A year ago, the UAE government took the initiative to transform the Abu Dhabi Global Market (ADGM) into one of the world’s largest financial hubs, totalling 14.38 million sqm. Through UAE Cabinet Resolution No. 41 of 2023, issued on April 24, 2023, the geographic scope of ADGM was expanded by incorporating Al Reem Island and ADGM’s existing location of Al Maryah Island, thus increasing the size of its jurisdiction tenfold. This expansion marks a significant milestone in ADGM’s rapid growth trajectory, achieved within just eight years since its establishment.
This expansion is compelling evidence of ADGM’s evolution into a premier destination for local, regional and global entities. With a growing demand for companies to locate within ADGM, occupancy rates in Al Maryah Island have exceeded 95%. Consequently, expansion in the physical space became the natural and necessary step to better accommodate the increasing demand of companies seeking to establish a presence in Abu Dhabi’s financial hub.
Complementing ADGM’s value proposition
It’s crucial to underscore the added value that Al Reem Island contributes to ADGM’s value proposition. One of ADGM’s key missions is to position the financial centre as a preferred place to live, work, and thrive by securing the attraction components that draw corporations to this hub and attract talent, expertise, and their families to make Abu Dhabi their home.
With the inclusion of Al Reem Island into its geographical domain, which boasts a rich array of commercial and residential structures, shopping centres, top-tier educational institutes, advanced healthcare facilities, hospitality venues, luxury amenities and entertainment options, ADGM is solidifying its status as a comprehensive and cohesive ecosystem.
The attributes of Al Reem Island perfectly complement ADGM’s stable and robust legal and regulatory environment, which includes the direct application of English Common Law, flexible and progressive regulatory frameworks, ease of doing business, access to talent and expertise and access to capital through diverse financial instruments and funding options.
Transition process
With every change comes a challenge. The main challenge that ADGM and its authorities had to overcome due to the expansion was to integrate Al Reem Island’s business and commercial sector within its jurisdiction, ensuring a seamless and efficient transition for Al Reem Island businesses to ADGM. To address this, ADGM implemented flexible measures and established reasonable deadlines, working closely with key government stakeholders, mainland regulators, and other local authorities, including the Abu Dhabi Department of Economic Development (ADDED), Central Bank of UAE (CBUAE), Abu Dhabi City Municipality (ADM), Ministry of Human Resources and Emiratisation (MoHRE) and Federal Authority for Identity, Citizenship, Customs, and Port Security (ICP).
With all regulatory, administrative, and logistical transitional arrangements established and pending execution, ADGM has begun addressing inquiries regarding the impact and results of its jurisdiction expansion. These inquiries encompass which entities on Al Reem Island will come under ADGM jurisdiction, the duration of the transition period provided to existing entities operating on Al Reem Island, the potential implementation of dual licensing or other arrangements to eligible entities currently regulated by federal and emirate-level authorities, and whether the ADGM regulatory framework will be offered as an optional alternative to the existing mainland regulatory framework or mandated after the transition period.
November 1, 2023, marked a significant milestone in ADGM’s execution of the transitional arrangements for expanding ADGM’s jurisdiction to Al Reem Island. From this date onwards, any new businesses and commercial entities intending to set up operations on Al Reem Island must obtain a commercial licence from ADGM instead of ADDED. Upon receiving an ADGM commercial licence, these businesses become subject to the laws, regulations, and administrative protocols of ADGM.
Existing companies and businesses on Al Reem Island were granted provisional exemption from adhering to ADGM’s registration and licensing requirements and specific regulations. They were permitted to maintain their ADDED licence until December 31, 2024. Subsequently, all existing businesses on Al Reem Island must fully adhere to ADGM licensing requirements.
Ongoing engagement with Al Reem businesses
Since the start of this year, ADGM has initiated several engagement initiatives to foster effective communication with the Al Reem Island business community. These efforts are geared towards assisting them in migrating to the financial hub while ensuring a smooth transition of their operations in alignment with ADGM requirements and regulations.
In addition to a series of awareness sessions and focus group meetings organised by the Registration Authority (RA) of ADGM for representatives of businesses on Al Reem Island, ADGM launched its information centre in Shams Boutik Mall, Al Reem Island. This centre is designed to serve as a dynamic hub, offering comprehensive support and actively gathering feedback to engage with businesses and resolve their inquiries. It also provides step-by-step guidance for registration within ADGM.
The centre’s launch was followed by ADGM’s first community event on Al Reem Island, held on March 4, 2024. The event highlighted ADGM’s commitment to actively engaging with Al Reem Island’s local business community. Over 500 representatives from diverse businesses based on Al Reem Island participated in the event. Additionally, officials from the Abu Dhabi Department of Economic Development (ADDED) and the Department of Municipalities and Transport—Abu Dhabi (DMT) were present to interact with the attendees.
Incentive initiative to support businesses
The community event provided a platform for ADGM to unveil a new incentive initiative tailored exclusively for businesses based on Al Reem Island, operating in non-financial and retail sectors.
Under this incentive initiative, eligible businesses on the island will be relieved from any fees associated with acquiring an ADGM commercial licence until October 31, 2024. This proactive measure facilitates a seamless transition for these businesses, allowing them to sustain their operations without additional financial obligations as they transition from an ADDED-licensed entity to an ADGM one.
Ensuring the seamless integration of Al Reem Island businesses into the ADGM ecosystem is a top priority for ADGM, which stands as the fastest-growing international financial centre in the MENA region. This endeavour represents a pivotal aspect of ADGM’s commitment to cultivating a supportive and business-friendly environment in Abu Dhabi, thereby contributing to the sustainable growth and advancement of the local economy.
