Comparison Between Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM)

Comparison between ADGM and DIFC

Comparison Between Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM)

Entrepreneurs often need clarification in choosing between the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM) as the place for their new venture or establishment. This article highlights the many commonalities and differences between these two jurisdictions.

DIFC & ADGM: Two great jurisdictions to pick from

The DIFC was established in 2002 in Dubai, while the ADGM was set up in 2013 in Abu Dubai. The goal of establishing both jurisdictions was to make each city strong, globally recognized financial centres.

With more than 20 years of experience, DIFC has a long, solid track record and a robust international reputation. On the other hand, ADGM is comparatively new. Still, with a similar regulatory regime as DIFC’s superb common law framework, ADGM is in a solid position to make its mark in the region.

Comparison between ADGM and DIFC

Here is a table that highlights the differences and similarities between the two jurisdictions:

ADGM (Abu Dhabi Global Market) DIFC (Dubai International Financial Centre)
Companies law The ADGM companies’ regulations are partly based on the UK Companies Act 2006.

The ADGM regulations are generally considered to be more up-to-date and comprehensive.

The DIFC regulations are partly based on the UK Companies Act 1985.
Status and legal structure Primary legislation is enacted by a board of directors appointed by the Abu Dhabi Executive Council.

The regulation of the free zone is delegated to three authorities:

  • Registration Authority (RA)
  • Financial Services Regulatory Authority (FSRA)
  • ADGM Court
The ruler of the Emirate of Dubai has the authority to enact primary and secondary legislation.

The regulation of the free zone is delegated to three authorities:

  • Registration Authority (RA)
  • Financial Services Authority (FSA)
  • DIFC Court
Courts English is used for court operations, judgments, and the publishing of laws.

ADGM Courts will directly apply English law; hence, they may use English court judgments as precedents.

The courts are the first to use an end-to-end eCourt platform.

English is used for court operations, judgments, and the publishing of laws.

DIFC courts have been operating for over two decades and have a solid local and international reputation.

The laws of the DIFC do not directly incorporate English common law, and therefore they do not follow precedents set by the English courts

Insolvency law ADGM Insolvency Regulations are based on English insolvency legislation and include the option of appointing an administrator. DIFC Insolvency Law is similar to English insolvency legislation; however, it does not have the concept of administration.
Arbitration The ADGM Arbitration Regulations 2015 are based on the UNCITRAL Model Law.

Arbitration at the ADGM Arbitration Centre differs from DIFC because it does not administer arbitrations but provides a site for holding arbitration hearings.

The DIFC Arbitration Law is based on the UNCITRAL Model Law on International Commercial Arbitration of 1985.

The DIFC Arbitration Centre administers commercial arbitrations under contracts incorporating the DIFC Arbitration Rules.

Family Offices

DIFC has the region’s first global Family Business and Private Wealth Centre. The Centre’s remit includes providing advisory services; education and training; networking; undertaking research, and dispute resolution assistance.

DIFC Single Family Office (SFO) Regulations are widely recognized as trailblazing for family-run institutions in the GCC. The regulations provide a platform for affluent families to set up holding companies at DIFC to manage private family wealth and family structures anywhere in the world.

The ADGM has followed Great Britain in its approach to family offices. No single regulation within the free zone encompasses a family office. Instead, it offers a variety of structures to manage family wealth, and hence a personalized solution is available according to your needs.

Special Purpose Vehicle (SPV)

A special purpose vehicle is an entity created for a specific purpose. Its legal status as a separate company makes its obligations secure even if the parent company becomes insolvent.

SPVs are used for asset securitization, property deals, raising capital, tax benefits, or to isolate parent company assets, operations, or risks.

ADGM provides two legal setups for SPVs; a private company limited by shares and a restricted scope company.

  • Private Company: Private limited companies are usually opted by the investors who intend to have a holding company or take up operational activities.
  • Restricted Scope Company: A restricted scope company can only be founded as a subsidiary of a public company or as a family office.

The DIFC offers an attractive venue for establishing one’s SPCs as they are not required to have their accounts filed or audited yearly. In addition, there is no requirement for shareholders to be based physically within the DIFC free zone. DIFC Corporate Services Providers (CSP) can act as SPC’s majority directors and company secretaries.

Consults the experts for professional advice

Our team of seasoned experts can help you decide which jurisdiction is best based on your circumstances. Whether you need a limited liability company, offshore company, family office, or an SPV, we have the correct answer. Please get in touch with one of our consultants for a free consultation.

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