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Introduction
UAE has been a hotspot for the hight net worth and ultra-wealthy families due to its comprehensive operational regulatory framework, diverse investment opportunities, and prime location bridging East and West. Thus, UAE’s offering of array of opportunities has made it a trusted and ideal location for family offices.
Abu Dhabi Global Market (ADGM) is the leading hub for wealth management and succession planning in the Middle East. ADGM’s ecosystem fulfils the needs of family wealth management through its stable space, inclusive products and solutions. On 4 September 2024, ADGM amended the regulations and rules on Single Family Office, and Restricted Scope Company.
Single Family Office
The enhanced regulation states the Single Family Office activities within the ADGM. A Single Family Office can be established to service a single family and can carry out the following activities:
(a) Concierge services for the family,
(b) Human resources,
(c) Strategic and risk management services,
(d) Taxation and wealth planning;
(e) Investment management and advisory services;
(f) Legal and regulatory services,
(g) Financial services,
(h) Holding company,
(i) Provide services to, or act on behalf of (including as trustee or councillor), any trust or foundation of any member of the single family; or
(j) Any other controlled activity undertaken for a single family.
The Conditions of Single Family Office License
The Single Family Office is required to have a minimum value of USD 30,000,000. The value needs to be calculated through the net investable/liquid asset value of the family that can be converted into a cash amount in a 180-day period. However, it is imperative to note that Single Family Office licensed prior to 1 October 2024 will not be affected with this change and may continue to be licensed. The Single Family Office under this condition can also renew their license without adhering to the minimum value of USD 30,000,000.
Restricted Scope Companies
In the ADGM, a Single Family Office can be registered as a Restricted Scope Companies. This is a viable option since only the constitution and details of the registered office will be available in the public register, thus, providing a secure and confidential environment.
However, the Restricted Scope Companies should provide the necessary information when requested. Furthermore, the restriction to the disclosure of the information should not be misinterpreted as a limitation or prohibition for providing essential information for AML/TFS purposes.
DIFC Regulations
In comparison with ADGM, DIFC replaced its Single Family Office regime with a simplified robust family office regime through the Family Arrangement Regulations 2023. The new regime allowed families to manage their businesses and safeguard their wealth through succession and legacy planning.
DIFC provides a list of family office activities such as:
- Family wealth management and services;
- Investments;
- Strategic tax wealth and succession planning;
- Risk management;
- Legal fiduciary and;
- Concierge services.
Definitions:
Single Family (ADGM):
A group of individuals who are related, including blood relations, step-children and adopted children, and all ancestors and descendants of such individuals, and any blood relations, step-children and adopted children of such ancestors and descendants.
Restricted Scope Company (ADGM):
Restricted Scope Company is a corporate vehicle offering a greater degree of confidentiality than other forms of corporate entity in ADGM.
Single Family (DIFC):
A common living ancestor and the descendants of that common ancestor, including male and female descendants and their spouses (including widows and widowers, whether or not remarried), their stepchildren, adopted children and ex-nuptial children and their descendants and spouses determined in a similar manner; or a related as a descendant to a common ancestor, including male and female descendants and their spouses (including widows and widowers, whether or not remarried), their stepchildren, adopted children and ex-nuptial children and their descendants and spouses determined in a similar manner, provided that such common ancestor does not exceed three preceding generations.