The Government of Abu Dhabi has approved a law amending some of the rules of the Law No (4) of 2013, concerning Abu Dhabi Global Market (ADGM). Spurred by a desire to attract foreign investment and boost the economy, the Abu Dhabi Economic Department announced the first phase of the Dual License initiative in 2018.
This license enables companies to not only operate onshore in Abu Dhabi, but also in its free zones. This amendment showcases the closeness between the ADGM and its governmental partners in Abu Dhabi, in particular with the Abu Dhabi Judicial Department (ADJD) and the Department of Economic Development (DED).
Occurring along with HH Sheikh Mohammed bin Zayed al Nahyan’s economic initiatives, this motion joins other initiatives that aim to support entrepreneurs, small-and-medium-sized enterprises and the private sector.
The Dual License Initiative forms an important part of the 50-billion-dirham stimulus package that was announced mid-2018 to benefit numerous vital sectors in the industry like financial and trading consultancies. This package was positively received by many in Abu Dhabi due to its benefits. The Dual License will be open to the companies that are headquartered in Abu Dhabi and its various Free Zones
In light of the pandemic, this type of license offers the additional benefit of exempting companies from renting an office space and allows them to work from home with an instant licensing system. It also obliges legacy entities licensed by the DED on Al Maryah Island (prior to the establishment of ADGM) to surrender their licenses and obtain an ADGM license, unless they are exempted in accordance with ADGM regulations or by a decision from the board of directors.
Since offshore companies were previously limited to the restrictions of the free zone, the dual license initiative is a step that allows entrepreneurs to feel motivated and supported to expand and invest in Abu Dhabi.
Previously, businesses with a free zone license could only expand their geographical and legal scope if they partnered with an onshore company/agent or applied for an onshore license which forced them to bear additional costs like leasing an office.
Since diversifying a license before this investment meant having to these sacrifices and others such as profit-sharing, this license is well-received by small and medium business enterprises as it allows them to commence business onshore without sharing their profits, and without the need of a local partner.
The new rules also mean that parties without any connection to ADGM will be able to resolve disputes at ADGM Courts. Since they use Common Law Courts, which are presided over in English, will be very beneficial for many companies.
Looking to learn more about the Dual License Initiative and its impact on your business? Get in touch with our ADGM experts to see exactly what it means for your business.