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The foundations of a new financial free zone in the GCC are taking shape in the capital of the UAE. Aptly called the Abu Dhabi Global Market (ADGM), the ADGM […]

The foundations of a new financial free zone in the GCC are taking shape in the capital of the UAE. Aptly called the Abu Dhabi Global Market (ADGM), the ADGM is set to turn Abu Dhabi into a global financial center and investment hub linking financial flows in the MENA and Asia geographic areas to the rest of the world. As its 50-year lease agreement with the Mubadala Development Company communicates, the ADGM is becoming an anchor within Abu Dhabi’s financial sector headquartered on the capital’s 24-hour financial district, Al Maryah Island, and is attracting interests from top international investors with its list of commercial incentives and regulatory architecture.

ADGM’s momentum began in 2013 when the Abu Dhabi government passed the Federal Law Number 4 by Decree to establish a financial free zone in the UAE’s capital city with the aim of becoming operational in the year 2015. With Abu Dhabi’s reputation for financial stability, vast reserves of oil wealth, and an economic diversification plan underway, the ADGM’s objectives are to funnel more global market players into the economy through various financial incentives and a transparent system of rules and regulations applicable in the free zone. In its design, the ADGM building will be home to the three primary operational components of the financial center: the Financial Services Regulations Bureau, the Registration Bureau, and the Courts. Being a licensed company at the ADGM will offer investors several benefits in conducting their banking, insurance, and trading, and investment activities through the ADGM such as 100% foreign ownership policies for non-UAE nationals, a zero tax rate, and an English-language court system to settle disputes. In a pioneering one-of-a-kind approach for the Middle East, the ADGM has decided that English common law will be the governing legal system at the financial free zone, modeling the legal frameworks on those of financial centers in Singapore and Hong Kong. Acknowledging that with increased financial activity freedom comes increased regulatory and legal responsibilities, unlike any other zone in the Middle East, the ADGM will present a key advantage for investors and international finance institutions given the added capacity they will have to do business within a transparent legal framework, reducing risk, and enhancing the certainty of financial transactions.

In 2015, the ADGM will begin licensing its first batch of institutions looking to transact their business from Abu Dhabi’s fledgling financial free zone, which will primarily be restricted to private banking, wealth management, and asset management institutions. The impact this increased commercial activity will have on the financial services sector is expected to ignite a new phase in the advancement of Abu Dhabi’s financial sector. As the role the ADGM will sustain in Abu Dhabi’s economy, the UAE’s economy, the regional economy, and the global economy at large unfolds, what is certain is that the establishment of the ADGM represents a major milestone in the Emirate’s strategic journey of economic growth and development. Today, a more attractive and robust business environment is developing within the local financial services sector, liberating Abu Dhabi’s potential success as a global financial center of world-class standards and reaffirming its ambitions to remain a key player in the world of finance.