounts will come into force on 23 August 2023. In order to find out when a company’s audited annual accounts requirement comes into effect, it is important to determine the accounting reference date and accounting reference period for the company as per Section 380 of Companies Regulations 2020.

The duty of a CSP entity to have its annual accounts audited take effect only after the CL Rules 2023 come into force being 23 August 2023. As such, the CSP entity need only file audited accounts for the accounting period that ends after the rules have come into force.

For example, if the accounting period end is 30 June 2023, as the rules have not come into effect and if the entity is entitled to small company exemption from requiring an audit then it may do so. Similarly, if the accounting period ends on 31 December 2023, then as this is after the date of rules coming into effect, the CSP entity would be required to file audited accounts.

CSP appointment is only compulsory for non-exempt SPVs and Foundations. Appointing a CSP to assist with formation and corporate services is optional for any other ADGM businesses including exempt SPVs and exempt Foundations. For further information on exempt and non-exempt SPVs and Foundations, please refer to self-assessment questionnaire and guidance note on this page.

The notification of appointment of a CSP must be completed by a director, partner, manager or authorised signatory of the exempt SPV that is appointing the CSP.

If the CSP to be appointed is already authorised to act in the capacity of director or authorised signatory of the exempt SPV, the CSP may sign the notification on behalf of the exempt SPV in accordance with that authority.

For a copy of the relevant notification forms to use, see the link here.

Non-exempt SPVs

If a non-exempt SPV fails to comply with the requirement to appoint and maintain at all times a company service provider, a contravention of the relevant regulations is committed by (a) the company, and (b) every officer of the company who is in default. A person who commits the contravention is liable to a fine not exceeding a level 7 fine (i.e. USD 25,000). The SPV may also, or alternatively, be struck off by the Registrar.

A non-exempt SPV that fails to make available to its CSP such documents and information as required to enable the CSP to comply with its obligations is liable to a fine not exceeding a level 6 fine (i.e. USD 20,000).

A non-exempt SPV that fails to notify the Registrar of a change appointment of a CSP is liable to a fine not exceeding a level 2 fine (i.e. USD 300).

Non-exempt foundations

For non-exempt foundations, if default is made in complying with the relevant subsection of the regulations to appoint a company service provider, a contravention of the regulations is committee by (a) the non-exempt foundation, and (b) every councillor who is in default. A person who commits the contravention is liable to a fine not exceeding a level 7 fine (i.e. USD 25,000). The foundation may also, or alternatively, be struck off by the Registrar.

A non-exempt SPV that fails to make available to its CSP such documents and information as required to enable the CSP to comply with its obligations is liable to a fine not exceeding a level 6 fine (i.e. USD 20,000)

A non-exempt foundation that fails to notify the Registrar of a change appointment of a CSP is liable to a fine not exceeding a level 2 fine (i.e. USD 300).

Adequacy is measured by presence of operational entities in the United Arab Emirates, presence of physical assets, machinery, factories, others. It can also be measured by the number of people employed and annual turnover, the number of the board of directors appointed, presence of the board committees, availability of professional skilled personnel in the in-house legal function, compliance function, AML function, risk function, other internal functions which may support maintaining the legal entities incorporated in ADGM in good standing.

The RA has published a guidance note which prescribes methods of self-assessing the adequacy which can be accessed here. This guidance note contains a non-exhaustive list of documents that can be presented to the RA for consideration of adequacy by the Registrar.

For ease of reference, please find below the non-exhaustive list of documentary evidence of adequate resources and presence in the UAE:

1. The company’s assets, turnover and employees in the United Arab Emirates*,
2. The company’s governance, policies and procedures**, and
3. Any rules made by the Board or guidance issued by the Registrar in this regard.
   
   *In order to demonstrate to the Registrar that the company has sufficient assets, turnover and employees, please see below non-exhaustive list of evidence acceptable to the Registrar (NOTE: documents lodged with the Registrar must be recent and relevant, i.e. issued in the preceding three months prior to submission, and must be translated into English language).

• Copies of the current valid commercial licenses (or similar document) issued by the local relevant regulatory authorities of operational legal entities currently operating in the UAE.
• Copies of the latest audited accounts of the operational entities in the UAE or elsewhere.
• List of the company’s assets– physical assets, buildings, machinery, factories.
• Information on the number of employees employed by the company and annual turnover per company per financial year.
• Copies of the current ‘establishment card’ (also known as ‘immigration card’) of each operating legal entity along with the list of the UAE residency visas issued for each legal entity/commercial license holder.
• Organization structure for each operating legal entity clearly demonstrating governance structure and number of full time employees in each operating entity within the group chart.
• Links to the company’s website where information on the board of directors and board committee can be found. Alternatively, please provide information indicating board of directors’ composition and board committees’ structure, including members of the committees, governance of the decisions and reporting lines within the structure.
• Detailed description of the resources available in the compliance and/or in-house legal department or company secretarial division showing number of full time employees, along with their professional qualifications and roles held.
• Other information which may demonstrate substantial assets.

**In order to demonstrate to the Registrar the company’s governance, policies and procedures, please see below non-exhaustive list of evidence acceptable to the Registrar

• Business ethics policy;
• Corporate Governance policy or statement/structure;
• Compliance policy;
• Bribery and corruption policy;
• Economic substance policy;
• Risk management policy;
• Anti Money Laundering Policy;
• Others (please specify).
• as well as evidence of monitoring and compliance with such policies and procedures.

No. The appointed CSP of an SPV must act as registered office provider to that SPV, unless otherwise expressly permitted by the Registrar. See section 296B(2) the Companies Regulations 2020.

An exempt SPV is the one that falls within one of the following categories listed below. The column ‘description’ refers to the majority shareholder of SPV to be incorporated in ADGM.

In order to determine if a company or a foundation may be exempt, you can conduct a self-assessment. The RA has prepared a questionnaire (located at the top of this page) which you can use as an indicator as to whether a company or foundation is considered exempt or non-exempt. Further, the RA has prepared a detailed guidance note which prescribes what documents to lodge with the RA in order for it to assess whether or not the company or foundation is indeed exempt.