The Emirate of Abu Dhabi has recently launched the Abu Dhabi Registration and Licensing Authority (“ADRA”) as an arm of the Abu Dhabi Department of Economic Development (“ADDED”) by way of a resolution issued by the Abu Dhabi Executive Council with the aim to foster a business-friendly ecosystem in the Emirate and to accelerate economic growth. This legal briefing provides an overview on the responsibilities of ADRA and the implications for businesses operating in the Emirate of Abu Dhabi as well as for investors intending to set up a legal entity in the Emirate.
1. What are the licensing options for companies in the Emirate of Abu Dhabi?
The Emirate of Abu Dhabi provides an attractive business environment for (foreign) investors. Investors intending to set up a business in the Emirate must decide whether to establish their legal entity in mainland Abu Dhabi or in one of the Emirate’s various free zones. Whilst all available locations offer a range of incentives, the decision for a certain location is in most instances driven by operational requirements and strategic considerations.
So far, six free zones have been established in the Emirate of Abu Dhabi. Each free zone is designed to meet the needs of a specific industry or sector. Abu Dhabi Global Market (ADGM) is a financial free zone that has been established in 2015. ADGM is a common law jurisdiction with a separate court system. ADGM’s territory and jurisdiction was initially restricted to Al Maryah Island in Abu Dhabi. Due to the popularity of this financial free zone, ADGM’s territory has recently been expanded into Al Reem Island in Abu Dhabi. The other five free zones KEZAD (Khalifa Economic Zones Abu Dhabi), Masdar City Free Zone, ADAFZ (Abu Dhabi Airports Free Zone), ICAD (Industrial City of Abu Dhabi), and Twofour54 are non-financial economic free zones designed to meet the needs of different industries and sectors (such as aviation and logistics or creative industries). In Abu Dhabi mainland as well as the Emirate’s economic free zones, investors can choose from various legal forms and an extensive catalogue of business activities.
Depending on the selected location of the business, the founders of the company need to deal with different authorities when initiating the business formation process. Whilst those wishing to establish a company in ADGM need to liaise with the Registration Authority, following the launch of ADRA, ADRA will be responsible to develop and regulate the business sector in Abu Dhabi mainland and the Emirate’s non-financial economic free zones.
2. What are the responsibilities of ADRA?
According to news reports, the Abu Dhabi Registration and Licensing Authority (ADRA) will act as the central business registry for Abu Dhabi.
ADRA will be responsible for overseeing the registration of businesses in the Emirate and its non-financial economic free zones as well as for coordinating with relevant entities to streamline licensing procedures. To cater to a diverse investor base, it is planned to introduce new types of licences.
ADRA will further serve as the single point for regulatory reporting and will be responsible for ensuring strict compliance with international, federal and local standards as well as laws and regulations applicable in the Emirate of Abu Dhabi and the non-financial economic free zones. This includes, amongst others, regulations aimed at combatting money laundering and the financing of suspicious activities.
Additionally, ADRA is tasked with developing a unified database which consolidates data on legal entities established in both mainland Abu Dhabi and the Emirate’s non-financial free zones.
3. What are the reasons for setting up ADRA?
The main reason for setting up ADRA is the Emirate’s intention to further facilitate business set-up, business operations and business growth to encourage investment and to create a robust ecosystem for the Emirate’s business sector.
ADRA states on its website the following five pillars for success which are designed to help investors thrive in Abu Dhabi:
- Simplified procedures: ADRA offers guidance and streamlined processes, including an online business registration platform;
- Expert guidance: ADRA’s customer service teams offer guidance on licensing types and procedures;
- Enhanced Transparency: ADRA provides stakeholders with accurate data to help with informed decision-making;
- Thriving ecosystem: ADRA provides opportunities to connect and network; and
- Regulatory compliance: ADRA ensures an ethical and secure regulatory environment.
4. What will companies and investors have to consider?
Existing companies will have to deal with ADRA in relation to licensing, registration and compliance aspects.
According to news reports, ADRA will be responsible for overseeing the registration of businesses in the mainland as well as in the non-financial economic free zones.
ADRA will also be responsible for overseeing compliance with various laws and regulations applicable in the Emirate’s mainland and its non-financial free zones, such as Anti-Money-Laundering regulations that businesses are required to comply with (including legal obligations to disclose the legal entity’s Ultimate Beneficial Owner).
Investors wishing to set up a legal presence in mainland Abu Dhabi or one of its non-financial economic free zones will be able to access information on the licensing and registration process on ADRA’s website and the TAMM portal, which provides access to government services in the Emirate of Abu Dhabi. According to ADRA’s website, investors can currently choose between different licence types (Standard Economic Licence, Tajer Abu Dhabi Licence, Farmers and Small Producers Licence, Mobdea Licence, Dual Licence, Freelancer Licence, Instant Licence Entrepreneurs and Virtual Licence). Following press reports, it is to be expected that more licence types will be added in the future. Depending on the selected business location and activity, additional approvals from other authorities, such as Abu Dhabi Municipality or the Abu Dhabi Department of Health, might need to be obtained as part of the licensing and registration process.
5. Conclusion & Outlook
The Emirate of Abu Dhabi has established itself as an attractive business and investment hub. To further strengthen this position and accelerate economic growth, the Emirate has recently launched ADRA as the central business registry and the single point for regulatory reporting in the Emirate. This decision underlines the Emirate’s commitment to provide an investor-friendly ecosystem, to further enhance the ease of doing business for (foreign) investors, and to ensure strict compliance with applicable laws and regulations.
The recent launch of ADRA follows an earlier announcement (dated 06 June 2024) to introduce a unified economic licence in Abu Dhabi in a move to streamline business set-up and to reinforce governance and transparency. This initiative led by ADDED in collaboration with the Abu Dhabi Free Zones Council intended to unify procedures for registering economic licences across the Emirate of Abu Dhabi and its free zones. As part of the initiative, it was announced to introduce a standardised reference number for all licences as well as a newly integrated Abu Dhabi registry to ensure company data always remains current, to further simplify data management and to foster collaboration between free zones and mainland authorities.
Dr. Constantin Frank-Fahle, LL.M.
Founding Partner
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