Expansion of ADGM: Transforming into one the largest financial districts in the world

The United Arab Emirates (“UAE”) Cabinet has made a significant decision to expand the jurisdiction of the Abu Dhabi Global Market (“ADGM”) by including Al Reem Island within its territorial scope.

As part of the UAE’s strategy to secure the global top position as a prominent financial centre and broaden the economy, expansion aims to create one of the largest financial districts in the world. This initiative strengthens Abu Dhabi’s commitment to attract foreign investors, facilitate sustainable economic growth, and nurture a culture of innovation.

Since its establishment in 2015, ADGM has established itself as a leading global financial center, renowned for its strong regulatory framework.  The ADGM has successfully attracted reputable domestic and international financial institutions, businesses, and investors.

The recent geographical expansion of the ADGM, which came into effect on 24 April 2023, will extend the ADGM’s legal and regulatory frameworks to include Al Reem Island. Accordingly, several regulatory improvements will be introduced to support the expansion.  However, until further clarity on the effective date when the regulatory changes will take effect, businesses currently operating on Al Reem Island are advised to assess whether they intend to apply for the required licenses, registration, and authorizations to remain under the regulatory jurisdiction of the ADGM.

Under the existing rules and regulations, in the scenario where entities located on Al Reem Island decide to be regulated under the regulatory insight of the ADGM’s competent authorities and conduct their activities in mainland Abu Dhabi, these may be required to obtain a dual license from the Abu Dhabi Department of Economic Development.

Alternatively, entities in Al Reem Island who do not wish to be regulated by the ADGM, will need to relocate their operations outside of Al Reem Island. By doing this, they can continue operation their activities in accordance with the existing legal and regulatory frameworks governed by the competent authorities of the UAE and the Emirate of Abu Dhabi.

Given the circumstances, it is possible that several inquiries may arise until additional information is provided by the competent authorities of the UAE and the ADGM. Some of these questions may include:

  1. What specific regulatory changes will be implemented to align Al Reem Island with the ADGM jurisdiction?
  2. What measures will be in place to ensure a smooth transition and minimize any potential disruptions during the incorporation of Al Reem Island into the ADGM jurisdiction?
  3. How will the expansion of the ADGM jurisdiction impact the legal framework and dispute resolution mechanisms on Al Reem Island during the transitionary period?
  4. How will the geographical expansion of the ADGM impact the prices of the real estate properties in Abu Dhabi, especially on Al Reem Island?

The questions mentioned above require additional clarification from competent authorities of the UAE and the ADGM. Therefore, it is important to await official updates and guidance to obtain accurate information and insights.

Fadi Hassoun and Omar Kayal are members of our Abu Dhabi Corporate Commercial Practice. They closely monitor and provide insights on legal and regulatory implications that may arise, ensuring their clients stay well informed and can effectively navigate this exciting transformation. If you have any queries regarding the above, or the topic of Regulations and Compliance more broadly, please contact our team.

Fadi Hassoun

Omar Kayal
Senior Associate