Introduction to DIFC and ADGM Fund Setup

When it comes to establishing a fund in the UAE, two names stand out: Dubai International Financial Centre (DIFC) vs ADGM (Abu Dhabi Global Market). Both financial centres offer unique regulatory environments and advantages for fund managers.

At NH Management, we specialize in helping clients navigate the complexities of fund setup in both jurisdictions. This blog will explore the key differences between setting up a fund in DIFC and ADGM, highlighting the benefits, regulatory requirements, and strategic considerations for each.

Understanding DIFC and ADGM

DIFC:

• Located in Dubai, DIFC is a leading financial hub that connects markets across the Middle East, Africa, and South Asia.

• Dubai Financial Services Authority (DFSA) governs it and offers a comprehensive regulatory framework for financial services.

• Known for its sophisticated infrastructure, DIFC supports various financial activities, including banking, asset management, and fund administration.

ADGM:

• Situated in Abu Dhabi, ADGM is an international financial centre serving the Middle East, Africa, and Asia.

• Regulated by the Financial Services Regulatory Authority (FSRA), ADGM provides a transparent and robust legal environment.

• ADGM is recognized for its innovation-friendly approach, supporting financial technology and sustainable investment initiatives.

Key Differences DIFC vs ADGM Fund Setup

Regulatory Environment

• DIFC: Regulated by DFSA, DIFC offers a well-established legal framework with clear guidelines for fund managers. It emphasizes investor protection and market integrity.

• ADGM: Overseen by FSRA, ADGM provides a flexible regulatory regime that encourages innovation. It has a reputation for being forward-thinking, particularly in fintech and sustainable investments.

Tax Benefits

• DIFC: Offers significant tax advantages, including zero personal income tax, capital gains tax, and corporate tax on certain funds. This tax-efficient environment attracts international investors.

• ADGM: Provides similar tax benefits, including exemptions from personal income tax, capital gains tax, and corporate tax. Its tax regime is designed to attract global financial services.

Types of Funds

• DIFC: Supports a diverse range of funds, including hedge funds, private equity funds, real estate funds, venture capital funds, and mutual funds. It caters to various investment strategies and asset classes.

• ADGM: Also accommodates a wide array of funds, such as hedge funds, private equity funds, real estate funds, venture capital funds, and mutual funds. ADGM is particularly noted for its support of innovative and sustainable investment funds.

Strategic Location

• DIFC: Located in Dubai, DIFC benefits from the city’s global connectivity and vibrant business environment. It serves as a bridge between East and West, facilitating international trade and investment.

• ADGM: Positioned in Abu Dhabi, ADGM leverages the emirate’s economic stability and growth. Its strategic location offers access to emerging markets in the Middle East, Africa, and Asia.

Steps to Establish a Fund in DIFC and ADGM

1. Define Investment Objectives: Clearly outline the fund’s strategy, objectives, and target market.

2. Choose the Right Structure: Select the appropriate fund structure based on your investment goals and regulatory requirements.

3. Regulatory Compliance: Ensure compliance with either DFSA (for DIFC) or FSRA (for ADGM) regulations, including obtaining necessary licenses.

4. Draft Fund Documentation: Prepare comprehensive documentation, such as the prospectus, offering memorandum, and subscription agreements.

5. Establish Governance Framework: Implement a governance structure that aligns with regulatory standards and investor expectations.

6. Select Service Providers: Engage reputable service providers, including legal advisors, fund administrators, auditors, and custodians.

7. Marketing and Fundraising: Develop a strategy to attract investors and raise capital for the fund.

Why Choose NH Management?

At NH Management, we provide expert guidance in establishing and managing funds in DIFC vs ADGM. Our team ensures that your fund setup aligns with your investment goals and complies with all regulatory requirements. From initial consultation to ongoing management, we offer the support you need to maximize your fund’s benefits.

Conclusion

Both DIFC and ADGM offer unique advantages for fund establishment in the UAE. By understanding the DIFC vs. ADGM differences, fund managers can align decisions with investment goals. At NH Management, we help you navigate fund setup complexities in both jurisdictions, ensuring regulatory compliance and strategic success. Contact NH Management today.