Special Purpose Vehicles in ADGM, Abu Dhabi
SPV’s are typically private corporate structures established to be used as investment and holding companies. They can be employed to isolate financial and legal risks by ring fencing assets and liabilities. SPV’s may be established as subsidiaries, project/ joint venture vehicles to ensure only those assets related to a particular transaction are exposed to the liabilities associated with that transaction. SPV’s are designed to be flexible, simple and efficient, and may be set up in a matter of days.
Typical uses for an SPV are:
SECURITISATION: Can be used by an originating party to securitise loans (or other receivables) by creating an SPV which purchases these assets by issuing debt, secured on these underlying assets. This ensures that the holders of the asset-backed securities have first priority right to receive payments on the debt while limiting recourse to the originator of the assets.
REAL ESTATE:Can be used to acquire title to real property and limit recourse of mortgage lenders depending on the location of the asset. In some jurisdictions the sale of the SPV’s shares can result in lower taxes and transaction fees when compared to transferring the asset.
RISK SHARING:Can be used to form project companies for joint ventures, reflecting agreed management responsibility while legally isolating joint venture partners from risks associated with the venture.
ASSET TRANSFER:Can be used to transfer assets along with associated material agreements which may permit the transfer of all or part of ownership of the enterprise while keeping intact material agreements which may be necessary to maintain the value of the asset.
INTELLECTUAL PROPERTY:Can be used to separate valuable IP into a standalone SPV which has minimal liabilities and can be used to raise funds and enter into license agreements with third parties. Also a useful tool to manage products with a variety of IP components.
RAISING CAPITAL:Can be used to raise capital at favourable rates in certain situations, with credit worthiness determined by the available collateral of the SPV, rather than the credit rating of the parent company.
FINANCING:Can be used to ring-fence investments, permitting financing without increasing debt levels for the parent company or exposing the parent’s assets (or SPV’s assets) to cross-liabilities.
Consultation with Alpha Management; we have the experience and the insight to determine the best structure for ADGM SPV companies.
We will prepare and submit a Business Plan with details of the proposed structure and obtain provisional approval from ADGM.
Once we have provisional approval, we will prepare and submit the full company application and submit to the ADGM Authority.
Once we have the final approval, the Shareholders can meet to sign the Articles of Association in front of the Registrar in ADGM (although this is not obligatory), and the company is formed!
Advantages of an ADGM SPV
- Common law jurisdiction.
- Independent ADGM Courts operating under English Law.
- Best-in-class independent regulatory framework.
- No attestation required for corporate documents.
- Variety of legal structures available.
- No physical office space requirement.
- Registered address as of Corporate Service Provider.
- Minimum of one director / shareholder only.
- Incorporation [normally] within a few days.
- Multi-class shares with different rights attaching to each class.
- No limit on number of shareholders.
- Shelf SPVs permitted.
Alpha Management Limited is registered with ADGM to incorporate SPV’s from its ADGM office based in Al Sila Tower, located opposite ADGM Building. Companies we incorporate may use our address as the SPV’s registered address thus eliminating the need to lease separate office space. Once the SPV is incorporated Alpha Management Limited acts at the registered agent and ensures the SPV remains in good standing. Additional services include accounting, preparation of financial statements, management of bank account, and administration services. Please consult us if you are interested in learning more about forming an ADGM SPV.