ADGM Explained: Company Types, FSRA Categories and Key Requirements

Setting up in Abu Dhabi Global Market (ADGM)? Before you reserve a name or sign a lease, there are three things to settle: whether you need an FSRA licence as well as registration, which type of company to set up, and, if you are in financial services, which FSRA category you fall into. Then there is the question every company faces each year: do you need an audit? This guide answers each one in plain English, including the Corporate Tax rule that can require an audit even for small companies.

What law applies to ADGM companies?

Companies in ADGM are formed under ADGM’s own Companies Regulations 2020, issued under the Abu Dhabi law that established ADGM. The UAE federal companies law does not apply to them.

The Regulations draw on common law. Directors’ general duties, for example, are set out in the Regulations and are based on common law rules and equitable principles.

Do I need an FSRA licence in ADGM?

Every ADGM company is registered with the Registrar. If your business will carry on an activity that ADGM’s Commercial Licensing Regulations 2025 treat as a controlled activity, the licence application goes to the Registrar together with your registration application.

If you will carry on a Regulated Activity in or from ADGM, such as dealing, managing assets, advising or arranging, you also need a Financial Services Permission from the Financial Services Regulatory Authority (FSRA), which the rulebooks call “the Regulator”.

The FSRA will only consider an application from a body corporate or a partnership. If your firm is incorporated in ADGM, both its head office and registered office must be in ADGM.

To be authorised, you must show the FSRA four things: adequate resources (including financial resources), that you are fit and proper, that you can be effectively supervised, and that you have adequate compliance arrangements.

Can a foreign firm open a representative office in ADGM? 

An overseas firm that is already regulated in its home jurisdiction and only wants to market in ADGM can apply to operate a Representative Office. It must limit itself to marketing and cannot carry on any other Regulated Activity. 

What types of company can you set up in ADGM?

Limited or unlimited, private or public

An ADGM company can be limited by shares, limited by guarantee, or unlimited, where members’ liability has no limit.

Any company that is not a public company is a private company. A private company needs at least one director and a public company at least two, and every company must have at least one director who is a natural person.

Can I move my existing company to ADGM?

A company incorporated elsewhere does not always need a new entity. It can apply to the Registrar to continue as an ADGM company. Whatever route you take, the company must keep a registered office in ADGM at all times.

What are the FSRA categories in ADGM??

If you need a Financial Services Permission, the FSRA’s Prudential Rulebook (PRU) places you in one of seven categories: 1, 2, 3A, 3B, 3C, 4 or 5. Your category decides which prudential rules apply to you.

Your category is set by the activities your Financial Services Permission covers. A Category 1 firm can also do lower-category activities if authorised, but a Category 4 firm can only do Category 4 activities.

Base capital is a floor, not the full picture. You must hold at least this amount in Common Equity Tier 1 capital from the day you are authorised and at all times after that.

For Categories 1, 2, 3A and 5, the capital requirement is the higher of base capital and a risk-based calculation. For Categories 3B, 3C and 4, it is the higher of base capital and, where applicable, an expenditure-based minimum. That minimum is a fraction of annual audited expenditure: for example 13/52nds for a Category 3B or 3C firm that does not hold client assets, and 18/52nds for a firm that does.

Categories 3B, 3C and 4 must also hold liquid assets above their capital requirement at all times, and must tell the FSRA immediately if their capital falls below 120% of the requirement.

What does your FSRA category mean for your business?

• Key people. Authorised firms must generally appoint a Senior Executive Officer, Finance Officer, Compliance Officer and Money Laundering Reporting Officer. The Senior Executive Officer, Compliance Officer and MLRO must be UAE resident.
• Accounting framework. Authorised firms report under full IFRS, although a branch may use its head office’s financial statements. 
• Audit reports to the FSRA. Your auditor must issue a financial statement audit report under International Standards on Auditing and a regulatory returns report, plus a client money report if you hold client money or relevant money. These go to the FSRA within four months of your year end. For Categories 3B, 3C and 4 that are subject to the expenditure-based minimum, the auditor also confirms your capital exceeds it and is held in liquid assets.
• Liquidity. The PRU liquidity risk chapter applies to Categories 1, 2, 3A and 5.
• Acquisitions. Firms in Categories 1, 2 and 5 must notify the FSRA before setting up or acquiring a subsidiary.

Does your ADGM company need an audit?

The starting point is yes. Under the Companies Regulations, a company’s annual accounts must be audited unless it qualifies for the small, subsidiary or dormant company exemption. But there are two sides to the answer: what ADGM company law requires, and what UAE Corporate Tax requires. A company can be exempt under one and still need an audit under the other.

Is a small ADGM company exempt from audit?

A company is small if its annual turnover is not more than US$13.5 million and its average number of employees is not more than 35. It must meet both tests. If your company is part of a group, it is the size of the whole group that counts.

Some companies cannot use the audit exemption however small they are: publicly listed companies and FSRA-regulated financial institutions (other than FinTech Participants). Companies licensed to provide company services cannot use any of the exemptions.

Even an exempt company may need an audit if its articles require one, or if members holding at least 10% of the shares ask for one.

Does a QFZP need an audit in the UAE?

This is the exception that matters most for small companies. Under UAE Corporate Tax Law, a free zone company that meets certain conditions can be a Qualifying Free Zone Person (QFZP) and pay 0% Corporate Tax on its Qualifying Income.

To keep the 0% rate, a QFZP must prepare and maintain audited financial statements. This applies regardless of revenue, size or dormancy, and even if the company would otherwise qualify for an audit exemption under ADGM law. The requirement comes from Article 54(2) of the Corporate Tax Law and the related Ministerial Decisions.

Two practical points follow. First, the audit must be carried out by an ADGM registered auditor, whatever the reason for the audit. Second, a small company that prepares audited financial statements to meet the QFZP requirement must file those audited statements with the Registrar.

Practical tip: If your company plans to rely on the 0% QFZP rate, budget for an audit from your first financial year, even if you are small, dormant or a restricted scope company under ADGM law.

When must ADGM companies file their accounts?

Private and public limited companies must file their accounts with the Registration Authority, except restricted scope companies and dormant subsidiaries. The normal deadline is 9 months after your accounting reference date for a private company, or 6 months for a public company.

FSRA-authorised firms have a separate deadline: their auditor’s reports go to the FSRA within four months of the year end, as set out above.

Quick self-check

1. Will you carry on a Regulated Activity? If yes, plan for FSRA authorisation as well as Registrar registration.
2. Who will own the company? A group subsidiary or a family-owned vehicle may qualify as a restricted scope company.
3. Moving an existing company here? You may be able to continue it into ADGM rather than set up a new one.
4. If regulated, which of your activities sits in the highest category? That sets your category, your base capital and much of your reporting.
5. Will you need an audit? Check the ADGM exemptions, and if you plan to claim the 0% QFZP Corporate Tax rate, assume you need one.

Frequently asked questions

Does the UAE federal companies law apply in ADGM?

No. Companies formed or registered under the ADGM Companies Regulations 2020 are outside it.

What is the minimum capital for an FSRA Category 4 firm?

The base capital requirement is US$50,000, or US$150,000 if you operate a private financing platform. If you hold client assets, relevant money or insurance money, an expenditure-based minimum of 18/52nds of annual audited expenditure applies, and your requirement is whichever is higher.

My company is small. Do I need an audit?

Not under ADGM company law, if you meet both size tests and are not excluded. But if you are a Qualifying Free Zone Person and want the 0% Corporate Tax rate, you need audited financial statements whatever your size.

How many directors does an ADGM private company need?

At least one, and at least one director must be a natural person.

How we can help

Getting ADGM right is not a one-off decision. It runs from choosing your structure and category, through FSRA authorisation, to annual accounts, audit and Corporate Tax status. Baker Tilly’s ADGM team works with businesses at every one of those stages.

Whether you are deciding between a restricted scope company and a standard private company, working out which FSRA category your activities put you in, checking whether you qualify as a QFZP, or preparing for your first audit, talk to us. If it involves ADGM, we can help. 

For further insights or queries on ADGM audit, tax and advisory matters, please contact

Amjad Rabani

Director, Baker Tilly UAE

amjad.rabani@bakertilly.ae · +971 58 855 2918

General information only, based on ADGM legislation and guidance. Not legal, regulatory or tax advice. For your Corporate Tax position, refer to the UAE Corporate Tax Law and FTA guidance, and seek advice on your specific circumstances.