The Abu Dhabi Global Market (ADGM) recently celebrated its first anniversary as a fully operational financial free zone, and Al Maryah Island has been festooned with flags proclaiming it Financial Centre of the Year (Mena region). Development of the financial services sector, to help diversify the economy away from oil, is one of the main goals of both the Abu Dhabi Economic Vision and the current Abu Dhabi Plan, and the ADGM is a key element of those efforts. So the attention focused on its progress is understandable. But is all this excitement justified?
More than 170 financial and non-financial companies have become licensed in the ADGM in its first year. Of these, about 40 per cent are retail companies operating in Galleria Mall, but eight are now authorised by the Financial Services Regulatory Authority (FSRA) to carry out regulated financial services activities in and from the ADGM. The first ADGM fund has been launched and the authorised groups include the internationally recognised names Macquarie Capital and Aberdeen Asset Management.
This growing total represents steady progress in ADGM’s first year, although at this early stage it is not yet in the same category as the 1,500-plus companies registered in the DIFC. When Abu Dhabi’s financial free zone was announced, critics were quick to claim that it could never compete with Dubai’s, that there was no room for two such centres to flourish in the Gulf, let alone within the UAE. ADGM has refuted this argument, pointing to other examples of financial hubs succeeding despite close proximity, such as Geneva and Zurich in Switzerland, and clarifying that it is not simply seeking to emulate the DIFC’s success but to carve its own niche. Indeed, ADGM has identified a number of key areas of focus in its business development efforts, particularly: wealth and asset management and private banking; funds; family offices; and fintech.
The first cohort of regulated companies reflects these objectives.
While the DIFC has more than a decade’s head start on the ADGM, comparing the ADGM’s progress against the DIFC’s first year is enlightening: the ADGM’s total of more than 170 registered entities actually exceeds that of the DIFC at the same stage of growth, even though the DIFC was launched during the pre-crisis good times while the ADGM was born into a much less stable financial world. This uncertainty and increasing competition – not only from the DIFC in Dubai but also the QFC in Doha and King Abdullah Financial District in Riyadh – are just two of the challenges that face the ADGM in its uphill marathon to become a globally respected financial centre.
The ADGM has recently begun championing its special purpose vehicle (SPV) option for use in real estate investments, asset transfers, ring-fencing and intellectual property management, joint ventures, capital-raising and securitisations. However, it is important to note that the SPV is more of a marketing concept than a legal one. Companies limited by shares and Restricted Scope Companies (RSCs) can be registered as SPVs, but an SPV is not a separate form of legal entity. There are no hard and fast rules as to what types of activities can and cannot be undertaken by an SPV. Essentially, if the entity is purely passive, it will probably qualify. If not, it will depend on the circumstances.
RSCs and other companies registered as SPVs have the advantage of being much less expensive to register at ADGM than normal private limited companies.
The RSC, a novel legal form unique to ADGM, gives the additional benefit of limited public disclosure, which may be attractive to Family Offices that want to hold and manage assets discreetly – but it can also be useful in multinational corporate groups and fund structures where passive entities are required.
The most eye-catching recent developments relate to fintech, the use of innovative technologies in the financial services sector. ADGM has ambitious aims in this arena: it wants to be the fintech hub for the whole GCC. It believes that the goal of fostering innovation in financial technology necessitates innovation in the rules that govern it too. To this end, on November 2 the FSRA launched its “regulatory laboratory” (RegLab), a set of rules that will allow fintech companies to experiment with new products and services within a controlled environment, but without immediately being subject to the usual heavy burden of regulation that might otherwise stifle innovation.
The RegLab allows a “blank-sheet” approach, whereby the FSRA will combine existing rules, applied selectively, with entirely new customised rules depending on the business model of the fintech company. The company then has a two-year window to develop its offering: a company with a viable business model graduates to the full regulatory regime of the ADGM; those who do not meet the criteria exit the RegLab.
ADGM is not alone in developing new initiatives to help grow the fintech industry. Earlier this year, the UK’s Financial Conduct Authority implemented a “regulatory sandbox” programme, through which authorised and unauthorised companies can test new financial products in a live environment. So far, 24 companies have been approved to take part. Other countries, including Singapore, Thailand, Indonesia, Malaysia as well as Hong Kong, have since jumped on board. The US and Australian authorities are considering similar initiatives.
ADGM aims to be a business-friendly environment that operates in line with international best practice. Our experience of dealing with the regulators bears that out.
In addition to a flexible and quality regulatory environment, companies that make the ADGM their home have the added certainty of being in an English law jurisdiction – unlike anywhere else in the Mena region, common law has been adopted wholesale – overseen by experienced and internationally renowned judges. One year on, it is still early days but there are signs that this unique combination is proving attractive.
Chris Macbeth is a counsel and Mariam Al Alami is a legal intern at Cleary Gottlieb Steen & Hamilton (Abu Dhabi)
business@thenational.ae
Follow The National's Business section on Twitter
Gender pay parity on track in the UAE
The UAE has a good record on gender pay parity, according to Mercer's Total Remuneration Study.
"In some of the lower levels of jobs women tend to be paid more than men, primarily because men are employed in blue collar jobs and women tend to be employed in white collar jobs which pay better," said Ted Raffoul, career products leader, Mena at Mercer. "I am yet to see a company in the UAE – particularly when you are looking at a blue chip multinationals or some of the bigger local companies – that actively discriminates when it comes to gender on pay."
Mr Raffoul said most gender issues are actually due to the cultural class, as the population is dominated by Asian and Arab cultures where men are generally expected to work and earn whereas women are meant to start a family.
"For that reason, we see a different gender gap. There are less women in senior roles because women tend to focus less on this but that’s not due to any companies having a policy penalising women for any reasons – it’s a cultural thing," he said.
As a result, Mr Raffoul said many companies in the UAE are coming up with benefit package programmes to help working mothers and the career development of women in general.
UAE currency: the story behind the money in your pockets
MATCH INFO
Manchester United 1 (Greenwood 77')
Everton 1 (Lindelof 36' og)
History's medical milestones
1799 - First small pox vaccine administered
1846 - First public demonstration of anaesthesia in surgery
1861 - Louis Pasteur published his germ theory which proved that bacteria caused diseases
1895 - Discovery of x-rays
1923 - Heart valve surgery performed successfully for first time
1928 - Alexander Fleming discovers penicillin
1953 - Structure of DNA discovered
1952 - First organ transplant - a kidney - takes place
1954 - Clinical trials of birth control pill
1979 - MRI, or magnetic resonance imaging, scanned used to diagnose illness and injury.
1998 - The first adult live-donor liver transplant is carried out
Brief scores
Barcelona 2
Pique 36', Alena 87'
Villarreal 0
COMPANY PROFILE
Company name: 3S Money
Started: 2018
Based: London
Founders: Ivan Zhiznevsky, Eugene Dugaev and Andrei Dikouchine
Sector: FinTech
Investment stage: $5.6 million raised in total
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
Kill
Director: Nikhil Nagesh Bhat
Starring: Lakshya, Tanya Maniktala, Ashish Vidyarthi, Harsh Chhaya, Raghav Juyal
Rating: 4.5/5
Sam Smith
Where: du Arena, Abu Dhabi
When: Saturday November 24
Rating: 4/5
Yahya Al Ghassani's bio
Date of birth: April 18, 1998
Playing position: Winger
Clubs: 2015-2017 – Al Ahli Dubai; March-June 2018 – Paris FC; August – Al Wahda
Company Profile
Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8
Results:
6.30pm: Maiden Dh165,000 2,000m - Winner: Powderhouse, Sam Hitchcott (jockey), Doug Watson (trainer)
7.05pm: Handicap Dh165,000 2,200m - Winner: Heraldic, Richard Mullen, Satish Seemar
7.40pm: Conditions Dh240,000 1,600m - Winner: Walking Thunder, Connor Beasley, Ahmed bin Harmash
8.15pm: Handicap Dh190,000 2,000m - Winner: Key Bid, Fernando Jara, Ali Rashid Al Raihe
8.50pm: The Garhoud Sprint Listed Dh265,000 1,200m - Winner: Drafted, Sam Hitchcott, Doug Watson
9.25pm: Handicap Dh170,000 1,600m - Winner: Cachao, Tadhg O’Shea, Satish Seemar
10pm: Handicap Dh190,000 1,400m - Winner: Rodaini, Connor Beasley, Ahmed bin Harmash
Company Profile
Name: Neo Mobility
Started: February 2023
Co-founders: Abhishek Shah and Anish Garg
Based: Dubai
Industry: Logistics
Funding: $10 million
Investors: Delta Corp, Pyse Sustainability Fund, angel investors
UAE currency: the story behind the money in your pockets
Confirmed bouts (more to be added)
Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez
Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through www.etihadarena.ae and www.ticketmaster.ae.
Visa changes give families fresh hope
Foreign workers can sponsor family members based solely on their income
Male residents employed in the UAE can sponsor immediate family members, such as wife and children, subject to conditions that include a minimum salary of Dh 4,000 or Dh 3,000 plus accommodation.
Attested original marriage certificate, birth certificate of the child, ejari or rental contract, labour contract, salary certificate must be submitted to the government authorised typing centre to complete the sponsorship process
In Abu Dhabi, a woman can sponsor her husband and children if she holds a residence permit stating she is an engineer, teacher, doctor, nurse or any profession related to the medical sector and her monthly salary is at least Dh 10,000 or Dh 8,000 plus accommodation.
In Dubai, if a woman is not employed in the above categories she can get approval to sponsor her family if her monthly salary is more than Dh 10,000 and with a special permission from the Department of Naturalization and Residency Dubai.
To sponsor parents, a worker should earn Dh20,000 or Dh19,000 a month, plus a two-bedroom accommodation
THE SPECS
Engine: 1.5-litre
Transmission: 6-speed automatic
Power: 110 horsepower
Torque: 147Nm
Price: From Dh59,700
On sale: now
Ruwais timeline
1971 Abu Dhabi National Oil Company established
1980 Ruwais Housing Complex built, located 10 kilometres away from industrial plants
1982 120,000 bpd capacity Ruwais refinery complex officially inaugurated by the founder of the UAE Sheikh Zayed
1984 Second phase of Ruwais Housing Complex built. Today the 7,000-unit complex houses some 24,000 people.
1985 The refinery is expanded with the commissioning of a 27,000 b/d hydro cracker complex
2009 Plans announced to build $1.2 billion fertilizer plant in Ruwais, producing urea
2010 Adnoc awards $10bn contracts for expansion of Ruwais refinery, to double capacity from 415,000 bpd
2014 Ruwais 261-outlet shopping mall opens
2014 Production starts at newly expanded Ruwais refinery, providing jet fuel and diesel and allowing the UAE to be self-sufficient for petrol supplies
2014 Etihad Rail begins transportation of sulphur from Shah and Habshan to Ruwais for export
2017 Aldar Academies to operate Adnoc’s schools including in Ruwais from September. Eight schools operate in total within the housing complex.
2018 Adnoc announces plans to invest $3.1 billion on upgrading its Ruwais refinery
2018 NMC Healthcare selected to manage operations of Ruwais Hospital
2018 Adnoc announces new downstream strategy at event in Abu Dhabi on May 13
Source: The National
THE BIO
Favourite place to go to in the UAE: The desert sand dunes, just after some rain
Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude
Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE
Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally
Favourite subjects in school: Mathematics and science
BACK TO ALEXANDRIA
Director: Tamer Ruggli
Starring: Nadine Labaki, Fanny Ardant
Rating: 3.5/5
DEADPOOL & WOLVERINE
Starring: Ryan Reynolds, Hugh Jackman, Emma Corrin
Director: Shawn Levy
Rating: 3/5
Company Profile
Name: HyveGeo
Started: 2023
Founders: Abdulaziz bin Redha, Dr Samsurin Welch, Eva Morales and Dr Harjit Singh
Based: Cambridge and Dubai
Number of employees: 8
Industry: Sustainability & Environment
Funding: $200,000 plus undisclosed grant
Investors: Venture capital and government
COMPANY PROFILE
Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends
2020 Oscars winners: in numbers
- Parasite – 4
- 1917– 3
- Ford v Ferrari – 2
- Joker – 2
- Once Upon a Time ... in Hollywood – 2
- American Factory – 1
- Bombshell – 1
- Hair Love – 1
- Jojo Rabbit – 1
- Judy – 1
- Little Women – 1
- Learning to Skateboard in a Warzone (If You're a Girl) – 1
- Marriage Story – 1
- Rocketman – 1
- The Neighbors' Window – 1
- Toy Story 4 – 1
What is the definition of an SME?
SMEs in the UAE are defined by the number of employees, annual turnover and sector. For example, a “small company” in the services industry has six to 50 employees with a turnover of more than Dh2 million up to Dh20m, while in the manufacturing industry the requirements are 10 to 100 employees with a turnover of more than Dh3m up to Dh50m, according to Dubai SME, an agency of the Department of Economic Development.
A “medium-sized company” can either have staff of 51 to 200 employees or 101 to 250 employees, and a turnover less than or equal to Dh200m or Dh250m, again depending on whether the business is in the trading, manufacturing or services sectors.
The specs
Engine: 3.9-litre twin-turbo V8
Power: 620hp from 5,750-7,500rpm
Torque: 760Nm from 3,000-5,750rpm
Transmission: Eight-speed dual-clutch auto
On sale: Now
Price: From Dh1.05 million ($286,000)
Company profile
Company name: Tuhoon
Year started: June 2021
Co-founders: Fares Ghandour, Dr Naif Almutawa, Aymane Sennoussi
Based: Riyadh
Sector: health care
Size: 15 employees, $250,000 in revenue
Investment stage: seed
Investors: Wamda Capital, Nuwa Capital, angel investors