Abu Dhabi Global Market (ADGM), was established under UAE Federal Decree Law No. (4) of 2013. Initially, its jurisdiction covered Al Maryah Island, Abu Dhabi only. However, following the issuance of UAE Cabinet Resolution No. 41 of 2023, ADGM's jurisdiction has been extended to include Al Reem Island. This extension leads to a tenfold growth in the ADGM’s geographic area as compared to its current footprint, making it one of the world's most expansive financial districts.

The expansion aligns with the Abu Dhabi’s economic vision and strategy for 2023-2027 to focus on advancing Abu Dhabi's financial sector and strengthening its global position as a financial hub.

ADGM has introduced modifications to several regulations to establish transitional measures that support existing businesses on Al Reem Island. Until December 31, 2024, these businesses will be granted an exemption from adhering to ADGM's registration and licensing prerequisites, as well as specific regulations. This grace period is intended to afford them the necessary time to secure licenses and permits essential for continued operations post the specified date.

Impact on New and Existing Entities

1. New Entities planning to establish their presence on Al Reem Island Commencing November 1, 2023, all new businesses intending to set-up entity in Al Reem Island much obtain a commercial license from ADGM rather than Abu Dhabi Department of Economic Development (ADDED). Upon receiving an ADGM commercial license, these businesses will be subject to the laws, regulations, and administrative requirements of ADGM, which are different from those applicable to entities under ADDED.
2. Existing Entities have the following options:-
   1. Registering with ADGM to remain located at Al Reem Island: - The existing entities can continue their presence on Al Reem Island by obtaining a license from ADGM on or before December 31, 2024. Upon securing an ADGM license, the entity will no longer maintain registration with the DED and will instead operate under the regulatory framework of ADGM.
   2. Relocate to Abu Dhabi Mainland: Another option available to existing entities is to relocate their operations to Abu Dhabi Mainland. In this case, the entity may continue to be registered with ADDED. The entity must make arrangements to cease occupancy of the Al Reem premises and relocate outside the ADGM Free Zone no later than the conclusion of December 31, 2024.

      It is pertinent to note that branches existing in Al Reem Island do not have option to initiate a continuation application with the ADGM Registration Authority. It is necessary for them to register a new branch within ADGM using the same premises on Al Reem Island. Subsequently, they should initiate the cancellation process for their branch license registered with the DED.

   3. Dual License:- ADGM and the ADDED have an agreement to facilitate a dual licensing regime for entities established in the ADGM. In accordance with this agreement, specific entities holding ADGM commercial licenses may qualify for reciprocal license recognition with the ADDED, subject to meeting the licensing prerequisites of each jurisdiction and adhering to their respective rules and regulations. This implies that qualifying ADGM entities may be authorized to cater to businesses in onshore Abu Dhabi without the necessity of maintaining an office presence on the mainland. ADGM entities providing financial services to customers in mainland Abu Dhabi will remain subject to any other relevant regulatory obligations and applicable laws which may be imposed on the mainland by the Federal regulators (such as the UAE Central Bank or Securities and Commodities Authority). Some businesses may be required to obtain further licenses from other onshore authorities, depending on the scope of their activities

How MBG can help

Our team of experts have regularly advised entities on the regulatory framework in ADGM and Abu Dhabi Mainland. With regard to this latest development, we can assist in devising the structuring solution best suited to your business and to assist with the smooth transfer and transition process which shall include the registration process with ADGM, relocation of office to Abu Dhabi Mainland, providing dual licensing support and advising of impact of this development on your enitity.