A Special Purpose Vehicle (SPV) in the UAE is a passive holding company established to mitigate financial and legal risk by ring-fencing specific assets and liabilities.
An SPV, also known as a Special Purpose Company or Special Purpose Entity, is deemed “bankruptcy-remote” due to its separate legal identity. It is set up as a subsidiary to protect against the parent company’s bankruptcy and to ensure isolation if the reverse occurs with those legal entities.
These passive holding companies can finance operations and projects, securitize loans, manage asset transfers, and ring-fence certain assets, such as intellectual property rights, to limit liability and isolate financial risk.
Special Purpose Vehicles in the UAE can conduct commercial activities through the Abu Dhabi Global Market (ADGM) or the Dubai International Financial Centre (DIFC).
Benefits of Establishing a Special Purpose Vehicle (SPV)
Setting up Special Purpose Vehicles (SPVs) in the UAE presents several advantages for business owners and asset holders, facilitating greater flexibility while effectively managing financial and legal risks through this distinctive ownership structure. The key benefits of an SPV in the UAE include:
- Tax Residency Certificate: Registered companies have the opportunity to apply for a Tax Residency Certificate from the UAE’s Federal Tax Authority (FTA), enabling them to leverage the UAE’s extensive Double Tax Treaty network.
- Redomiciliation to ADGM: Companies established in other jurisdictions can opt to relocate or redomicile to the Abu Dhabi Global Market (ADGM), expanding their operational scope.
- Convenient Management: ADGM SPVs can engage an agent or company service provider to oversee management tasks and provide a registered office address, streamlining administrative processes.
- Simplified Document Attestation: Unlike other setups, ADGM SPVs do not require their corporate documents to be attested, simplifying the establishment of this new business structure.
- Diverse Legal Structures: ADGM SPVs offer a wide array of legal structures within their classes, with multiple options available to cater to various business needs and preferences.
- Legal Framework and Regulation: Operating within the ADGM jurisdiction ensures adherence to Common Law principles and regulation by independent ADGM courts, the Registration Authority, and Financial Services Regulatory Authority. This imparts enhanced business credibility, consistency, reliability, and a stable legal environment.
- Robust Regulatory Framework: ADGM SPVs benefit from a best-in-class risk-based independent regulatory framework, ensuring a solid foundation for the SPV company structure.
- Tax Incentives: ADGM SPVs enjoy attractive tax benefits, including 0% direct tax, 0% withholding tax, unrestricted capital repatriation, and absence of foreign exchange controls, making them an appealing choice for businesses seeking tax efficiency.
How to Establish an SPV in ADGM
Setting up a Special Purpose Vehicle (SPV) in the Abu Dhabi Global Market (ADGM) involves a streamlined process consisting of four main steps:
Step 1: Profile Creation
The ADGM SPV application and payment process are entirely digital, accessible through the ADGM portal’s online registry solution. Begin by creating a profile and gathering the necessary documentation for the application process. The essential documents include:
- Articles of Association (AoA)
- Copy or lease agreement of the registered office address
- Resolution of Board of Directors or Shareholders Resolution
- Passport copy and information of each authorized signatory, director, shareholder, and beneficial owner
- Emirates ID for UAE national authorized signatory
- Certificate of Incorporation or Certificate of Registration for each director or shareholder that is a body corporate
Step 2: Application Completion
Fill out all required forms and submit the application along with the listed documentation. Payment is also required at this stage.
Step 3: Notification
Upon submission, if all information and documentation are accurate, the application process typically concludes in less than a week. You can track the status of your application through the online dashboard of the ADGM online registry portal. You will receive email updates if any changes are needed. Once the Registrar reaches a final decision, you will receive notification via email confirming the approval of your ADGM SPV application.
Step 4: License Issuance
Upon successful approval, you will receive a physical copy of your ADGM SPV license. Additionally, you will be provided with a link in the email, allowing you to schedule an appointment to collect all original documentation.
Why with Firmz Business Setup:
Firmz Business Setup provides helps to setup Special Purpose Vehicle (SPV) in the UAE. With expertise in UAE business regulations, personalized solutions, and a comprehensive service range, Firmz Business Setup ensures a smoother and cost-effective license acquisition process. The team’s commitment to ongoing assistance contributes to the success of your business setup journey in Dubai.