A corporate migration (or re-domiciliation) is a legal process which allows a company to transfer its domicile from one jurisdiction (the outgoing jurisdiction) to another (the host jurisdiction), whilst continuing its existence under the same legal entity, says Racha Wylde, lawyer senior manager at De Gaulle Fleurance.
It is important to note that most of the jurisdictions allow that a domestic company may continue to exist abroad through the mechanism of re-domiciliation. The company will maintain its legal personality and will not cease to exist.
Since the company continues its existence, all contracts that have already been entered into by the migrating company should continue to stand. The company will also maintain all its track record in terms of filing administration and accounting.
Abu Dhabi Global Market
Within the United Arab Emirates (UAE), certain designated areas (free zones) now permit a foreign company to be redomiciled within their territory, making the UAE a popular jurisdiction for companies looking to move to the Middle East.
Abu Dhabi Global Market (ADGM) is an international financial centre established in the Emirate of Abu Dhabi, UAE.
ADGM bases its regulatory framework on commercial laws based on English common law, offering a world-class legal system and regulatory regime to the businesses established within its jurisdiction.
It comprises three separate authorities, the Registration Authority (RA), the Financial Services Regulatory Authority (FSRA) and ADGM Courts. In particular, the RA is the commercial regulator of the ADGM and is responsible for the licensing, registration and incorporation of entities seeking to establish a presence in the ADGM.
ADGM offers a variety of different business models and activities, such as Financial, Non-financial (Professional and business services Corporate Solutions) and Retail and Entertainment activities.
Why a corporate migration to ADGM?
Many international groups are considering establishing some of their activities in the United Arab Emirates for various reasons (strategic place for addressing the EMEA market, business friendly jurisdiction, etc.).
ADGM is currently one of the most attractive local free zones in the country due to its very good reputation linked in particular to a secure and sophisticated regulation. Among the advantages of being re-domiciled in ADGM, we can include:
• It allows for 100% foreign ownership.
• No minimum capital requirement for non-regulated activities.
• No need to open a corporate bank account.
• Full benefit of UAE double taxation treaties.
• High credibility with banks.
• It offers competitive services and is cost-efficient.
• Its regulatory framework is based on Common Law.
• It has an independent court body.
• It includes an arbitration hearing centre.
How to migrate to ADGM?
For a company intending to move its domicile to ADGM, a set of specific requirements will have to be implemented.
In particular, the entity must be incorporated under one of the correspondent legal entity types available in ADGM (e.g., a company limited by shares).
Thus, it is important to verify the legal form of the company and assess whether any change in that legal form is necessary before the start of the re-domiciliation process to fit into one of the host jurisdiction's legal forms. The company will also need to start the de-registration from the relevant Trade and Companies Register of its origin by resolving that it will redomicile in ADGM. The de-registration is usually reflected on the company's commercial excerpt which will mention that the company was de-registered from the relevant Trade and Companies Register.
The migrating company must also comply with specific requirements imposed by the ADGM Companies Regulations 2020. In particular, the migrating company will not be allowed to start its re-domiciliation to ADGM if it is insolvent or any such other procedure. The above must be supported by a legal opinion issued by a law firm of the company's country of origin that will also confirm that nothing legally forbids the migrating company to continue its activity in ADGM.
Once the company has decided to migrate to ADGM, it must proceed with an application to be submitted to the RA:
1. Submission of initial documentation to obtain the Provisional Approval from ADGM
The migrating company will be required to submit to ADGM its constitutional documents, relevant KYC documents and any other document required by ADGM to obtain a Provisional Approval to transfer the migrating company to ADGM.
2. Submission of additional documents and Issuance of Certificate of Continuance by the ADGM Registrar
if all the documents and information are in order, ADGM will issue the Certificate of Continuance, which will confirm that the migrating company has completed its migration into ADGM.
The Certificate of Continuance will bear the same date included in the de-registration certificate issued by the relevant Trade and Companies Register of the migrating company's original jurisdiction. This means that the migrating company will not cease to exist, nor will cease its legal personality but will simply have changed its domicile.
The migrating company must also reserve an office space in ADGM. The office lease contract must be signed and registered before the completion of the migrating process.
In addition, once the re-domiciliation process is completed, the migrating company must comply with the ADGM commercial rules and regulations by observing the ongoing filing obligations.
3. Once the re-domiciliation is complete
French and European businesses more generally should take into account the complexities involved in a re-domiciliation process. However, once the company is re-domiciled in ADGM, it can be fully operational in that free zone, and it can interact with other UAE jurisdictions freely.
By Racha Wylde, lawyer senior manager at De Gaulle Fleurance.
