On 1 September 2018, the Abu Dhabi Global Markets Free Zone (“ADGM”) announced it will make available a new commercial licence specifically for technology start-ups. This licence will grant such start-ups access to ADGM’s range of top-tier investors, mentors and corporate advisors thereby providing a great opportunity for start-ups to hurdle traditional barriers to development such as high set up costs and lack of access to both funding and business support.
The cost of this new licence is highly competitive at just US$700, which includes up to four residency visas for employees. In addition, the new licence allows start-ups to obtain an operational licence without the usual requirement for a physical office space, allowing for further cost savings and flexibility. It also provides the opportunity for start-ups to access funding on an immediate basis and may potentially allow future listings on the ADGM’s financial exchange.
As well as the low costs and fundraising options, the ADGM will also assist start-ups by providing access to ADGM’s professional services support programme (“PSSP”). Through the PSSP, start-ups can collaborate with local and international advisors to assist them with common issues and required services such as the application of VAT, implementation of proper accounting structures and their legal and financing arrangements. The PSSP is notably the first service of its kind offered by an economic free zone in the United Arab Emirates (“UAE”).
The registration process is helpfully the same as the current online procedure used to enable entities to obtain an ordinary commercial licence within the ADGM. This process involves the submission of a business plan for approval by the ADGM Registration Authority, following which access is granted to the ADGM’s online company establishment portal where an entity will be required to submit its relevant details. As an added benefit, the volume of registration documents required for this new licence appears to be less than that which is usually required for a standard commercial licence, allowing a quicker and easier application process for tech start-ups.
Once granted, the new tech start-up licence would be valid for two years and can then be converted into either a traditional ADGM operational entity with a standard commercial licence or into a holding company, subject to being able to demonstrate successful progress, for example through its revenue generation or the level of investment it has obtained.
The availability of this new licence, following on from ADGM’s FinTech and Reg-Lab programmes, further demonstrates ADGM’s commitment to the development and promotion of technology and creates a unique start-up ecosystem based on innovation and local investment. This development is also part of the UAE’s National Innovation Strategy which seeks to stimulate innovation across a number of key sectors, including technology, through strategies including the introduction of new legislation, the establishment of innovation incubators and providing private-sector incentives.