United Arab Emirates: Abu Dhabi Global Market: Obtaining A Commercial Licence

This memorandum provides a brief overview of certain key areas of the Commercial Licensing Regulations 2015 published by Abu Dhabi Global Market on 14 June 2015. The Commercial Licensing Regulations establish the framework licensing regime for those seeking to conduct business in Abu Dhabi Global Market.

Introduction

A licence must be obtained prior to conducting business in Abu Dhabi Global Market ("ADGM") except in limited circumstances. Entities incorporated inside or outside of the free zone may apply for a licence. Those incorporated outside of ADGM that obtain a licence will operate through a branch. Entities may also choose to establish a wholly owned subsidiary incorporated outside of ADGM.

There are certain transitional measures available for entities that were already active in ADGM. Until 14 June 2016, those that were approved to carry out economic, commercial or professional activities under a licence issued by the Abu Dhabi Department of Economic Development before 19 February 2013 will be exempt from the requirement to obtain a licence.

Key features of the Commercial Licensing Regulations include:

  • the general prohibition on the conduct of "controlled activities" by any person in ADGM unless they are exempt or have obtained a licence;
  • the exemption of certain bodies or persons from the licensing regime;
  • the requirements for trading disclosures and business names in ADGM;
  • the vesting of authority in ADGM's registrar (the "Registrar") to issue licenses for such periods and subject to such conditions as it may specify, and to vary and cancel licences.

What Are Controlled Activities?

The conduct of "controlled activities" within ADGM is prohibited unless the person or body conducting the activities is either licensed or exempt. The Commercial Licensing Regulations (Controlled Activities) Rules 2015 (the "Controlled Activities Rules"), set out what constitutes a "controlled activity" and the broad position is that any economic activity carried on by way of business in ADGM will be a "controlled activity."

This rule is subject to exclusions for persons:

  1. carrying on controlled activities solely as an employee employed or appointed under a contract of service;
  2. discharging duties of a public nature or (broadly) in connection with public administration;
  3. providing professional services in ADGM without a permanent establishment in ADGM (e.g., the provision of legal advice by law firms based onshore to ADGM-resident bodies); and
  4. conducting economic activity (other than professional services) in ADGM without a permanent establishment in ADGM at the invitation of someone either ordinarily resident in ADGM or with a permanent establishment in ADGM (e.g., the provision of cleaning services by an onshore business to ADGM-resident bodies).

An entity or person that conducts business in ADGM without the requisite licence or who is not an exempt person is subject to a fine unless they can show they took all reasonable precautions to avoid contravening the requirements. Any contract entered into by that entity or person will not necessarily be void or unenforceable.

Licences

An application for a licence can be made by an individual, a body corporate or a partnership whether incorporated in ADGM or otherwise.1 If the applicant is incorporating a company in ADGM, the application for a licence should be made at the same time as the incorporation documents are filed with the registrar.

Among other things, an application must set out the applicant's details and the type of controlled activities that the applicant intends to carry on. The registrar has one month to consider a properly completed application for licence.

The Registrar may grant a licence if it is satisfied that the applicant meets the conditions of licence for that particular controlled activity. These conditions will depend upon the nature of the controlled activity conducted; for example, applicants intending to provide legal services are required to be licensed and authorised by an approved legal regulatory body outside of ADGM. Financial institutions that will be subject to financial regulation by the Financial Services Regulatory Authority will need to apply for an additional licence under a separate process which we discuss in a separate memorandum.

Licences are granted for such period of time and subject to such conditions as the Registrar may specify. Applications for renewal can be submitted if desired. Licences must be renewed on an annual basis.

Fines and Powers of Investigation

Below is a short summary of the powers of the Registrar to ensure compliance with ADGM's commercial licensing regime.

The Registrar may vary the terms of a licence to add, remove or vary the description of the activities it permits. The Registrar may also cancel a licence if a licensee has failed to satisfy the conditions of that licence, failed to carry on the relevant controlled activity or if the cancellation is otherwise in the interests of ADGM. The Registrar's power to cancel and vary licences is subject to various safeguards, including a right of appeal to ADGM's court.

In addition, if the Registrar is satisfied that a licensee has contravened a rule enacted under the Commercial Licensing Regulations, it has the power to impose a fine or suspend all or part of a licence.

The Registrar may require a licensed person to provide specified information by serving written notice to that effect. It may also arrange an investigation into the business of licensed persons where it appears to the Registrar that there is a good reason for doing so. Investigators have broad powers to require those subject to investigation to attend interviews or otherwise provide information.

Prohibited Names and Trading Disclosures

The Commercial Licensing Regulations restrict the use of certain business names in ADGM. Restrictions apply to the use of names which suggest a connection with a government or public authority or which contain sensitive words or expressions.

The Regulations also set out the disclosure requirements for persons carrying on a business in ADGM (i.e., the need to display the person's or body's name on business communications and at their place of business). Companies incorporated or continued into ADGM under ADGM's Companies Regulations 2015 (the "Companies Regulations") are subject to separate but mostly parallel rules in this regard.

Establishing a Company in ADGM

Those conducting business in ADGM may also wish to consider incorporating a company in the free zone under the Companies Regulations. The Companies Regulations (which are substantially based on the UK Companies Act 2006) provide for the incorporation of private companies, public companies and "restricted scope" companies (being companies subject to less onerous disclosure requirements). They also make provision for cell companies and investment companies.

We have prepared a separate summary on the Companies Regulations which is available on our website.

Our Role

Shearman & Sterling advised ADGM on its establishment as an international financial centre. Working closely with the leadership team at ADGM, Shearman & Sterling helped develop ADGM's world-class legal and regulatory regime to be in line with international standards to provide the sophistication and certainty found in the world's top financial centres. Shearman & Sterling has played a key role in ADGM's adoption of English common law by applying it in its jurisdiction for civil and commercial law. The application of English common law will govern matters such as contracts, tort, trusts, equitable remedies, unjust enrichment, damages, conflicts of laws, security and personal property. Additionally, Shearman & Sterling drafted all legislation governing matters such as companies, insolvency, interpretation, commercial licensing, arbitration, courts, employment, limited liability partnerships, real property, financial regulation and strata title.

Shearman & Sterling advises its clients on ADGM laws out of its Abu Dhabi, Dubai, London and US offices, and has unique insights as a result of its role in developing the legislation.

Footnote

1. Information on applying for a licence, including the applicable forms, is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions