ADGM expands into Al Reem Island

Abu Dhabi Global Market

The ADGM is an international financial centre in the Emirate of Abu Dhabi. As a Financial Free Zone formed under a federal decree, it is allowed to enact its own legislation. The original jurisdiction and territory of the ADGM was restricted to Al Maryah Island, Abu Dhabi. This is no longer the case.

What has changed?

The Cabinet issued Resolution No. 41 of 2023 was enacted on 24 April 2023, expanding the jurisdiction and territory of the ADGM to Al Reem Island, Abu Dhabi. This expansion results in a tenfold increase in the area of land of the ADGM, making it one of the largest financial districts in the world, as far as the territory is concerned.

Previously governed by UAE federal and Abu Dhabi local laws, from 24 April 2023, Al Reem Island will form part of the ADGM and fall under its legal system.

Why this change?

Over the past years, the popularity of the ADGM continues to increase. This undisputed success means, however, scarcity of the real estate available to ADGM entities. With Al Maryah Island at an 95% occupancy rate, the expansion is very welcome. Businesses, especially those seeking financial service licenses, acutely felt this scarcity as finding office space is a key precondition to being granted with final approval from the ADGM’s Financial Services Regulatory Authority for their financial services permission (FSP). Now with the expansion, access to Al Reem Island should provide access to a wider range of office spaces at more competitive pricing and hopefully help ease the FSP application process.

How does it impact you?

Al Maryah Island: This development does not affect existing ADGM establishments.

Al Reem Island: If you are a new ADGM license (including FSRA license) applicant, you can now opt for office space on Al Reem island.

For entities already operating on Al Reem Island, under an onshore Abu Dhabi license, two options will be available:

• they may convert to a free zone company within the ADGM jurisdiction by applying for the appropriate licenses, registrations and authorizations; or
• they may remain under the onshore Abu Dhabi legal regime and continue to be governed by the UAE federal and Abu Dhabi local legal and regulatory frameworks that they were subject to prior to the expansion.

Presently, the formalities between the ADGM and the local authorities in relation to the two options above are still under discussion. In the interim, all current applications, licenses, visas and permits at the federal and local level are to continue as normal until further notice is provided by the concerned authorities.

How can we help?

At Al Tamimi & Company we regularly advise local, regional, and global financial institutions on matters concerning the ADGM. We would be delighted to assist you in better understanding this new development as well as in relation to:

(i) setting up in the ADGM;

(ii) setting up in the Abu Dhabi mainland;

(iii) relocation of your business from Al Reem island;

(iv) general advice on the effect of this resolution to your legal entity; or

(v) FSRA licensing.