SPV - An Introduction

SPECIAL PURPOSE VEHICLE

SPV regime caters to a broad range of business types, uses and industry sectors including but not limited to Corporates, sovereign wealth funds, government related entities, single family offices, trustees and individual investors.

SPVs are corporate vehicles, typically private companies, established for the purpose of isolating financial and legal risk by ring-fencing assets and liabilities. SPVs can be established as subsidiaries, project or joint venture vehicles to ensure that only those assets related to a transaction are exposed to the liabilities associated with that transaction. As the key feature of an SPV is its separate legal personality, claims by the SPV’s creditors cannot attach to the assets of the SPV’s shareholders or any of its sister companies.

Typical Uses for SPVs

1. SECURITISATION - Can be used by an originating party to securitise loans (or other receivables) by creating an SPV which purchases these assets by issuing debt, secured on these underlying assets. This ensures that the holders of the asset-backed securities have first priority right to receive payments on the debt while limiting recourse to the originator of the assets.
2. REAL ESTATE INVESTMENT - Can be used to acquire title to real property and limit recourse of mortgage lenders depending on the location of the asset. In some jurisdictions the sale of the SPV’s shares can result in lower taxes and transaction fees when compared to transferring the asset.
3. FINANCING - Can be used to ring-fence investments, permitting financing without increasing debt levels for the parent company or exposing the parent’s assets (or SPV’s assets) to cross-liabilities.
4. ASSET TRANSFER - Can be used to transfer assets along with associated material agreements which may permit the transfer of all or part of ownership of the enterprise while keeping intact material agreements which may be necessary to maintain the value of the asset.
5. RISK SHARING - Can be used to form project companies for joint ventures, reflecting agreed management responsibility while legally isolating joint venture partners from risks associated with the venture.
6. RAISING CAPITAL - Can be used to raise capital at favourable rates in certain situations, with credit worthiness determined by the available collateral of the SPV, rather than the credit rating of the parent company.
7. INTELLECTUAL PROPERTY - Can be used to separate valuable IP into a standalone SPV which has minimal liabilities and can be used to raise funds and enter into license agreements with third parties. Also a useful tool to manage products with a variety of IP components.

Introduction to ADGM SPVs

The ADGM SPV regime has been designed to be flexible, robust, simple and efficient. It offers a quick, easy-to-use and fully digital registration process. Its straightforward ongoing reporting requirements and a cost-effective and transparent fee structure makes ADGM a preferred jurisdiction choice for those with SPV requirements. ADGM’s SPV incorporation process is highly competitive both in terms of process and fees, with a fast turnaround time. ADGM allows the use of an agent/corporate service provider to manage the SPV and to provide the registered office address, removing the need to have a physical office space.   

Advantages of the ADGM Incorporation

Here are just some of the general benefits of ADGM SPV formation;

1. No restriction on the nationality of shareholders
2. No physical office space needed
3. No minimum share capital needed
4. No maximum number of shares or shareholders
5. No legalization or notarization of documents required

Benefits of ADGM SPV formation

Special Purpose Vehicles (SPVs) are passive holding companies established for the purpose of isolating financial and legal risk by ring-fencing certain assets and liabilities. Catering to the needs of a broad range of business types, uses and industry sectors, our SPV regime is already being widely adopted by businesses, individuals, and the advisory community for a wide variety of purposes. They cannot be used to conduct operational business or hire staff.

Why ADGM for SPV’s

• Common law jurisdiction  
• Independent ADGM court
• Best-in-class & Fast to set up 
• Independent regulatory framework
• Access to broad UAE double tax treaty network
• Variety of legal structures available  
• No office requirement if agent appointed  
• Quick and easy, fully digital registration process  
• No attestation required for corporate documents  
• Shelf SPVS permitted
• Electronic signatures accepted
• Different classes of shares allowed
• Separate legal framework founded on English law
• Can migrate an existing entity to ADGM

Scope of Work (How to obtain SPV)

• Pre – approval : business application including structure, shareholders and purpose 
• Application : Provide Application Documentation to the Registrar
• Completion : Provided all information is accurately submitted, the process can be completed within a few days  
• Bank Account Opening: Incumbency Certificate will be required for Bank Account Opening.

Cost Estimate – SPV Formation with Account Opening

Required Documents

• Articles of Association
• Registered Office Address (Copy of lease agreement, or signed consent letter for provision of registered address)
• Resolution of Board Directors and Shareholders 
• Passport information and signature page for each Authorized Signatory, Director, Shareholder, and Beneficial Owner  
• UAE visa page in passport for each Authorized Signatory (for UAE residents)
• Emirates ID for UAE national Authorized Signatories
• Certificate of Incorporation / Registration for each Director and Shareholder that is a body corporate (Certified copy (certified within the last three months))

For further details, please feel free to contact;

Mr. Geo Jimmi

Business Consultant

+971 521054028, geo@primedubai.com