K-Capital Meets the Gulf: Structuring Financial Services Firms in the ADGM
Korea Focus
Jiwon HaSenior Counsel,Korea Group
Stella KimSenior Associate,Corporate Commercial
The Gulf Cooperation Council (GCC) region has become a strategic hub for Korean financial institutions seeking to diversify their investment portfolios and establish a foothold in Middle Eastern markets. Korean institutional investors, private investment firms, venture capitals, and increasingly, family offices managing substantial generational wealth, are recognizing the GCC's potential as both an investment destination and a gateway to broader emerging markets. These Korean entities are now seeking to establish regional platforms that can manage direct investments, alternative assets, and traditional portfolio investment.
The ADGM offers them an ideal base for Middle Eastern operations. The region's Economic Vision 2030 projects and growing tech sector match well with Korean expertise in industrial development and innovation. The ADGM's English common law system and location between Asia and the West provide a familiar legal environment with access to Middle Eastern capital. This creates strong opportunities for Korean institutions to build investment platforms that serve both Korean and regional clients.
The ADGM operates as an independent financial free zone with its own laws, regulatory framework, and judicial system based on English common law principles. The ADGM's regulatory authority, the Financial Services Regulatory Authority (FSRA), oversees all financial services while supporting innovation and market growth. The regulatory framework follows international best practices, making it attractive to Korean and other Asian investors.
The ADGM's regulatory framework also incorporates comprehensive anti-money laundering (AML) and counter-terrorism financing (CTF) requirements that meet international standards, ensuring Korean institutions can maintain compliance with global regulatory expectations while operating in the Middle Eastern market.
The ADGM also presents a compelling environment for high-net-worth families considering the establishment of a family office. In 2024, the ADGM introduced amendments to the Single-Family Office (SFO) and Restricted Scope Company (RSC) regimes to offer high-net-worth individuals and families enhanced clarity on the regulatory environment for managing and growing their wealth.
A "single family" is broadly defined as encompassing a group of individuals who are related. To establish an SFO, the family must have a net investable or liquid asset value of at least USD 30 million – as calculated in respect of assets that can be converted into cash within a 180-day period.
An SFO has the option to be registered either as an RSC or as a private company limited by shares. An RSC is a unique corporate vehicle that benefits from a higher degree of confidentiality compared to other corporate entities in the ADGM.
Alongside other private wealth structuring vehicles in the ADGM such as special purpose vehicles and foundations, SFOs represent one of the various family wealth solutions and structures available in the ADGM. Strategically combining these options can enable families to safeguard their wealth over the long term in a UAE tax efficient manner.
The licensing process for financial services and family office activities in the ADGM requires careful navigation of FSRA requirements and typically involves several months of preparation and regulatory review. Korean institutions must demonstrate adequate financial resources, appropriate governance arrangements, and qualified personnel to conduct their intended range of activities effectively.
FSRA requires entities to hold appropriate regulatory permissions based on their intended activities, which may include managing investments, operating collective investment schemes, arranging deals in investments, advising on investments, and providing family office services. Key regulatory requirements include appointing qualified senior management with relevant experience across the intended spectrum of activities, implementing robust risk management and compliance systems that can handle venture capital, asset management, and family office operations, and establishing appropriate operational controls.
The licensing process can require submission of comprehensive business plans detailing venture capital, asset management, and family office strategies, organizational charts showing clear governance and operational structures, policies and procedures manuals covering all intended activities, and detailed information about controllers, senior management, and significant family members where applicable. FSRA conducts thorough due diligence on key personnel and assesses the entity's overall fitness and propriety to conduct the full range of regulated activities.
Once licensed, Korean financial services firms and family offices in the ADGM must meet ongoing compliance requirements across all their activities. Key obligations include maintaining effective board oversight and clear operational controls for different business divisions, implementing comprehensive risk management systems covering investment, operational, and liquidity risks, and ensuring robust compliance monitoring with adequate internal audit capabilities.
Reporting requirements are comprehensive, covering regular financial reporting, performance disclosures, and detailed record-keeping of all investment decisions and client interactions. Korean entities must maintain transparent reporting on investment strategies and risk exposures while ensuring proper segregation between institutional and family office activities where applicable.
Korean institutions may face several key challenges when establishing the ADGM operations. Cultural differences require adapting business practices and client relationship approaches for Middle Eastern markets.
Staffing challenges include finding professionals who understand both Korean business culture and local market conditions. Most successful entities use mixed teams combining Korean management with local expertise.
Technology systems must handle the ADGM regulatory reporting, Korean parent company requirements, and family office needs like consolidated family reporting and privacy protection. Data protection and cybersecurity considerations are particularly important given the cross-border nature of operations and sensitive financial information involved.
Currency and tax planning requires careful structuring to comply with both UAE and Korean regulations while optimizing efficiency. Family offices face additional complexity as regards to family tax residence and domicile considerations.
Building local relationships takes time and cultural sensitivity. Korean entities that invest in understanding regional business practices and developing local partnerships typically achieve better long-term success than those operating purely as offshore entities.
The regulatory environment continues evolving, making strong local legal and regulatory advisory relationships essential for ongoing compliance and adaptation to new requirements.
For further information,please contact Jiwon Ha and Stella Kim.
Published in October 2025
