There are many considerations when establishing a business in the UAE so before discussing an application you must first decide where in the UAE you would like to establish your business. In the UAE there are different emirates, freezones, financial freezones as well as “onshore” all of which have a distinct impact on your business and therefore need to be clearly understood. So what are some of the things you should consider before picking the right jurisdiction for the Firm?
There are several factors in determining where in the UAE you should set up your business and below is a guide to some of these based on our experience of the current marketplace. There are however several other factors which will impact your decision and these can all be discussed with an Effecta consultant familiar with each of the options. This guide is intended to provide a high-level overview for you to start this process.
The UAE is made up of 7 Emirates with the two key ones being Dubai and Abu Dhabi, although Ras Al Khaimah (“RAK”) and Sharjah are beginning to grow in popularity for different types of business. As a financial services firm you have the option to establish in one of the two financial freezones, the Dubai International Financial Center (“DIFC”) or the Abu Dhabi Global Markets (“ADGM”) as such your option will be a financial freezone or onshore. All freezones which are not financial freezones are considered to be onshore with many being established to attract particular sectors such as Virtual Assets, Healthcare, IT, Outsourcing etc. Most international firms prefer to set up either in a freezone or a financial freezone which does not require a local sponsor. The regulator in the DIFC is the Dubai Financial Services Authority, in the ADGM is the Financial Services Regulatory Authority and onshore is either the Securities and Commodities Authority, Central Bank or the new Virtual Assets Regulator.
What types of clients and where are they based?
Firms dealing with institutional clients will find greater flexibility in where to establish their business. The financial freezones grant a license to do business in or from the financial freezone itself but you must consider the regulations in the jurisdiction in which you client is based as there are no passporting arrangements (other than for domestic funds). As such if you are based in the DIFC, for example, you need to be aware of any limitations in marketing in the jurisdiction where your client is based including the ADGM and onshore.
If your target client base are retail clients in the UAE you are likely to require a local promoter or a license/no objection from the SCA to engage with these clients if you are based in a financial freezone although there are certain practices that have developed of time which have become the “market norm” and these can be explained on a case by case basis.
Which jurisdiction is best for my business?
In many cases businesses have a choice of all three jurisdictions in which they can establish and depending on the type of business as to which jurisdiction may be more appropriate. The Effecta consultant will sit with you to identify the pro’s and con’s so that you can make the right decision for the business now and in the future.
What is the application process and timelines?
When making an application to be authorised in the UAE each of the relevant regulators have their own requirements and processes. As you would expect the more complex the application the longer the time lines are for approval.
How can Effecta assist you?
Effecta’s compliance consultants have extensive experience in assisting firms with obtaining a regulatory license suitable for their business and can project manage your application in an extremely efficient manner. In order to do this as effectively as possible, Effecta will nominate a consultant (the “Nominated Consultant”) to act as your project manager for the application process. The Nominated Consultant will have appropriate experience and expertise and will be supported by the project team and will provide a project plan detailing all the steps required and estimated timeframes to complete the entire application project and who is responsible for delivering each element of the project plan and key milestones. The project plan will be updated on a continuous basis and you will be able to access this information at any time to assess the progress that has been made on your application.
Specifically Effecta can:
- Discuss the license required
- Liaise with the regulator
- Advise on and reviewing the Firm’s Regulatory Business Plan (“RBP”)
- Complete the regulatory application forms
- Prepare the essential compliance documentation
Once authorised Effecta can provide the Firm with ongoing Compliance support either on a Retainer basis or on an Outsourced basis
EFFECTA’S Essential Insights: A Regulatory Update
February 16, 2023
Welcome to EFFECTA’s Essential Insights, a quarterly newsletter aimed at providing its readers with succinct overviews...read more