FAQ: Can I use an ADGM Special Purpose Vehicle as a shareholder for a UAE mainland company?

Can I use an ADGM Special Purpose Vehicle (SPV) as a shareholder for a UAE mainland company?

An ADGM SPV is a well recognised corporate entity often used as a Holding company – it can be used to hold assets, shares, IP, as well as to secure positions and share risk amongst individual and companies. An SPV is not an operational company and cannot invoice for operational business activity.

The ADGM SPV can as such hold shares in mainland UAE LLLCs for example. Depending on who the Ultimate Beneficiary Owner (UBO) of the ADGM SPV will determine the shareholder percentage that is possible in the mainland LLC.

Under UAE Commercial Companies law 51% of shares in a mainland LLC have to be held by a UAE National or UAE Company, unless under special circumstances.

If the UBO of the ADGM SPV is a foreign shareholder, then a maximum of 49% of the shares in an mainland UAE can be held.

The main advantages of using an ADGM SPV are:

There is no limitation on number of shareholders
Avoiding declaration to the DED who the Ultimate Beneficiary owner is. This means that if this shareholder has a current job in UAE then no NOC is required
ADGM uses 100% English Common Law. In case of disputes this is reassuring that English law will be the precedent.
Adds a layer of protection to the LLC. Side agreements use ADGM court jurisdiction and a share pledge can be registered in ADGM
Relatively inexpensive – no extra office is required and attestation of documents is not required
Protects the UBOs from the LLC activity