How the removal of the ADGM SPV's nexus requirement opens new market opportunities

• The ADGM has removed the nexus requirement for Special Purpose Vehicles (SPVs), broadening access to its established structuring regime.
• Access to ADGM SPVs is no longer tied to UAE or GCC connections, expanding structuring options for investors.
• The jurisdiction has shifted the regulatory emphasis to the purpose of the vehicle and whether the proposed structure is appropriate for the asset type.

The ADGM SPV landscape has evolved significantly in recent years. While the regime previously included eligibility and nexus-based requirements designed to establish a connection to the UAE or GCC, the framework has progressively shifted towards a greater emphasis on governance, transparency, compliance and the legitimate use of SPVs within a well-regulated financial centre.

ADGM's recent decision to remove the nexus requirement represents the latest stage in this evolution, reflecting a broader trend among international financial centres towards regulating holding and structuring vehicles through robust oversight, transparency and risk-based supervision, rather than geographic connection tests.

Understanding the original nexus requirement

Historically, applicants seeking to establish an ADGM SPV were required to demonstrate a sufficient 'nexus' or connection to the UAE, or the wider GCC region. The objective was to ensure that the jurisdiction was not being used solely as a location for remote shell companies with no legitimate regional connection.

The nexus requirement would typically be satisfied through various tests, including:

• ownership by GCC resident individuals
• ownership by UAE-regulated entities
• holding or acquiring assets located within the GCC
• demonstrating operational or investment activities connected to the region
• being part of a wider group with an established UAE presence

The policy reflected international concerns regarding transparency, beneficial ownership and economic substance, particularly in the years following the OECD's Base Erosion and Profit Shifting (BEPS) initiatives and global scrutiny of offshore holding structures.

Why has the ADGM removed the nexus requirement?

The Corporate Service Provider (CSP) framework came into force on 12 April 2021 and introduced a mandatory requirement for non-exempt SPVs and foundations to appoint an ADGM-licensed CSP. The CSP regime was introduced to enhance governance standards, strengthen regulatory oversight and align the ADGM with shifting international best practices.

Under the framework, the appointed CSP acts as the:

• incorporation agent
• registered office provider
• primary point of contact with the Registration Authority
• administrator for statutory filings
• custodian of corporate records and beneficial ownership information

By introducing regulated intermediaries into the SPV ecosystem, the ADGM was able to place greater emphasis on ongoing transparency and regulatory oversight, reducing reliance on eligibility criteria based purely on geographic connections.

This also coincides with the introduction of UAE corporate tax, together with beneficial ownership reporting, anti-money laundering requirements and enhanced disclosure obligations.

Today, SPV structures are evaluated less on where their shareholders reside and more on their purpose, substance, compliance and tax treatment. The presence of these additional frameworks collectively creates a significantly more robust system than had existed previously.

What does the removal of the nexus requirement mean in practice?

The ADGM's decision to remove the nexus requirement for SPVs opens the regime to a significantly broader international audience. Investors, family offices, multinational groups and private wealth structures can now establish ADGM SPVs regardless of whether their shareholders, directors, assets or investments have any pre-existing connection to the UAE or GCC.

This is a significant strategic shift. By removing the nexus requirement, the jurisdiction has broadened access to its SPV regime and enabled investors to assess the jurisdiction on the strength of its legal framework, governance standards, tax environment and operational efficiency, rather than on regional eligibility criteria. Thus, the ADGM is increasingly focused on asking 'why does this vehicle exist?' and 'what assets or activities is it intended to hold?'.

SPVs remain passive vehicles and cannot undertake operational trading activities or employ staff. They continue to be used for purposes such as:

• holding shares in subsidiaries
• holding intellectual property
• owning real estate
• supporting financing structures
• segregating assets and ring-fencing risk
• preserving wealth and facilitating succession planning
• holding joint venture and investment arrangements

By removing the nexus requirement, the ADGM has not changed its focus on accountability and governance. Non-exempt SPVs and foundations remain subject to the requirement to appoint an ADGM-licensed Corporate Service Provider, ensuring that governance, filings and regulatory engagement continue to be managed through a regulated intermediary as well as the appointment of an eligible authorised signatory.

This positions the ADGM to compete more directly with other leading international structuring jurisdictions while maintaining a focus on investment-led and private wealth-focused structures.

Why the ADGM remains attractive

While the removal of the nexus requirement broadens access to ADGM SPVs, the jurisdiction's appeal extends well beyond its eligibility criteria. For organisations looking to establish holding structures, investment vehicles and private wealth arrangements, ADGM offers a well-established and internationally recognised legal and regulatory framework.

Key advantages include:

• providing the certainty and familiarity of an English common law framework
• giving access to the independent ADGM courts and a sophisticated dispute resolution ecosystem
• allowing 100% foreign ownership with no local shareholder requirements
• offering an internationally recognised and respected holding company jurisdiction
• providing a flexible platform suitable for private wealth structures, family offices, institutional investors and multinational groups
• connecting businesses and investors to a mature ecosystem of licensed corporate service providers, professional advisers and financial institutions

These factors, combined with the recent removal of the nexus requirement, position the ADGM as an increasingly accessible and globally competitive jurisdiction for multiple modern structuring arrangements.

Digitalisation and ease of access

Alongside regulatory modernisation, the ADGM has invested heavily in digital infrastructure, resulting in a SPV registration process that is increasingly straightforward. Streamlined incorporation procedures, electronic filings, online licence renewals and integration with CSP-led administration models enable the efficient setup and ongoing management of SPVs.

For entity controllers, this can reduce the administrative burden and further support the ADGM's objective of becoming a globally accessible jurisdiction for holding structures while maintaining strong governance and regulatory standards.

Conclusion

The removal of the nexus requirement should not be viewed as a relaxation of standards. Rather, it reflects the ADGM's confidence that governance and oversight are now achieved through licensed CSPs and a mature regulatory framework. The ADGM has replaced geographic eligibility criteria with a more sophisticated framework built around licensed CSPs, enhanced governance standards, beneficial ownership transparency, corporate tax compliance and digital administration.

For investors, family offices and multinational groups, the change significantly expands access to one of the region's most respected holding company jurisdictions. For the ADGM, it reflects confidence that robust oversight is now delivered through regulated intermediaries and compliance infrastructure, rather than through eligibility tests based on the location of shareholders or assets. Ultimately, the focus has shifted from nexus to purpose, governance and transparency, aligning the ADGM's SPV regime with the expectations of modern international structuring and wealth management.

How WPS can help

Establishing and maintaining an ADGM SPV involves ongoing regulatory and administrative obligations. As one of the largest and longest established licensed CSPs in the ADGM, Walkers Professional Services (Middle East) is well placed to help you manage these requirements efficiently, allowing you to focus on the core investment and business objectives.

Our role as CSP includes:

• incorporating SPVs
• providing a registered office within ADGM
• monitoring and management of key ADGM regulatory filing and reporting deadlines
• maintaining statutory registers
• preparing and filing the annual confirmation statements
• coordinating annual commercial licence and data protection renewals
• filing of annual accounts with the ADGM Registrar of Companies
• managing ADGM client portal submissions and document uploads
• distributing ADGM communications to designated contacts
• acting as the primary liaison with the ADGM Registration Authority on routine corporate administration matters
• providing secure online access to corporate records and governance documents

If you'd like to discuss how we can support your ADGM entity, please get in touch with one of the team.

Disclaimer: Walkers and WPS do not provide advice on UAE or DIFC law. This article is intended for general information purposes only and should not be relied upon as legal, tax, regulatory or investment advice.