If you are looking to establish a regulatory business, one of your first considerations must be: in which jurisdiction do I locate this business? You will need to consider costs, where your clients are based, where your staff are based, as as well as the regulatory and legal environment.
Why should you set up in the UAE?
The UAE has emerged as one of the world’s leading financial centres. To begin with, this was very much due to the establishment of the Dubai International Financial Centre (DIFC) and, subsequently, the addition of the Abu Dhabi Global Market (ADGM). However the local UAE market also has its attractions and may prove a better jurisdiction for those wishing to penetrate the UAE investor base.
The UAE is strategically located between the East and West, which provides a platform for businesses and financial institutions to reach into and out of the emerging markets of the region
In many respects the UAE is the perfect base to take advantage of the region’s rapidly growing demand for financial and business services. It also fills the time-zone gap between Europe and the US in the West and Asia and India in the East. With several options on how and where in the UAE to establish your business, you are bound to find the right environment for you.
Outside of the Financial Free Zones, you will need to consider the requirement that you may need a local sponsor to help you establish your legal entity. However, if you set up within the Financial Free Zones of the DIFC and the ADGM, your company can have 100% foreign ownership. This is also true of a Central Bank Representative Office and as such these tend to be the more appealing structures. Also whether you are part of an already established business could impact your choice of either a branch or a subsidiary or whether you can set up outside the Financial Free Zones as a Representative Office.
Are you looking to provide purely advisory type services or will you be managing assets, providing credit or even accepting deposits? The lower the regulatory risk of your business the more options you have as to where to locate your business, but there are some restrictions on certain types of business being provided in or from the Financial Free Zones including dealing in the UAE Dirham or insuring risks within the UAE. Also, does your Firm need to be regulated for the types of activities it is planning to undertake and is this the same no matter where in the UAE the business is based?
Whilst a license to do business from a Financial Free Zone allows you to do business in or from that Financial Free Zone you should also be aware that there are no passporting arrangements in the GCC as well as within the UAE. As such you need to ensure that the business you are undertaking is allowed to be marketed/provided to clients under the regulations applicable in the jurisdiction in which the client is based. This tends to become more relevant if your client base is mainly retail where few exemptions to the local regulations are available.
Both the DIFC and the ADGM operate their own civil and commercial laws which are based on the laws of England and Wales. They also have their own Financial Services Regulators whose rules are also very much based on the UK FCA rulebook. This may be more relevant to those who already have an international based business who will be more familiar with this environment whereas a more regional based business may find that the UAE local market regulations are designed more for their type of business.
The UAE has, over the years, attracted many young and experienced professionals, as well as investing heavily in the education and training of the local population. This provides an ideal balance of junior, senior, local and international staff who can operate in a culturally diverse environment. The UAE has also attracted many of the big law firms, accountants, auditors, fund administrators and other financial professionals like ourselves at CCL. Also, as anyone who has visited UAE can tell you, there is an abundance of new properties both residential and commercial that will meet your requirements, although the price of property will vary depending on where the business is established. If you wish to incorporate your business in the DIFC, the ADGM or in the UAE outside of the Financial Free Zones you will be required to have premises in that location from which to provide your financial services.
The UAE is a tax free environment and the Financial Free Zones were given a guarantee regarding zero taxes on corporate income and profits for 50 years from 2004. This, as well as the UAE’s wide network of double taxation avoidance treaties with Regulators and Central Banks, makes the UAE a tax efficient environment. Also as a financial services firm you will be required to not only have a premises from which to operate from but the cost of Compliance with the relevant regulatory environment may vary depending on the jurisdiction.
Also as a financial services firm, you will be required to not only have premises from which to operate from but the cost of Compliance with the relevant regulatory environment may vary depending on the jurisdiction.
For specific information of the regulatory jurisdiction options in the UAE, visit the following pages:
- Setting up in the DIFC
- Setting up in the ADGM
- Getting Authorised by the Securities & Commodities Authority (SCA)
- Setting up a Rep Office with the UAE Central Bank
CCL can help you consider all your options before starting down the path of any regulatory authorisation application to make sure you choose the right jurisdiction for you.