Establishing A Management Consultancy In ADGM: Legal And Regulatory Overview

The Abu Dhabi Global Market (ADGM) has quickly established itself as one of the preeminent international financial hubs in the Middle East, with a sophisticated regulatory framework that is modelled on English common law. For management consultancy firms looking to set up in the United Arab Emirates, ADGM offers a very attractive option marked by regulatory certainty, flexibility, and access to a vibrant regional market. This article will explore the key legal and regulatory issues to consider when setting up a management consultancy in ADGM.

Regulatory Framework

ADGM is an autonomous entity within the Emirate of Abu Dhabi, with its own civil and commercial laws that differ from the UAE mainland. With operations commencing in 2015, ADGM is supervised by the Financial Services Regulatory Authority (FSRA) for financial services and the Registration Authority (RA) for commercial matters. Management consultancies are usually supervised by the ADGM RA subject to the nature and scope of their activities. 

The legal framework of ADGM is heavily influenced by English common law, making it very appealing to international companies accustomed to the Commonwealth system of law. ADGM has its own courts with independent judges, ensuring companies have an effective dispute resolution process conducted in accordance with international procedural standards.

Business Structure Options

ADGM offers a range of corporate structures suitable for management consultancy businesses. The most popular form is the private company limited by shares, which offers flexibility in shareholding structures while limiting shareholders’ personal liability. Branch offices of foreign companies are also permitted, enabling existing management consultancy businesses to expand their presence in ADGM without forming a new entity.

The choice of structure should be guided by the firm’s commercial objectives, ownership considerations, and long-term growth strategy. Each option carries distinct implications for capitalisation, governance, regulatory oversight, and ongoing compliance requirements.

Licensing Requirements And Permitted Activities

For management consultancies, a commercial license is required from the ADGM Registration Authority, which should specify the business activities the company is permitted to conduct. The licensing framework also provides for the consolidation of various business activities into a single license, including general management consulting, strategic advice, operational efficiency consulting, and other services. In this context, management consultancy activities in ADGM broadly cover the provision of advice, guidance, and operational assistance to businesses and public sector organisations on management-related matters, such as strategic and organisational planning, financial decision-making (in a non-regulated capacity), marketing objectives and policies, human resource planning and practices, and production scheduling and control. This scope may also include advisory and support services relating to public relations and communications, the design of accounting methods and cost accounting programs, budgetary and control procedures, and assistance in planning, organisation, efficiency, management information systems, and internal controls.

The application process involves submitting a detailed business plan, organisational structure, and evidence of the professional competence of key individuals to the ADGM Registration Authority. Applications are typically processed within a period of approximately 2 to 3 weeks, subject to the completeness and accuracy of the information submitted.

The ADGM licensing cost applicable to a management consultancy firm is approximately USD 5,800, exclusive of any additional costs relating to office space, visas, or professional service providers. Where there are no specific office requirements, applicants may opt for a flexi-desk arrangement within ADGM; however, a valid lease agreement must be submitted as part of the application. In addition, identification documents of the shareholders, directors, and authorised signatories, along with other supporting corporate documents, are required for submission. It is important to ensure that the company’s activities are appropriately segregated so as not to inadvertently undertake regulated financial services, which would require authorisation and license from the Financial Services Regulatory Authority.

Employment Considerations

ADGM has its own employment regime, which is currently governed by the ADGM Employment Regulations 2024. These regulations outline the relationship between employers and employees in ADGM. The regulations offer a wide range of protections to employees, along with the flexibility that employers need to design employment terms suited to professional services firms.

Foreign employees can be sponsored by firms for UAE residence visas through the ADGM visa program. The number of visas is usually proportional to the firm’s business activities and office space. Employment agreements must adhere to ADGM employment standards, which cover issues such as notice periods, end-of-service benefits, and working time regulations. It is important to note that ADGM employment law is different from UAE mainland employment law in some respects.

Conclusion

Setting up a management consultancy firm in ADGM provides several benefits for companies that are looking for a strong legal system, flexibility, and access to the region’s markets. The fact that ADGM is based on a common law system, combined with its progressive regulatory framework and business-friendly environment, makes it very favourable for professional service firms. Nevertheless, for such firms to be successful in ADGM, they need to navigate the regulatory framework with the help of experienced lawyers and corporate advisors.