Family Office Insights - ADGM
Corporate Structuring / UAE
Khadija HussainSenior Associate,Corporate Structuring
The UAE has long been a haven for ultra-wealthy families and family-owned businesses, thanks to its robust regulatory framework and supportive infrastructure.As a result, the UAE is increasingly recognized worldwide as a stable and attractive option for family office planning.
Abu Dhabi Global Market (ADGM) is one of the leading financial hubs in UAE and presents a compelling environment for high-net-worth families considering the establishment of a family office. On September 4, 2024, the ADGM introduced amendments to the Single-Family Office (SFO) and Restricted Scope Company (RSC) regimes. The changes were aimed at offering high-net-worth individuals (HNWIs) and families with enhanced clarity on the regulatory environment for managing and growing their wealth.
The new regulations provide a clear definition of what constitutes SFO activity within the ADGM. An SFO can be set up to service a single family and can engage in the following activities (“ADGM SFO Services”):
Concierge services;
Human resources;
Strategic and risk management services;
Taxation and wealth planning;
Investment management and advisory services;
Legal and regulatory services;
Financial services;
Acting as a holding company;
Providing services to or acting on behalf of any trust or foundation of any family member; and
Any other controlled activity undertaken for a single family.
A "single family" is broadly defined, encompassing a group of individuals who are related, including blood relations, step-children, adopted children, and all ancestors and descendants of such individuals. This inclusive definition ensures that all family members can benefit from the SFO's services.
To establish an SFO, the family must have a net investable or liquid asset value of at least USD 30 million. This value is calculated based on assets that can be converted into cash within a 180-day period.
An RSC is a unique corporate vehicle that benefits from a higher degree of confidentiality compared to other corporate entities in the ADGM.
All RSC are not SFOs similarly all SFOs do not need to be registered as RSC. An SFO has the option to be registered either as an RSC or as a private company limited by Shares.
If a SFO is registered as an RSC, it has the added benefit of confidentiality since the ADGM public register does not name its shareholders and directors. The public register limits the information of RSC to its name, license activity, corporate form, registered address, and registration date details and filings.
Also, unlike other ADGM companies, RSCs are not required to file accounts or have their accounts audited. However, they must file an annual return, articles, and details of their registered offices, directors, and secretary (if applicable) with the ADGM Registrar of Companies (“Registrar”).
Finally, RSCs are subject to specific compliance obligations under the Anti-Money Laundering (AML) Rulebook. RSCs should be forthcoming with relevant information in response to requests and the reduced disclosure standards should not be interpreted as a limitation on providing necessary information for compliance purposes.
In the context of a SFO, an RSC can only be owned by a group of natural persons who are ‘members of the same family’ as defined by the ADGM regulations. Ownership transfer to INDIVIDUALS who are not members of the same family is void, ensuring that the RSC remains within the family.
"Members of the same family" encompasses a broad range of familial relationships, including blood relations, step-children, adopted children, ancestors and descendants of such individuals. The Registrar has the discretion to determine family membership and may require supporting documentation.
The DIFC requires a minimum net asset of USD 50 million for SFOs, compared to ADGM's USD 30 million.
Considering the flexible and modern framework under the DIFC Family Arrangements Regulations 2023, one could wonder who those two regimes compare.
We note the following aspects worth attention:
Key Feature
DIFC Provisions
ADGM Provisions
Definition of Family
The DIFC defines a family as members related by a common ancestor within three generations, including spouses, stepchildren, and adopted children.
ADGM's definition is slightly broader, encompassing all ancestors and descendants (and includes individuals related by blood, including stepchildren and adopted children).
Family Office Services
Services include, but are not limited to:
Concierge and personal services;
Strategic business advisory;
Tax and wealth planning;
Investment and risk management;
Legal, finance, communications, administration, and operations; and
Fiduciary services.
The Services Include:
Accreditation
The DIFC offers a certification and accreditation program for Family Businesses. This program supports benefits and incentives planned for Family Businesses in the UAE under the Family Business Law.
The ADGM does not provide such accreditation program.
Minimum Asset Requirements
DIFC SFO must meet a minimum net asset requirement of USD 50 million.
ADGM SFO must meet a minimum net asset requirement of USD 30 million.
The amendments to the SFO and RSC regulations in the ADGM are designed to enhance clarity, ensure compliance, and provide a supportive framework for family offices and restricted scope companies. These changes reflect the ADGM's commitment to maintaining a competitive and attractive environment for family businesses in the region.
With the recent regulatory enhancements, the UAE continues being an attractive destination for the privately wealthy offering competitive options for establishing family office. Both the ADGM and DIFC offer robust frameworks for the establishment and operation of Single-Family Offices, each with its unique features and requirements. Families looking to establish a family office in the UAE should consider the offerings provided by the jurisdiction that best suits their needs.
For further information,please contact Khadija Hussain.
Published in January 2025
