On April 12, the ADGM (Abu Dhabi Global Market) will implement the Company Service Provider (CSP) framework to special purpose vehicles (SPV) and Foundations in its jurisdiction.
The overall aim of a CSP is to support the operations of SPVs and Foundations and, crucially, to implement robust governance for these entities and help facilitate their dealings with the ADGM Registrar. The new CSP framework is designed to address the potential challenges and risks that may arise from the growing success of – and increasing demand for – such structures in ADGM, particularly where these entities do not have a direct connection to ADGM.
Under the framework, all CSPs currently providing or intend to provide services to other companies have to meet certain criteria and controls to keep their commercial licence. CSP services may include certain responsibilities such as offering a registered office address; company secretarial services; accounting; book-keeping and more. Every CSP will have additional obligations under this new legislation, including liaison between the entity and ADGM Registrar and helping to facilitate all obligatory filings on behalf of the entity.
All SPVs and Foundations will fall into this scope, with exemptions for those that can satisfy a large degree of “economic substance” or presence in UAE (significant assets, resources, experience) or are licenced and regulated by the Central Bank.
What does this mean in practice? Essentially, all existing non-exempt SPVs and Foundations that have not engaged with a CSP either prior to or post-incorporation are obliged to appoint a CSP within 12 months of the implementation date or by their next commercial licence renewal date, whichever falls earlier. All newly established, non-exempt SPVs and Foundations will need to appoint a CSP prior to incorporation three months after the implementation date, ie, July 12.
This legislative update is consistent with the strategy of keeping the ADGM in line with global standards as well as ensuring rules are not overly burdensome and appropriate for the needs of its business community. We believe the new CSP framework instills international best practices and establish a more robust regulatory framework.
These measures have been welcomed by the market, who shared their views with ADGM Registration Authority via public consultation. We believe it is a commercially balanced and proportionate initiative, which will be administered by the ADGM Registration Authority.