Charitable Endowments in ADGM Guidance
1. 1. INTRODUCTION
Introduction to Abu Dhabi Global Market1.1. Abu Dhabi Global Market (ADGM) is an international financial centre established pursuant to Abu Dhabi Law No. 4 of 2013 in the Emirate of Abu Dhabi. With its own civil and commercial laws based on English common law, ADGM offers the local, regional and international business community a world-class legal system and regulatory regime.1.2 The Registration Authority (RA) is one of ADGM’s three independent authorities, together with the Financial Services Regulatory Authority (FSRA) and the ADGM Courts. The RA is the commercial regulator of the ADGM. It is responsible for the licensing, registration and incorporation of entities seeking to establish a presence in the ADGM as well as monitoring and enforcing the ADGM’s commercial legislation and facilitating government services.
Guidance overview and application1.3 This guidance has been prepared to assist clients who wish to establish a charitable endowment in ADGM.1.4 This guidance is issued under section 28 of the Commercial Licensing Regulations 2015.
2. CHARITABLE INITIATIVES IN THE UAE2.1 The UAE has a long established culture of philanthropic initiatives aimed at promoting and supporting the welfare of communities worldwide. Whilst such initiatives play an important role in supporting a strong and progressive society, charitable organisations must nevertheless adhere to all relevant laws aimed at reducing the risk of charities and non-profit organisations being utilised by illegal organisations as a means for disguising their fundraising efforts.2.2 In the UAE, charity work and charitable donations are regulated at both the Federal and Emirate level. The Ministry of Community Development regulates the establishment and registration of charities. There are a number of legislative instruments regarding charitable donations at the Federal level, including Federal Law No. 2 of 2008 concerning Public Welfare Associations and Organisations, which criminalises the collection of donations through associations that are not properly licensed by the Ministry. Further, Federal Law No. 5 of 2012 on Combating Cybercrimes makes it an offence to seek public donations through information technology devices without relevant permission from the competent authorities. In addition, Federal Law No. 5 of 2018 provides the legislative environment for the establishment of Waqfs or endowments in the UAE.2.3 In Abu Dhabi, the Department of Community Development plays an important role in facilitating, organizing and coordinating the contributions of individuals, governmental entities and private corporations to contribute to the UAE’s prosperity and build a cohesive society.2.4 Once a charitable organisation has been established in broader UAE (outside the ADGM) and appropriately licensed by Federal authorities, it may then collect donations to pursue its aims and objectives. To this end, ADGM’s legal framework may provide an appropriate structure or vehicle to facilitate building, investing and benefiting from donations to achieve the charity’s objectives.
3. 3. CHARITABLE ENDOWMENTS IN ADGM
What is an Endowment?3.1 An endowment, in its common day-to-day usage and as used in this guidance, is a gift or a donation made for a charitable purpose. This gift or donation can then earn investment returns that can in turn be used to finance projects or operations.3.2 It is important to note that an endowment as referred to in this guidance should be distinguished from an ‘Endowment Policy’, which is a life insurance contract, or a savings product, that pays a lump sum to a beneficiary after a specific term or upon the death of the policyholder.
What is a Charitable Endowment?3.3 Over the years, a number of legal structures have been utilised for philanthropic activities and causes including endowments, trusts, foundations and charitable organisations.3.4 For the purpose of this guidance, a charitable endowment refers to the mechanism by which a charitable or not-for-profit organisation collects and invests donations, and subsequently distributes the proceeds or income earned from the investment of such donations to finance charitable projects over the long term. The key aspect is that the donor of the donation loses all legal and beneficial title to, and has no expectation of, any return or repayment of the funds donated. Thus, once donated, the funds are used for the sole benefit of, and form the charitable endowment for, the proposed recipient (namely, a charitable or not-for-profit organisation).
Key Features of a Charitable Endowment3.5 A charitable endowment has four key features:a. A founding instrument;b. A mechanism for the collection or pooling of gifts or donations;c. Effective governance and regulatory oversight to facilitate prudent investment; andd. Governance structure to facilitate authorised distributions of proceeds/income.A founding instrument3.6 A charitable endowment is established by a legal instrument, which may choose to apply the English common law, as applied in the ADGM, and be enforced by the ADGM Courts, recording the terms of the gift or donation and facilitating the transfer of ownership of the gift or donation from the donor to the intended recipient, being a charitable or a not-for-profit organisation. The type of legal instrument utilized will depend, among other things, on the type of structure that the charitable endowment takes. For instance, a Foundation will require a Foundation Charter; a Trust a Trust Deed and a Company a Constitution, Articles of Association or a resolution of the board of directors.A mechanism for the collection or pooling of gifts or donations3.7 In the context of a charitable endowment, as the donor does not retain title to the donation or a gift, this mechanism can be a bank account into which donors can deposit their donations.Effective governance and regulatory oversight to facilitate prudent investment3.8 This element involves three separate considerations:a. The role of the charitable or not-for-profit organisation in establishing the investment strategy and practices. These may include investment and operating restrictions concerning the deployment of donated funds and are typically articulated in the founding instrument;b. The role of any investment manager appointed by the charitable endowment in implementing the investment strategy and practices; andc. The role of the Federal authorities in overseeing the conduct of a charitable organisation that is established and licensed in the broader UAE (outside ADGM) and, where relevant, the possible role of the FSRA to supervise the conduct of any ADGM-based investment manager appointed by a charitable organisation, if one is appointed.1Governance structure to facilitate authorised distributions of proceeds/income3.9 The founding instrument establishing a charitable endowment will also set out the guidelines for, and restrictions on, the use of the proceeds or income derived from the investment of endowed funds. This will include prescribing a specific purpose or nominating particular projects or causes to which the proceeds or income could be applied, and which persons (for instance, a board of directors or trustees or oversight committee) will be empowered to determine whether any proposed deployment of resources is in compliance with the operating restrictions contained in the founding instrument. This ensures that proceeds are only distributed to agreed or authorised projects or purposes as specified in the founding instrument of the vehicle established.
Investment Management is a financial services activity regulated by the FSRA. An investment manager will require a Financial Services Permission (FSP) to engage in the Regulated Activity of Managing Assets, and be subject to additional regulatory requirements imposed by the Financial Services and Markets Regulations 2015 (FSMR) and the Rules made under FSMR, including the FSRA General Rulebook and the FSRA Conduct of Business Rules.
4. 4. CHARITABLE ENDOWMENT STRUCTURES AND THEIR REGULATION IN ADGM4.1 There are a number of legal vehicles in ADGM that may be utilised to facilitate a charitable endowment framework, including foundations, trusts and companies limited by guarantee.
Foundations4.2 Foundations are a type of legal entity that operate like a common law trust yet have features more akin to a company, such as being incorporated and having separate legal personality. Foundations in ADGM can be used for a variety of purposes, including wealth management and preservation, family succession planning, tax planning, asset protection, corporate structuring and for public interest purposes. Once a founder establishes a foundation, assets are transferred and become the property of the foundation. Unlike a trust, a foundation safeguards the founder’s ability to exercise control over a foundation. The foundation continues to exist perpetually after the death of the Founder. In the case of a charitable foundation, this can be established by a founder who is an individual (philanthropist) or an organisation.4.3 In ADGM, foundations operate in accordance with the ADGM Foundations Regulations 2017 and are regulated by the RA. The regulatory framework prescribes the mandatory requirements for ADGM foundations, such as the need for a valid charter, a requirement for a registered office address in ADGM, as well as governance controls or safeguards to protect the wishes of the founder, safeguard the assets of the foundation and oversee the foundation council (including the role of a guardian, statutory duties for the foundation council, including the requirement to maintain accounts). Further information on the ADGM foundations regime is available here.
Trusts4.4 A trust is, broadly, a legal relationship recognised and governed by established English common law, English statute, ADGM regulations and the principles of equity. A trust is created by a settlor when assets are placed under the control of a trustee for the benefit of a beneficiary, or for a specified purpose. A trust permits the separation of legal and beneficial ownership: the trustees become the owners of the trust property whilst the beneficiaries are entitled to expect that the trustees will manage the trust property for their benefit.4.5 A charitable trust is a trust for purposes rather than identified beneficiaries, and may be an appropriate vehicle through which a charitable organisation’s donations may be invested and managed for charitable purposes. A charitable trust typically falls within any of the following four classes: the advancement of education, the relief of poverty, the advancement of religion, or for other purposes beneficial to the community. For example, trust structures have been utilised in the USA by universities to collect and administer donations to those institutions including by philanthropists, former students and the industry, in order for those institutions to utilise those funds for the future advancement of the institution including research and infrastructure.4.6 The ADGM Trusts framework is derived from both established English common law and the ADGM Trusts (Special Provisions) Regulations 2016. This enables ADGM trusts to be flexible, enabling changes in trust assets, trustees or beneficiaries, trust objectives and limits on trusts' duration. Being a trustee of an express trust, as well as other associated activities of ‘Providing Trust Services’, is a type of a financial services activity regulated by the FSRA. Accordingly, a Financial Services Permission under the Financial Services and Markets Regulations 2015 is required in order to conduct this activity in or from ADGM.
Companies Limited by Guarantee4.7 A company limited by guarantee is designed to protect members from liability, but which typically does not distribute profits to its members and does not hold share capital. These companies do not have share capital and their members are ‘guarantors’ rather than ‘shareholders’, as they agree to guarantee a stated sum to contribute in the event of the winding up of the company. Such companies are primarily used for industry and professional associations or organizations that require legal personality. In ADGM, these entities are governed by the ADGM Companies Regulations 2020 and regulated by the RA. A company limited by guarantee can be incorporated by a minimum of one person, an individual or a body corporate, and require a minimum of one director. More information on the incorporation of a company limited by guarantee is available here.
5. ANTI-MONEY LAUNDERING AND COUNTER TERRORIST FINANCING OBLIGATIONS5.1 In addition to all requirements imposed under Federal laws applying to organisations with charitable purposes, ADGM’s Anti-Money Laundering and Sanctions Rules and Guidance (AML) apply to any legal purpose or arrangement operating for charitable purposes in or from ADGM, defined as a ‘Non-Profit Organisation’ (NPO). The governing body of an NPO is obligated to maintain records of its membership, objectives and charitable activities, including the details of any charitable beneficiaries, and all measures undertaken to ensure that charitable funds have not been used to finance terrorism. The NPO is required to provide all requested assistance to the FSRA to ascertain whether AML has been complied with, including access to records and employees.
6. 6. WHAT TO CONSIDER BEFORE CREATING A CHARITABLE ENDOWMENT6.1 Charitable endowments are predominantly focused on planning and investing funds for the benefit of a charitable cause. This has a number of advantages, as well as some potential drawbacks, that must be taken into consideration.6.2 Most charitable endowments are typically designed to keep the principal investment intact so it can grow and increase in value over time, allowing the returns earned to be applied to the nominated purposes or projects of the endowment. Accordingly, a well-managed charitable endowment can help create an ongoing source of income to fund the charity’s current and future projects.6.3 Nevertheless, the cost and complexity of establishing and operating a charitable endowment may not be appropriate where only a single, immediate charitable objective is envisioned. In addition, as with any investment plan, the long term growth of the charitable endowment and the amount of income available for charitable purposes will be subject to the risks associated with the investment strategy devised by the framework agreement and its execution. The expertise of any appointed investment manager, as well as the costs of administration of the charitable endowment, will have a significant impact on the income and proceeds that will be available to finance charitable projects.
For more information, you may contact the Registrar:Telephone: 00 971 2 3338777Email: email@example.comAddress: 3rd floor, ADGM Building, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, United Arab Emirates.
Opening HoursThe Registrar’s office is open to public from Sunday to Thursday, 9:00am to 3:00pm.
DisclaimerThis guidance includes non‐binding and interpretive guidance with regard to charitable endowments in ADGM. Further advice from a specialist professional in relation to the implementation of this guidance may be required. ADGM makes no representations as to accuracy, completeness, correctness or suitability of any information and will not be liable for any error or omission. Information in this guidance is not to be deemed, considered or relied upon as legal advice and should not be treated as a substitute for a specific advice concerning any individual situation. Any action taken upon the information provided in this guidance is strictly at your own risk and ADGM will not be liable for any losses and damages in connection with the use of or reliance on information provided in this guidance.
Voluntary Liquidation Guidance
Part 1 Part 1 – Introduction
Guidance overview and application1.1 This guidance provides an overview of voluntary liquidations under ADGM’s insolvency legal framework, the ADGM Insolvency Regulations 2015. The Guide also provides information about the documents that must be delivered to the Registration Authority as part of a voluntary liquidation and the process.1.2 This guidance does not cover other types of insolvency proceedings available under ADGM’s insolvency legal framework, such as compulsory winding up, receivership, and administration.1.3 The guidance applies to ADGM incorporated public and private limited companies, limited liability partnerships (LLPs) and limited partnerships with legal personality (LPs). For ease of reference, the term ‘Company’ is used throughout this guidance to refer to ADGM incorporated companies, LLPs and LPs, unless specifically stated otherwise.1.4 This guidance is issued under section 28 of the Commercial Licensing Regulations 2015 (CLR 2015).
Legal framework1.5 The relevant ADGM legislation regarding the dissolution of Companies is the:a) ADGM Companies Regulations 2020 (CR 2020); andb) ADGM Insolvency Regulations 2015 (IR 2015).1.6 This guidance provides information on voluntary liquidations and therefore should be read in conjunction with the IR 2015 specifically, as the guidance will not be able to tell you everything about a voluntary liquidation.
Insolvency proceedings1.8 Insolvency proceedings are formal measures taken to deal with Company debt. There are a number of different types of Company insolvency proceedings available under ADGM’s legal framework. It is important to note that not all companies involved in insolvency proceedings are insolvent.
ADGM Companies can be dissolved without insolvency proceedings1.9 ADGM’s CR 2020 provides an alternative Company dissolution process called voluntary strike off, as well as a power for the Registrar to strike Companies off the register. Both of these processes are outlined as follows.
Voluntary Strike Off1.10 Voluntary strike off is the process of dissolving a Company at the Company’s request, pursuant to CR 2020. There are two methods of voluntary strike off available under CR 2020:a) voluntary strike off by company with notice to members - this is informally referred to as an “ordinary” strike off, orb) voluntary strike off by company supported by a prescribed statement - this is informally referred to as a “simplified” strike off.1.11 There are various eligibility requirements that must be satisfied for a Company to apply for either type of voluntary strike off. For example, in the three months prior to making an application, a Company must not have traded or carried on business.1.12 Where a satisfactory application is submitted to the Registrar, the Registrar will issue a public notice of the Company’s intention to be struck off. If the Registrar does not receive any claims against the company at the end of the public notice period, the Company’s name is struck off the register and the Company is dissolved.1.13 A liquidator or insolvency practitioner is not required to complete this process. However, voluntary strike off is not an alternative to formal insolvency proceedings.
Further InformationAfter reading this guidance, if you require further information or clarification on voluntary liquidation, please email the ADGM Registration Authority at: firstname.lastname@example.org
Part 2 Part 2 - Voluntary Liquidation
Liquidation2.1 The liquidation or ‘winding up’ process ends the life of a Company and ensures that its property is administered for the benefit of creditors and members. When the liquidation process is completed, the Company is dissolved and removed from the register.
2.2 During the liquidation process, a Company’s assets are used to pay off its debts, liabilities and winding up expenses. Any remaining value is distributed to the shareholders.
Types of Voluntary Liquidation2.3 The IR 2015 provides two types of voluntary liquidations of Companies. The table below lists each type and the circumstances in which each type may be appropriate.
No. Liquidation Type Circumstances Members’ Voluntary Liquidation Where the members want to close a Company and has sufficient assets to pay its debts within 12 months. Creditors’ Voluntary Liquidation When a Company is unable to pay its debts.2.4 A solvent Company whose directors have decided to stop trading, may apply for a Members’ Voluntary Liquidation (“MVL”). Alternatively, if the Company has ceased trading for a period exceeding three months and otherwise qualifies, they may apply for voluntary strike off, as provided for in the CR 2020.
2.5 For an insolvent company, the directors can propose to the members that the Company be wound up through a Creditors’ Voluntary Liquidation (“CVL”).
2.6 Creditors can also apply to wind-up an insolvent Company via a compulsory winding-up by the ADGM Courts. Compulsory winding-up is not covered in this guidance.
Note: if a Company has already been dissolved, it will need to be restored to the register before applying for liquidation.Please refer to the CR 2020 for the requirements on company restoration.
How a liquidation is managed2.7 Liquidation is overseen by a liquidator (insolvency practitioner). All liquidators appointed to a voluntary liquidation must be licensed as an insolvency practitioner under the CLR 2015 and registered on the register of Insolvency Practitioners under IR 2015.
2.8 For an MVL, the shareholders choose and appoint the liquidator, while for a CVL, the Company’s creditors choose and appoint the liquidator.
2.9 The expenses of the winding up, including the liquidator’s fees, are payable by the Company in priority to the claims of unsecured creditors.
Part 3 Part 3 – Members’ Voluntary Liquidation (MVL)
When an MVL is applicable3.1 An MVL can take place where it has been decided that a Company is no longer required (for example, it is no longer needed, there is a lack of business or there no one to continue running the Company), and the directors of the Company believe that the Company is solvent (can pay its debts and liabilities).
Declaration of solvency3.2 Where it is proposed to wind up a Company using an MVL, the Directors (or, in the case of a Company having more than two Directors, the majority of them), must make a declaration of solvency.3.3 The declaration of solvency must state that the directors have made a full inquiry into the Company’s affairs and that, having done so, they have formed the opinion that the Company will be able to pay its debts in full, together with interest, within 12 months from the start of the winding-up process.3.4 The directors must make a declaration of solvency within the five weeks immediately before a resolution to wind up the Company is passed.
Making a declaration of solvencyIn addition to writing a statement that the Directors have assessed and formed the opinion that the Company can pay its debts in full, with interest, you should include:a) the name and address of the company;b) the names and addresses of the company’s directors; andc) how long it will take the company to pay its debts (which must be no longer than 12 months from the start of liquidation).
Commencement of liquidation3.5 The liquidation is deemed to have commenced at the time of the passing of a Special Resolution (“resolution”) by members for voluntary winding up at a general meeting.
Notice of a members’ voluntary liquidation3.6 When the members have passed a resolution for an MVL, the Company must publish a notice of the resolution in the ADGM within seven days.
Publishing a notice of members’ voluntary winding up in the ADGM
To satisfy the requirement to publish a notice in the ADGM, the Registrar expects that a Company will publish an advertisement in both an English and an Arabic language newspaper, each with a wide circulation that includes the ADGM and the Emirate of Abu Dhabi, UAE.
The advertisement should be published for three consecutive days.
Status of Company once liquidation commences3.7 From the commencement of the liquidation, a Company must cease to carry on business, except where required for its beneficial winding up. For example, a Company may sell any of its remaining inventory as this is required for its beneficial winding up.
Conversion of MVL to CVL3.8 During an MVL, if the liquidator decides that the company will not be able to pay its debts in full within the period stated in the directors’ declaration of solvency, the liquidation becomes a CVL (see Part 5 of the guidance for more information).3.9 Where the liquidator takes that decision, the liquidator must call a meeting of the creditors, notice of which shall not be less than seven days. The liquidator must prepare a Statement of Affairs of the Company and provide it to the creditors at the meeting. The liquidation becomes a CVL from the date of that meeting.
Summary of the steps to commence an MVL3.10 The following is a summary of the steps to commence an MVL.
Make a Declaration of Solvency Signed by the Directors (or a majority of them) Call a general meeting Within 5 weeks of the Declaration of Solvency and the members must pass a resolution for winding up Appoint a liquidator At the general meeting. The liquidator must be an ADGM licensed insolvency practitioner Advertise the resolution in ADGM The Company must publish an advertisement in an English and Arabic language newspaper with a wide circulation, including the ADGM and Abu Dhabi, UAE
Part 4 Part 4 – Creditors’ Voluntary Liquidation (CVL)
When a CVL is applicable4.1 When a Company cannot pay all of its debts within 12 months or at all (i.e. it is insolvent), it may choose to proceed in a number of ways, include going into a CVL.
Statement of Company’s Affairs4.2 Where it is proposed to wind up a Company via an MVL, the Directors of the Company must prepare a Statement of Affairs of the Company and provide the Statement to the Company’s creditors.4.3 The Statement of Affairs must:a) give the particulars of the Company’s property, debts and liabilities;b) give the names and addresses of the Company’s creditors;c) specify the security held by each creditor;d) give the date on which each security was granted; ande) contain such other information as may be prescribed.
Notice of voluntary liquidation4.4 When the members have passed a resolution for voluntary winding up, the Company must publish a notice of the resolution in the ADGM within seven days.
Publishing a notice of voluntary winding up in the ADGMTo satisfy the requirement to publish a notice in the ADGM, the Registrar expects Company’s to publish an advertisement in both an English and an Arabic language newspaper, each with a wide circulation that includes the ADGM and the Emirate of Abu Dhabi, UAE.The advertisement should be published for three consecutive days.
Status of Company once liquidation commences4.5 From the commencement of the liquidation, a Company must cease to carry on business, except where required for its beneficial winding up.
Role of Directors once liquidation commences4.6 Once a liquidator is appointed the Company’s director(s) no longer have control of the company or anything that it owns and cannot act on behalf of the Company.
Disqualification of unfit Directors4.7 Pursuant to the CR 2020, the Registrar has a duty to disqualify unfit directors of insolvent companies. If you were the director of a Company in a CVL and the Registrar is satisfied that your conduct, as a director of the Company, makes you unfit to be concerned in the management of a company, you will be served a disqualification order. The minimum period of disqualification is two years, and the maximum period is 15 years.
Summary of the steps to commence a CVL
4.8 The following is a summary of the steps to commence a CVL.
Prepare a Statement of Affairs The Directors must prepare a Statement of Affairs Call a general meeting Members must pass a resolution for voluntary winding up Call a meeting of creditors Directors to lay the Statement of Affairs before the creditors Appoint a liquidatorThe liquidator shall be nominated by the creditors (if they do not do so, then the Company may).The liquidator must be an ADGM licensed insolvency practitioner. Advertise the resolution in ADGM The Company must publish an advertisement in an English and Arabic language newspaper with a wide circulation, including ADGM and Abu Dhabi, UAE
Part 5 Part 5 – Liquidators
Role of the liquidator5.1 The liquidator is appointed to wind up the company’s affairs. The liquidator does this by calling in and using the company’s assets to pay off creditors and distribute the remainder to shareholders.5.2 The liquidation involves the following:a) ensuring all Company contracts (including employee contracts) are completed, transferred or otherwise ended;b) ceasing the Company’s business;c) settling any legal disputes;d) selling any assets;e) collecting money owed to the Company;f) distributing any funds to creditors;g) repaying share capital to shareholders; andh) dissolving the company and removing it from the register.5.3 On the appointment of a liquidator, ordinarily all the powers of the Directors cease. The liquidator will take control of the company’s affairs and the directors no longer have control of the company or anything it owns and cannot act for or on behalf of the company.
Notice of a liquidator’s appointment5.4 Within seven days of being appointed, a liquidator must:a) publish a notice of their appointment in the ADGM, andb) deliver to the Registrar for registration, a notice of their appointmentPublishing a notice of appointment in the ADGMTo satisfy the requirement to publish a notice in the ADGM, the Registrar expects liquidators to publish an advertisement in both an English and an Arabic language newspaper, each with a wide circulation that includes the ADGM and the Emirate of Abu Dhabi, UAE.The advertisement should be published for three consecutive days noting that creditors have 21 days to bring forward any claims against the company.
What the liquidator must send to the Registrar5.5 Once a Company’s affairs are fully wound up, the liquidator must send a copy of the account of the winding up and a return of meetings held with the Company and creditors, to the Registrar within seven days after completion of the meetings.
5.6 Where the liquidation continues for more than one year, the liquidator must also send a progress report to the Registrar every 12 months, until the liquidator ceases to act. The progress report must cover the period of 12 months starting with the date the liquidator is appointed and each subsequent period of 12 months.
What happens when the company’s affairs are fully wound up5.7 When a Company’s affairs are fully wound up, the liquidator must send a copy of the final account and return to the Registrar.
5.8 Unless the Court makes an order deferring the dissolution of the Company, it is dissolved on the expiration of three months from the date of dispatch of the final account and return.
Court’s power to control proceedings5.9 On the application of a liquidator, the Court may make an order staying winding up proceedings. The liquidator may make such an application for a number of reasons such as to provide more time to administer the affairs of the Company or if misconduct has been identified that requires further investigation.
This guidance is a non-binding indicative guide and should be read together with the relevant legislation, in particular the ADGM Insolvency Regulations 2015, Companies Regulations 2020 and any other relevant regulations and enabling rules, which may change over time without notice. Information in this guidance is not to be deemed, considered or relied upon as legal advice and should not be treated as a substitute for a specific advice concerning any individual situation. Any action taken upon the information provided in this guidance is strictly at your own risk and the Registration Authority will not be liable for any losses and damages in connection with the use of or reliance on information provided in this guidance. The Registration Authority makes no representations as to the accuracy, completeness, correctness or suitability of any information provided in this guidance.
Beneficial Ownership and Control Guidance
IntroductionAbu Dhabi Global Market (“ADGM”) is established pursuant to Abu Dhabi Law No. 4 of 2013 as a financial free zone in the Emirate of Abu Dhabi, with its own civil and commercial laws. ADGM offers market participants a world-class legal system and regulatory regime.This document has been prepared to guide clients in identifying the registrable beneficial owners of ADGM Entities.
Registration Authority OfficeThe Registration Authority (the “Registrar”) is an independent authority, which has the powers granted to it under the Abu Dhabi Law No. 4 of 2013. The Registrar’s office is located at 3rd floor, ADGM Building, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, United Arab Emirates.
The Registrar’s main functions• Registration of ADGM establishments• Registration of business names and maintenance of register• Registration of post-incorporation documentation and event-driven filings• Registration of changes in business name particulars• Registration of changes in directors, officers, shareholders and share capital• Enforcement, prosecution and strike off, dissolution or restoration of ADGM establishments• Cancellation of Commercial Licenses, amendment, suspension, etc.
Opening HoursThe Registrar’s office is open to public from Sunday to Thursday, 9:00am to 3:00pm and may be contacted during normal working hours at +971 2 3338777 or by email at email@example.com
ADGM RequirementBeneficial ownership identification and verification is essential component and an integral part of ADGM’s review process in registering a legal entity in ADGM. An applicant must provide such information at the time of incorporation and this information must be kept up to date during the life cycle of the legal entity.In particular, each ADGM Person (hereinafter referred to as ‘ADGM Person’) must keep a record of the required particulars of its beneficial owners in a register of beneficial owners.Where the ADGM Person is existing at the time of the enactment of ADGM Beneficial Owners and Control Regulations (“Regulations”), the ADGM Person must ensure that its record of beneficial owners is established no later than ninety (90) days after the date of enactment of the Regulations.Where the ADGM Person comes into existence after the date of enactment of the Regulations, the ADGM Person must ensure that a record of beneficial owners is established in accordance with that ADGM entity’s rules of formation.
What is beneficial owner?“beneficial owner”, in relation to a company or LLP“beneficial owner” for an ADGM Person who is a trustee, means each of the following but only in respect of the trust governed by the law of the Abu Dhabi Global Market for which the ADGM Person is a trustee“beneficial owner”, in relation to a foundationany person who owns or controls (in each case whether directly or indirectly), including through bearer share holdings or by other means, more than 25% of the shares or voting rights in the company or LLP;any person who controls the company or LLP, orany person who exercises control over the management of the company or LLP.the settlor of the trust;any other trustee(s) aside from the ADGM Person;each beneficiary of the trust;where the persons (or some of the persons) benefiting from the trust have not been determined, the class of persons in whose main interest, in the opinion of the Registrar, the trust has been established or operates; andany other person who, in the opinion of the Registrar, has control over the trust.the founder;the foundation council members (except council members that are ADGM registered corporate service providers);the guardian, if any; andthe beneficiaries (if named) or designee (if no beneficiaries are named) in whose main interest, in the opinion of the Registrar, the foundation has been established or operates.“control” if in relation to a company means such person who:holds, directly or indirectly, more than 25% of the company’s shares;holds, directly or indirectly, more than 25% of the voting rights in the company; orholds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;in relation to an LLP, the person, holds, directly or indirectly, more than 25% of the voting rights in the conduct and management of the LLP.“control” means a power (whether exercisable alone, jointly with another person or with the consent of another person) under the trust instrument or by law to:dispose of, advance, lend, invest, pay or apply trust property;vary or terminate the trust;add or remove a person as a beneficiary to or from a class of beneficiaries;appoint or remove trustees or give another person control over the trust; anddirect, withhold consent to or veto the exercise of a power mentioned in sub-paragraphs (a) to (d).A person shall have “control” in relation to a foundation if such person:holds, directly or indirectly, more than 25% of the voting rights in the conduct and management of the foundation;holds the right, directly or indirectly, to appoint or remove a majority of the officials of the foundation.Note:Where any of the above roles are fulfilled by a company, LLP or partnership, the ADGM Person shall identify the natural persons who are the beneficial owners of such company, LLP or partnership, unless the company is a listed company.In any case where a beneficial owner is:• a listed company; or a company that it wholly-owned by the Federal Government of the United Arab Emirates, or by any of the governments of the member Emirates of the United Arab Emirates; or a company created by Emiri decree within the United Arab Emirates, it shall be treated as a natural person for the purposes of the Regulations, and therefore (for the avoidance of doubt) as the beneficial owner of the ADGM Person.• “listed company” means a company listed on a stock exchange recognised by the Registrar and subject to disclosure requirements which enable its beneficial owners to be identified.• “Beneficial owner”, in relation to a partnership (other than an LLP), means any person who ultimately is entitled to or controls (in each case whether directly or indirectly) more than 25% share of the capital or profits of the partnership or more than 25% of the voting rights in the partnership.
How to determine the beneficial owner?
Test 1 Test 1: The Ownership TestThe ownership test is to identify the individual who ultimately own the ADGM Entity. Ultimate owners are considered to be a registrable beneficial owner and their information and identification documents must be provided to the Registration Authority at the time of application and must be kept up-to-date throughout the lifecycle of ADGM Person.To help you identify the registrable beneficial owners, please refer to the illustration below. Registrable beneficial owners are identified through grey boxes.
Direct OwnershipIn this example, Individual 1 owns 100% of the ADGM Entity. He is the beneficial owner.
In this example, Individual 1 and Individual 2 are direct owners of ADGM Entity. Both individual are the beneficial owners.
Indirect OwnershipIn this example, Individual 1 is the indirect owner and beneficial owner of the ADGM Entity.In this example, Individual 1 and Individual 2 are indirect owners and beneficial owners of the ADGM Entity.
Multiple Indirect OwnershipIn this example, there are multiple levels of indirect ownership. The two beneficial owners are clearly marked in grey boxes. In this case, Individual 4 has a 32.75% interest in ADGM Entity (50% x 65.5% = 32.75%) and Individual 1 has 50%.Calculating shareholdings: a reference in this Guidance Note to holding shares in an ADGM Person or other legal entity is to holding a right to share in the capital or, as the case may be, profits of that person or other entity, and a reference to holding “more than 25% of the shares” in that ADGM Person or other legal entity is to holding a right or rights to share in more than 25% of the capital or, as the case may be, profits of that person or other entity.If no registrable person can be identified under Test 1, Test 2 also needs to be considered.
Test 2: The Control TestThis test requires the identification of individual or corporate that ultimately controls the ADGM Entity by means other than ownership. For example, by a person, that holds more than 25% of the voting rights of ADGM Entity but the exercise of such voting rights is controlled by another. This latter person is a beneficial owner in respect of the ADGM Entity.It is important to note that if, in relation to ADGM Entity, there are individual who satisfy Test 2 in addition to individual / corporate beneficial owners that satisfy Test 1, then all are registrable in respect of that ADGM Entity.
Test 3: The Management TestThis test only applies if no registrable owners have been identified under Test 1 or Test 2 and stipulates that all natural persons who hold the position of a senior managing official of the ADGM Entity will be registrable as a beneficial owner.
DisclaimerThis Guidance (the “Note”) provides answers to many frequently asked questions and provides information on how to identify the beneficial owner of ADGM Entity. This is only a non-binding indicative guide and should be read together with the relevant legislation, in particular, ADGM Beneficial Owners and Control Regulations 2018 and any other relevant regulations and enabling rules, which may change over time without notice. The Note only refers to the procedures that need to be completed in relation to the Registrar. It does not cover other requirements as set out in the relevant legislation (which includes contact with the court and other obligations of an applicant). Further advice from a specialist professional may be required. The Registration Authority makes no representations as to accuracy, completeness, correctness or suitability of any information and will not be liable for any error or omission. Information in this Note is not to be deemed, considered or relied upon as legal advice and should not be treated as a substitute for a specific advice concerning any individual situation. Any action taken upon the information provided in this Note is strictly at your own risk and ADGM RA will not be liable for any losses and damages in connection with the use of or reliance on information provided in this Note.For more information, you may contact the Registrar:Telephone No.: 00 971 2 3338777
Email: firstname.lastname@example.orgAddress: 3rd floor, ADGM Building, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, United Arab Emirates.
Guidance on Applications for Accounts Filing Extensions
Guide overview and application
This guidance (“Guide”) provides an overview on applying for more time to file an ADGM private company or limited liability partnership’s accounts. The Guide also outlines the information that must be delivered to the Registration Authority (“RA”) as part of the application process and factors that the Registrar will consider when determining whether companies or limited liability partnerships will receive extensions.
The Guide applies to ADGM incorporated private limited companies, as well as limited liability partnerships (“LLPs”). For ease of reference, the term “Company” is used throughout this Guide to refer to both ADGM incorporated companies and LLPs, unless specifically stated otherwise.
This Guide is issued under section 28 of the Commercial Licensing Regulations 2015.
The relevant ADGM legislation regarding filing annual accounts of companies is the ADGM Companies Regulations 2020 (“CR 2020”) and for LLPs is the Limited Liability Partnership Rules 2020 (“LLPR 2020”).
Pursuant to section 416 of CR 2020 and rule 21 of LLPR 2020, the Registrar has the power to approve an application for an extension to file accounts for periods up to 3 months.
This Guide provides information on extending the filing due date of annual accounts and therefore should be read in conjunction with the CR 2020 and LLPR 2020 for companies and LLPs, respectively, as the Guide will not tell you everything about filing annual accounts.
ADGM’s Regulations and Rules are available on the ADGM website by following this link (https://en.adgm.thomsonreuters.com/).
Annual accounts – General information
All Companies, whether trading or not, must keep adequate accounting records.
Accounting records must, in particular, contain entries from day to day showing all money received by the Company and the matters in respect of which the receipt and expenditure takes place, and a record of the assets and liabilities of the Company. Parent Companies must ensure that any subsidiary keeps sufficient accounting records to enable the directors/members of the parent Company to prepare accounts that comply with CR 2020 or LLPR 2020.
A Company must keep its accounting records at its registered office address or any alternative location that the Company thinks suitable. Accounting records must be preserved by the Company for ten years from the date on which they are made.
Company’s accounts must be approved by the Board of Directors and a director must sign the balance sheet on behalf of the Board. A Company’s accounts must be audited unless the Company is exempt from audit, as per CR 2020 and LLPR 2020, as applicable. All Companies must file their accounts with the RA every year. If a Company’s accounts are filed late, the Company is liable to a fine.
Your Company should take appropriate measures to ensure that accounts are filed on time through the ADGM’s online registry solution: www.registration.adgm.com.
Please review the CR 2020 or LLPR 2020 to ensure that all requirements in relation to your Company’s annual accounts are complied with.
Registrar’s power to grant accounts filing extensions
The Registrar may, for any special reason he thinks fit, approve an application to extend the timeframe for filing accounts for periods of up to 3 months. Any extension will not extend the period for filing to more than 12 months after the end of the Company’s relevant accounting period.
A special reason would include an unforeseen event outside the Company’s control that prevents the Company from filing its accounts by the filing deadline. The unforeseen event could include, for example, an unexpected illness of a key individual in the company essential to the filing or a fire destroying company records. The Registrar will consider each application and supporting explanation on a case-by-case basis.
Applying for an extension
You can apply to extend your Company’s accounts filing deadline, however, you must apply for the extension before your filing deadline with a full explanation of why you need the extension. An application made after the filing deadline will be rejected.
Apply for your extension early. If you have not received a response from the Registrar on your application before the filing deadline for your Company’s accounts, you are required to file the annual accounts by the filing deadline.
Late filing penalties
If the Registrar has not yet approved your application for an extension and you file your accounts after the filing deadline, your Company will be liable to a fine. If you do not apply for an extension and your accounts are filed late, your Company will be liable to a fine. The Registrar does not have the discretion to waive the collection of a penalty.
Failure to deliver accounts to ADGM – No longer carrying on business
If a Company does not comply with the requirement to file accounts and the Registrar believes that the Company is no longer carrying on business or in operation, he may strike it off the register and dissolve it.
Failure to file documents is an offence under CR 2020 and LLPR 2020. All the directors/members of a Company may be liable to a fine, along with the Company.
How to apply for the filing extension
You must apply to extend your accounts filing deadline by completing the relevant application form and submitting it via email to the Monitoring and Enforcement Team at: email@example.com
To access the application form click here.
You will not receive a late filing penalty by the RA if your application is approved and you file your accounts before the extended deadline.
The Registrar will review your application and make a decision about your extension request.
It is important to file your accounts by the filing deadline. You should not wait for a decision about your extension request.
The RA will contact you by email to tell you if your application has been successful or not. The RA may also contact you if more information is needed.
If the Registrar approves your application for an extension of your Company’s filing deadline, you must file your accounts before the new filing deadline or your Company will be liable to a late filing penalty.
It is also important to note that if the extension is granted, it will not change the ordinary filing deadline for your Company’s future account filings.
COVID-19 Temporary Support Measure
If your accounts will be late because your company is affected by COVID-19, you can apply for a 3 month extension to file your accounts provided that your next filing deadline is before 1 January 2021 and your filing deadline has not yet passed.
After reading this Guide, if you require further information or clarification regarding applications for extension of accounts filings, please email the RA’s Monitoring & Enforcement Team at: firstname.lastname@example.org
This Guide is a non-binding indicative guide and should be read together with the relevant legislation, in particular the ADGM Companies Regulations 2020 and the Limited Liability Partnership Rules 2020 and any other relevant regulations and enabling rules, which may change over time without notice. Information in this Guide is not to be deemed, considered or relied upon as legal advice and should not be treated as a substitute for a specific advice concerning any individual situation. Any action taken upon the information provided in this Guide is strictly at your own risk and the Registration Authority will not be liable for any losses and damages in connection with the use of or reliance on information provided in this Guide. The Registration Authority makes no representations as to the accuracy, completeness, correctness or suitability of any information provided in this Guide.
COVID 19 Implication for Data Protection
Introduction to Abu Dhabi Global Market
Abu Dhabi Global Market (ADGM) is a broad based international financial centre, established pursuant to Abu Dhabi Law No. 4 of 2013 in the Emirate of Abu Dhabi. With its own civil and commercial laws based on the English common law, ADGM offers the local, regional and international business community a world-class legal system and regulatory regime.
ADGM Office of Data Protection
The Registrar of the ADGM Registration Authority, together with the Office of Data Protection (ODP), is responsible for supervising and ensuring the effective compliance of the obligations of Data Controllers under the Data Protection Regulations 2015 (as amended) (DP Regulations).
The ODP also provides guidance to registered entities and receives complaints from individuals.
For more information and data protection resources, please go to the ODP micro-site available at: https://www.adgm.com/operating-in-adgm/office-of-data-protection/guidance.
For further information or enquiries, please contact us via email at: Data.Protection@adgm.com.
Frequently Asked Questions
The ODP recognises that Data Controllers are facing unexpected challenges during the Coronavirus COVID-19 pandemic.
The ODP is aware that Data Controllers may need to share Personal Data rapidly or collect the Personal Data of visitors to their premises for such purposes as contact tracing and other response measures.
The DP Regulations do not prevent a Data Controller from processing Personal Data in cases of emergency, provided that the Personal Data is processed fairly, lawfully and securely, and it is adequate, relevant and proportionate for the purposes for which it is being processed.
The ODP is here to help and clarify frequently asked questions received in this regard:
1. What is the ODP’s position if a Data Controller does not meet certain regulatory requirements or experiences a delay in responding to Data Subject rights requests during the current COVID-19 situation?
Data Controllers should always seek to comply with their obligations under the DP Regulations. However, during these uncertain times, the ODP understands that Data Controllers might be distracted and there may be delays in responding to Data Subject requests and other compliance requirements under the DP Regulations. The ODP will take a pragmatic approach to regulation during these uncertain times and will take into consideration any mitigating circumstances before deciding what regulatory action to take (if any) against Data Controllers for non-compliance.
2. Can a Data Controller inform employees that a member of their team has contracted COVID-19?
Employers have a legal obligation to ensure the health and safety of all their employees. Accordingly, Data Controllers should keep employees informed about any cases of COVID-19 in their organization and take the necessary measures to keep employees safe. However, employers should avoid naming individuals, if possible, and should not provide any more information than is necessary.
3. Is a Data Controller, that is a public entity or healthcare provider, permitted to contact individuals in relation to COVID-19 without having prior consent?
The DP Regulations do not prevent any health professionals from sending public health messages to people, either by phone, text or email, as these messages are not direct marketing.
Public bodies may also require additional collection and sharing of Personal Data for the purpose of protection against serious threats to public health. This is a legitimate purpose for collecting and processing such Personal Data.
4. Can a Data Controller collect health data in relation to COVID-19 about employees or visitors of ADGM entities?
As an employer, Data Controllers have a duty to ensure employees’ health and safety, but that does not necessarily mean they may gather unnecessary information about their employees.
For example, it may be reasonable in the current circumstances to ask an employee or a visitor if they have visited a particular country or are experiencing COVID-19 symptoms. On the other hand, it would be unreasonable to ask an employee or visitor if they or any of their family members have ever been diagnosed with any other contagious disease.
If additional health data is required, employers must ensure that they do not collect any more Personal Data or Sensitive Personal Data than is necessary (note: Sensitive Personal Data includes health information). In addition, employers must ensure that any Person Data or Sensitive Personal Data that is collected is treated with the appropriate safeguards, as specified under the DP Regulations.
5. Can a Data Controller share employees’ health information to the relevant Health Authorities for public health purposes?
It is unlikely that a company will be required by Health Authorities to share information about specific individuals. However, if this does happen, the DP Regulations do not prevent employers from sharing such information, provided there is a legal basis for the processing of the Personal or Sensitive Personal Data and appropriate safeguards have been met.
6. Can employees work from home during this period?
The DP Regulations do not restrict a Data Controller’s employees from working from home, provided the appropriate safeguards have been met (e.g. appropriate IT security is made available to employees) to protect any Personal Data that may be processed during that period.
ADGM Data Controllers and their employees are responsible for ensuring robust security measures are in place and adhered to at all times.
7. Who can I contact for more info?
For further information, please do not hesitate to contact the ODP via e-mail: Data.Protection@adgm.com.
The object of Frequently Asked Questions (FAQs) is to provide guidance to ADGM Data Controllers during the unforeseen challenges caused by COVID-19. This is only a non-binding indicative guide and should be read together with the DP Regulations and any other relevant regulations and enabling rules, which may change over time without notice. Further advice from a specialist professional may be required. The Registration Authority makes no representations as to accuracy, completeness, correctness or suitability of any information and will not be liable for any error or omission. Information in this FAQ is not to be deemed, considered or relied upon as legal advice and should not be treated as a substitute for a specific advice concerning any individual situation. Any action taken upon the information provided in this FAQ is strictly at your own risk and ADGM RA will not be liable for any losses and damages in connection with the use of or reliance on information provided in this FAQ.
Data Protection Guidance Note
2. IntroductionAbu Dhabi Global Market2.1 Abu Dhabi Global Market (ADGM) is a broad based international financial center, established pursuant to Abu Dhabi Law No. 4 of 2013 in the Emirate of Abu Dhabi. With its own civil and commercial laws based on Common law, ADGM offers the local, regional and international business community a world-class legal system and regulatory regime.2.2 This guidance (“Guide”) is issued under section 28 of the Commercial Licensing Regulations 2015. The Guide has been prepared by the Registration Authority to assist ADGM registered entities in relation to data protection requirements.Registration Authority2.3 The Registration Authority is one of ADGM’s three independent authorities, together with the Financial Services Regulatory Authority and ADGM Courts. The Registration Authority is responsible for, among other things the registration and commercial licensing of businesses operating in or from Al Maryah Island, Abu Dhabi.The Office of Data Protection2.4 The ADGM Office of Data Protection is the data protection supervisor for the ADGM. The Office of Data Protection’s role is to administer the ADGM’s data protection regime (the Data Protection Regulations 2015 (as amended)), including maintaining a register of Data Controllers, enforcing the obligations upon Data Controllers and upholding the rights of individuals.2.5 The Office of Data Protection also provides guidance to registered entities and receives complaints from individuals.2.6 For more information and data protection resources, please go to the Office of Data Protection micro-site available at: https://www.adgm.com/operating-in-adgm/office-of-data-protection/overview2.7 For further information or enquiries please contact us via email at: Data.Protection@adgm.com
3. Overview3.1 This Guide has been written to assist ADGM registered entities in relation to ADGM’s data protection regime. This Guide covers:- What is data protection;- The five key principles of ADGM’s data protection regime;- The rights of the Data Subject in relation to their personal data;- The role and obligations of Data Controller and Data Processor;- The process of transferring Personal Data and Sensitive Personal Data outside ADGM;- The obligations to notify the Registration Authority; and- The use of consent for the purpose of data protection.3.2 All capitalized terms are defined in a Glossary of defined terms at Section 16 of this Guide.
4. What is Data Protection?4.1 Data protection is the process of safeguarding an individuals’ personal information, including how personal information is accessed, stored, disseminated and destroyed.4.2 Data protection regimes exist to create a balance between the rights of individuals to privacy and the needs of organizations to utilize data for the purposes of conducting their business, including sharing personal data with third parties.
5. What is ADGM’s Data Protection Regime?5.1 ADGM’s data protection regime consists of the ADGM Data Protection Regulations 2015 (as amended) (the “Data Protection Regulations”).5.2 The Data Protection Regulations were enacted on October 4, 2015 by the Board of Directors of the ADGM, in exercise of its powers under Article 6(1) of Law No. 4 of 2013 concerning the ADGM (issued by His Highness the Ruler of the Emirate of Abu Dhabi). The Data Protection Regulations make provision for the protection of personal data within the ADGM and for connected purposes. The Data Protection Regulations was amended in 2018 to include updates on matters such as defined terms, data breach notification timeframes and deadlines for notifications to the Registrar, alongside expanded enforcement provisions.5.3 The Data Protection Regulations control how personal information is used by organisations and businesses registered in ADGM. All entities registered in ADGM that hold or process Personal Data must follow the obligations under the Data Protection Regulations.
6. The Role and Responsibilities of the Data Controller6.1 The Data Controller determines the purposes for which, and the manner in which, any Personal Data that it holds, are processed. The Data Controller is responsible for ensuring that all Personal Data processing complies with the Data Protection Regulations.
7. Five Key Principles of Data Protection*:7.1 Data Controllers are expected to ensure that Personal Data which they process are:a) processed fairly, lawfully and securely;b) processed for specified, explicit and legitimate purposes in accordance with the Data Subject's rights and not further Processed in a way incompatible with those purposes or rights;c) adequate, relevant and not excessive in relation to the purposes for which they are collected or further Processed;d) accurate and, where necessary, kept up to date; ande) kept in a form, which permits identification of Data Subjects for no longer than is necessary for the purposes for which the Personal Data were collected or for which they are further Processed.7.2 Further information on each principle is set out below.Principle 1. Processed fairly, lawfully and securely7.3 The Data Protection Regulations requires the Data Controller to process Personal Data fairly, lawfully and securely. The main purpose of this requirement is to protect the interests of the Data Subjects whose Personal Data is being processed.7.4 This principle applies to all actions that a Data Controller undertakes with Personal Data. In practice, it means:a) to have legitimate grounds for collecting and using the Personal Data;b) do not use the data in ways that have unjustified adverse effects on the individuals concerned;c) to be transparent about how they intend to use the data, and give individuals appropriate privacy notices when collecting their Personal Data;d) to handle people’s Personal Data only in ways they would reasonably expect; ande) to make sure they do not commit any unlawful actions with the data.Principle 2. Processed for specified, explicit and legitimate purposes in accordance with the Data Subject's rights and not further Processed in a way incompatible with those purposes or rights7.5 The Data Controller must be open about their reasons for obtaining Personal Data, and that what they undertake with the information is in line with the reasonable expectations of the individuals concerned. In practice, the Data Controller must:a) be clear from the outset about why they are collecting Personal Data and what they intend to do with it;b) comply with the Data Protection Regulation’s fair processing requirements – including the duty to give privacy notices to individuals when collecting their Personal Data; andc) ensure that if they wish to use or disclose the Personal Data for any purpose that is additional to or different from the originally specified purpose, the new use or disclosure is fair.Principle 3. Adequate, relevant and not excessive in relation to the purposes for which they are collected or further Processed7.6 The Data Controller must only collect the Personal Data that they need for the purposes that have been specified. They are also required to ensure that the Personal Data they collect is sufficient for the purpose for which it was collected. In practice, it means that the Data Controller should ensure that:a) they hold Personal Data about an individual that is sufficient for the purpose they are holding it for in relation to that individual; andb) they do not hold more information than they need for that purpose.Principle 4. Accurate and, where necessary, kept up to date7.7 To comply with this requirement, the Data Controller should:a) take reasonable steps to ensure the accuracy of any Personal Data they obtain;b) ensure that the source of any Personal Data is clear;c) carefully consider any challenges to the accuracy of information; andd) consider whether it is necessary to update the information.Principle 5. Kept in a form, which permits identification of Data Subjects for no longer than is necessary for the purposes for which the Personal Data were collected or for which they are further Processed7.8 The Data Controller is required to retain Personal Data no longer than is necessary for the purpose that they obtained it for. They are expected to ensure that Personal Data is disposed of when no longer needed to reduce the risk that it will become inaccurate, out of date or irrelevant. In practice, it means that Data Controllers will need to:a) review the length of time that Personal Data is kept;b) consider the purpose or purposes they should hold the information for in deciding whether (and for how long) to retain it;c) securely delete information that is no longer needed for this purpose or these purposes; andd) update, archive or securely delete information if it goes out of date.
* Section 1(1) of the ADGM Data Protection Regulations 2015.
8. Requirements for Legitimate Processing of Personal Data*8.1 The conditions for processing Personal Data are set out in the Data Protection Regulations. At least one of the following conditions must be met whenever the Data Controller processes Personal Data:a) The Data Subject has given his written consent to the Processing of that Personal Data;b) Processing is necessary for the performance of a contract to which the Data Subject is party or in order to take steps at the request of the Data Subject prior to entering into a contract;c) Processing is necessary for compliance with any regulatory or legal obligation to which the Data Controller is subject;d) Processing is necessary in order to protect the vital interests of the Data Subject;e) Processing is necessary for the performance of a task carried out in the interests of the ADGM or in the exercise of the Board's, the Court's, the Registrar's or the Regulator's functions or powers vested in the Data Controller or in a Third Party to whom the Personal Data are disclosed; orf) Processing is necessary for the purposes of the legitimate interests pursued by the Data Controller or by the Third Party to whom the Personal Data are disclosed, except where such interests are overridden by compelling legitimate interests of the Data Subject relating to the Data Subject's particular situation.
* Section 2 of the ADGM Data Protection Regulations 2015.
9. Requirements for Processing Sensitive Personal Data*9.1 Due to the nature of Sensitive Personal Data and its vulnerability to be misused, Section 3 of the Data Protection Regulations prohibits the processing of Sensitive Personal Data unless certain criteria are satisfied, including but not limited to:a) Additional written consent to the processing of this kind of Personal Data has been obtained from the Data Subject;b) Processing is necessary for the purposes of carrying out the obligations and specific rights of the Data Controller; orc) Processing is necessary to protect the vital interests of the Data Subject or of another person where the Data Subject is physically or legally incapable of giving his/her consent.9.2 Please refer to the Data Protection Regulations for the full list of criteria.
* Section 3 of the ADGM Data Protection Regulations 2015
10. Notifications to the Registration Authority*Initial Registration as a Data Controller10.1 The registration of any data controller residing within Al Maryah Island is mandatory with the Registration Authority. If you are an entity applying to be registered / incorporated in ADGM and will be processing Personal Data, it is therefore essential for you to complete the Data Protection initial registration form and pay the applicable fee. A Data Controller shall establish and maintain records of any Personal Data Processing operations or set of such operations intended to secure a single purpose or several related purposes.Application for renewal of Registration as a Data Controller10.2 Registration as a Data Controller is valid for one (1) year and can be renewed annually by submitting an “Application for renewal of registration – Data Protection” via the Registration Authority’s Online Solution available at https://www.registration.adgm.com and by paying the applicable fee. Renewal must be done on every anniversary of the company’s incorporation/registration.Appointment and Cessation of Data Processor10.3 A Data Controller must notify the Registration Authority of the appointment or cessation of a Data Processor. This notification can done by completing a Notice of Appointment / Cessation of Data Processor through the Registration Authority’s Online Solution.Change in Particulars of Data Processor10.4 A Data Controller must give notice to the Registration Authority of any change in the particulars of Data Processor. Such notice can be done by completing a Notice of Change of Particulars of Data Processor through the Registration Authority’s Online Solution.Change in business contact details10.5 A Data Controller must notify the Registration Authority in case of any change in its business contact details, for example the data protection contact person’s name, contact number, email, etc.Data Breach Notifications within 72 hours10.6 10.6 An unauthorized intrusion involving Personal Data is serious issue. Organizations must react appropriately when they become aware of breaches involving customer or employee personal information. A Data Controller must notify the Registration Authority in case of any security breach involving Personal Data as soon as possible.10.7 Breach notifications must be filed electronically via the Registration Authority’s Online Solution available at https://www.registration.adgm.com.
* Section 12 of the ADGM Data Protection Regulations 2015.
11. Transfers of Personal Data out of the ADGM*:11.1 Personal Data shall not be transferred to a country or territory outside ADGM unless that country or territory ensures an adequate level of protection for the rights and freedoms of Data Subjects in relation to the processing of Personal Data.11.2 The adequacy of the level of protection ensured by laws to which the Recipient is subject, shall be assessed in the light of all the circumstances surrounding a Personal Data transfer operation or set of Personal Data transfer operations, including, but not limited to:a) the nature of the Personal Data;b) the purpose and duration of the proposed Processing operation or operations;c) if the data do not emanate from the ADGM, the country of origin and country of final destination of the Personal Data; andd) any relevant laws to which the Recipient is subject, including professional rules and security measures.
*Section 4 of the ADGM Data Protection Regulations 2015.
12. Adequate level of protection*12.1 The following jurisdictions have been designated by the Registration Authority as providing an adequate level of protection. This list may be updated from time to time by a publication to such effect on the Registrar's website.Argentina
BulgariaCanada (provided the recipient is subject to the Canadian Personal Information Protection and Electronic Documents Act [PIPED Act])
DenmarkDubai International Financial Centre (DIFC)
Isle of ManItaly
United KingdomUruguayUnited States of America (subject to compliance with the terms of the EU-US Privacy Shield)
* Schedule 3 of the ADGM Data Protection Regulations 2015.
13. Transfers out of the ADGM in the absence of an adequate level of protection*13.1 If an ADGM registered entity intends to transfer Personal Data to a Recipient located in a jurisdiction other than in the table above, the transfer is only possible under certain conditions, including but not limited to:a) the Registration Authority has granted a permit for the transfer or the set of transfers and the Data Controller applies adequate safeguards with respect to the protection of such Personal Data;b) the Data Subject has given his written consent to the proposed transfer;c) the transfer is necessary for the performance of a contract between the Data Subject and the Data Controller or the implementation of pre-contractual measures taken in response to the Data Subject's request;d) the transfer is necessary for the conclusion or performance of a contract concluded in the interest of the Data Subject between the Data Controller and a Third Party;e) the transfer is made to a person established outside the ADGM who would be a Data Controller (if established in the ADGM) or who is a Data Processor, if, prior to the transfer, a legally binding agreement in the form set out respectively, to these Regulations has been entered into between the transferor and Recipient; orf) the transfer is made between one or more members of a Group of Companies in accordance with a global data protection compliance policy of that Group, under which all the members of such Group that are or will be transferring or receiving the Personal Data are bound to comply with all the provisions of these Regulations containing restrictions on the use of Personal Data and Sensitive Personal Data in the same way as if they would be if established in the ADGM.
* Section 5 of the Data Protection Regulations 2015
14. The use of consent for the purpose of data protection14.1 This section highlights key issues that data controllers should be aware of and consider when using the Data Subject’s consent as legal grounds for the processing of Personal Data. For further information about the use of consent in the area of data protection, please contact the ODP.Relying on consent for data protection compliance14.2 Consent of the Data Subject is only one of several legal grounds that make the processing of Personal Data lawful. Although many data controllers view consent as the simplest route to compliance with their data protection obligations, it may not always be sufficient on its own. Having consent only ensures compliance with the requirement to process data fairly and lawfully. Data Controllers must still comply with the remaining data protection principles. This means that the Data Controllers will not be permitted to process Personal Data that are inaccurate or out of date, unnecessary, irrelevant or excessive for the specific purposes for which they were collected, even if the Data Subject had previously consented.14.3 Additionally, Data Controllers may only rely on consent as grounds for lawful processing of Personal Data if the individual Data Subject has a genuine free choice and is subsequently able to withdraw the consent without detriment.Definition of consent14.4 To be valid in a data protection context, consent must be freely given, specific, informed, and unambiguous. The Data Subject must also signify his agreement to the processing of his Personal Data.• Consent will only be deemed freely given if it is voluntary and if Data Subject is able to exercise a real choice, i.e. there is no risk of deception or coercion.• Consent will only be deemed specific if it is given with respect to the type of Personal Data that is processed, and the exact purpose for which it is processed.• Consent will only be deemed an informed consent if the Data Subject was given accurate and full information of all relevant issues in a clear and understandable manner. This should include the nature of the data processed, the purpose of the processing, the recipients of possible transfer, the right of the Data Subject, etc.• Consent will only be deemed unambiguous if the procedure to seek and to give consent leaves no doubt that the Data Subject does in fact agree to that processing. Methods to obtain unambiguous consent include express statements by the Data Subject, online forms that include a visible tick box to be ticked by individuals who agree to their data being processed in a particular way that is explained on the online form or a documents to which that form links, express oral consent, etc.Express or Explicit consent14.5 Express or explicit consent encompasses all situations where individuals are presented with a proposal to agree or disagree to a particular use of disclosure of their personal information and they respond actively to the question orally or in writing, consent which is inferred or implied will not normally meet the requirement of explicit consent.At what stage must consent be obtained?14.6 As a general rule, the Data Controller must obtain consent before processing Personal Data, particularly if it is a pre-condition for lawful processing.What happens When a Data Subject withdraws his consent?14.7 The Data Subject’s withdrawal of consent has no retroactive effect, this means that it will not make previous data processing that was based on the original consent unlawful. However, a withdrawal should, in principle, prevent any future processing of the Data Subject’s data unless the processing can be justified by other legal grounds.
15. Difference between Personal Data and Sensitive Personal Data15.1 The difference between Personal Data and Sensitive Personal Data may in certain instances be difficult to define. For example, names and surnames in connection with addresses and dates of birth are Personal Data rather than Sensitive Personal Data. However, more sensitive details such as ethnicity or religion may be inferred from these details, as frequently particular surnames are associated with a certain religion or ethnicity, or possibly both.15.2 This does not necessarily mean that in order to maintain these names on client databases you would have to comply with the requirements for processing Sensitive Personal Data. But where the data processor is processing such names due to the specific reason that they indicate a certain religion or ethnicity, e.g. to send advertising or marketing materials for items or services that are targeted specifically at persons of this particular religion or ethnicity, then this would constitute the processing of Sensitive Personal Data.15.3 In all instances assumptions about Data Subjects should be made with caution as such assumptions may lead to the collection of inaccurate Personal Data.
16. Glossary of Defined Terms*TermMeaningData:Any information which– (a) is being processed by means of equipment operating automatically in response to instructions given for that purpose; (b) is recorded with the intention that it should be processed by means of such equipment; or (c) is recorded as part of a Relevant Filing System or with the intention that it should form part of a Relevant Filing System.
Personal Data:Any information relating to an identified natural person or Identifiable Natural Person.
Identifiable Natural Person:A natural person who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity.
Data Controller:Any person in the Abu Dhabi Global Market (excluding a natural person acting in his capacity as a staff member) who alone or jointly with others determines the purposes and means of the Processing of Personal Data.
Data Processor:Any person (excluding a natural person acting in his capacity as a staff member) who Processes Personal Data on behalf of a Data Controller.
Data Subject:The natural person to whom Personal Data relate.
Processing:Any operation or set of operations which is performed upon Personal Data, whether or not by automatic means, such as collection, recording, organisation, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction, and "Processed", "Processes" and "Process" shall be construed accordingly.
Recipient:Any person to whom Personal Data are disclosed, whether a Third Party or not, but does not include any person to whom disclosure is or may be made as a result of, or with a view to, a particular inquiry by or on behalf of that person made in the exercise of any power conferred by law.
Sensitive Personal Data:Personal Data revealing or concerning (directly or indirectly) racial or ethnic origin, political opinions, religious or philosophical beliefs, trade‐union membership and health or sex life.
* Section 20 of the ADGM Data Protection Regulations 2015.
DisclaimerThis Guide provides information on completing the annual Data Protection Register Renewal obligation. This is only a guide and should be read together with the relevant legislation, in particular, ADGM Companies Regulations 2015, ADGM Data Protection Regulations 2015 and any other relevant regulations and enabling rules. The Guide only refers to the procedures that need to be completed in relation to the Registrar. It does not cover other requirements such as obtaining relevant permits from third parties, if necessary. Further advice from a specialist professional may be required.For more information, please contact the Office of Data Protection by:Telephone: +971 2 333 8888Email: Data.Protection@adgm.comIn person: 3rd floor, ADGM Building, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi,
United Arab Emirates.Published: 18 February 2020
Decision Procedures, Disqualification and Enforcement Manual
Annex 1 – Warning Notices and Decision Notices
CLR 2015 Description 18(1)(a) When the Registrar is proposing to grant a licence but to exercise its power under section 10(5)(a) or (b) 18(1)(b) When the Registrar is proposing to grant a licence but to exercise its power under section 14(1) in connection with the application for a licence 18(1)(c) When the Registrar is proposing to vary a licence on the application of a licensed person but to exercise its power under section 10(5)(a) or (b) 18(1)(d) When the Registrar is proposing to vary a licence but to exercise its power under section 14(1) in connection with the application for variation 18(3)(a) When the Registrar is deciding to grant a licence but to exercise its power under section 10(5)(a) or (b) 18(3)(b) When the Registrar is deciding to grant a licence but to exercise its power under section 14(1) in connection with the grant of the licence 18(3)(c) When the Registrar is deciding to vary a licence on the application of a licensed person but to exercise its power under section 10(5)(a) or (b) 18(3)(d) When the Registrar is deciding to vary a licence on the application of a licensed person but to exercise its power under section 14(1) in connection with the variation 18(3)(e) When the Registrar is deciding to refuse an application made under this Part 20(1) When the Registrar is proposing to cancel a licensed person’s licence otherwise than at the person’s request 20(2) When the Registrar is deciding to cancel a licensed person’s licence otherwise than at the person’s request 43(1)(a) When the Registrar is proposing to impose a fine on a person (under section 41) 43(1)(b) When the Registrar is proposing to suspend the licence of a licensed person or impose a restriction in relation to the carrying on of a controlled activity by a licensed person (under section 42) 44(1)(a) When the Registrar is deciding to impose a fine on a person under section 41 (whether or not of the amount proposed) 44(1)(b) When the Registrar is deciding to suspend a licence or impose a restriction under section 42 (whether or not in the manner proposed) CR 2020 Description 247 When the Registrar proposes to make a disqualification order against a person. 248 When the Registrar decides to make a disqualification order against a person.
Annex 2 – Supervisory Notices
CLR 2015 Description 19(4) When the Registrar is proposing to vary a licence or to impose or vary a requirement, or varies a licence or imposes or varies a requirement, with immediate effect 19(7)(a) Having considered any representations made by a licensed person, when the Registrar is deciding to vary the licence, or impose or vary the requirement, in the way proposed 19(7)(b) Having considered any representations made by a licensed person, when the Registrar is deciding if the licence has been varied or the requirement imposed or varied, not to rescind the variation of the licence or the imposition or variation of the requirement 19(8)(b) Having considered any representations made by a licensed person, when the Registrar is deciding to vary the licence or requirement in a different way, or impose a different requirement
Annex 3 – Registration Authority Enforcement Process Flow Diagram
Decision Procedures, Disqualification and Enforcement Manual
Chapter 1 Chapter 1 – Introduction
Introduction1.1 This Decision Procedures, Disqualification and Enforcement Manual (the Manual) provides information on the policies, processes and procedures of the Abu Dhabi Global Market (ADGM) Registration Authority in relation to the exercise of its disqualification and enforcement powers and related decision making.1.2 The Manual contains various policies and procedures and is intended to be both a reference for staff of the Registration Authority as well as to provide guidance to persons operating, or intending to operate, as licensed persons in the ADGM. However, the information in this Manual is general and non-binding. Decisions about particular matters or investigations are made based on the specific facts of the case.1.3 The Manual is not an exhaustive source of the Registration Authority’s policy and procedures on the exercise of its disqualification, enforcement and disciplinary powers and related decision making (refer to the ‘Application’ section below for further detail on the scope of this Manual).1.4 This Manual should be read in conjunction with ADGM’s commercial legislation, in particular, the Commercial Licensing Regulations 2015 (CLR 2015) and Companies Regulations 2020 (CR 2020). A link to ADGM’s commercial legislation is available here.
Application1.7 This Manual is relevant to licensed persons in ADGM and other persons including potential applicants, advisors, directors, receivers and promotors of companies, insolvency practitioners and interested parties. The Manual sets out:a. the Registration Authority’s decision making procedure for giving warning notices, decision notices and supervisory notices pursuant to CR 2020 and CLR 2015 (collectively referred to as “statutory notices”);b. the Registration Authority’s policy with respect to exercising own initiative action to vary (narrow) the scope of a commercial licence;c. the Registration Authority’s policy with respect to the imposition of financial penalties under CLR 2015;d. the Registration Authority’s policy with respect to suspending, limiting or restricting a commercial licence; ande. the Registration Authority’s policy with respect to cancellation of a commercial licence.
Purpose1.8 The purpose of this Manual is to provide readers an understanding of how the Registration Authority operates in relation to the exercise of its disqualification and enforcement powers and related decision making, as well as its expectations of licensed persons and directors.1.9 Additionally, this Manual is intended to satisfy the requirements of section 45 and subsection 54(5) of CLR 2015, as well as sections 249 and 258 of CR 2020, where the Registration Authority must publish statements of policy and procedure regarding the matters set out in the ‘Application’ section, above.1.10 The Manual is publically available at www.adgm.com
Updating the Manual1.11 This Manual will be subject to periodic review and updated as appropriate in the light of any amendments to relevant regulations and changes in policy.1.12 In accordance with the relevant provisions of CR 2020 and CLR 2015, the Registration Authority will publish a draft of any proposed alterations or revisions for public consultation, prior to issuing updates to the Manual.
Defined Terms1.13 The terms used in this Manual, have the same meaning in CLR 2015 and CR 2020 (as applicable), unless stated otherwise.
Statutory Notices1.14 The types of statutory notices and related notices, and the principal references to them in CLR 2015 and CR 2020 are set out in Table 1, below.Table 1: Summary of statutory and related notices
Notice Description Regulation reference Warning Notice Gives the recipient details about action that the RA proposes to take and about the right to make representations. Section 47, CLR 2015
Section 251, CR 2020
Decision Notice Gives the recipient details about action that the RA has decided to take. The RA may also give a further decision notice if the recipient of the original decision notice consents. Section 48, CLR 2015
Section 252, CR 2020
Notice of Discontinuance Identifies proceedings set out in a warning notice or decision notice and which are not being taken or are being discontinued. Section 49, CLR 2015
Section 253, CR 2020
Final Notice Sets out the terms of the action that the RA is taking. Section 50, CLR 2015
Section 255, CR 2020
Supervisory Notice Gives the recipient details about action that the RA has taken or proposes to take, for example, to vary a condition. Sections 19(4), 19(7), 19(8)(b) and 54(13) CLR 20151.15 In the Manual the supervisory notice about a matter first given to the recipient is referred to as the “first supervisory notice” and the supervisory notice given after consideration of any representations is referred to as the “second supervisory notice”.1.16 The requirement in subsection 54(5) of CLR 2015 and in section 258 of CR 2020 to publish a statement of procedure for the giving of notices does not extend to the giving of a notice of discontinuance or a final notice. Neither of these notices is a statutory notice for the purposes of the Manual; nor is the decision to give such a notice a statutory notice associated decision.1.17 For a list of actions that require the issuance of a warning or decision notice, please refer to Annex 1.1.18 For a list of actions that require the issuance of a supervisory notice, please refer to Annex 2.
Chapter 2 Chapter 2 – Approach to Enforcement
Introduction2.1 The purpose of this Chapter is to set out how the Registration Authority commences and conducts investigations as well as its approach to the exercise of its enforcement powers and the considerations that apply to the exercise of those powers.
Enforcement Principles2.2 The Registration Authority’s approach to enforcement is based on the following principles:a. Risk Based Approach: the Registration Authority follows a risk-based approach to the monitoring and enforcement of ADGM’s commercial legislation. The risk based approach ensures that the Registration Authority’s resources are focused on those areas that it perceives as posing the greatest risk to the achievement of its objectives.b. Acting Decisively: the Registration Authority acts decisively and swiftly to stop conduct which may cause reputational damage to, or threatens the integrity of, the ADGM, to minimise its effects, and prevent such conduct re-occurring.c. Procedural Fairness and Proportionality: the Registration Authority takes enforcement action in accordance with its policies and procedures. In the exercise of its enforcement powers the Registration Authority acts fairly, transparently and proportionally.d. Transparency: the Registration Authority ordinarily publicises outcomes arising from an enforcement action taken, in order to maintain the integrity of the ADGM and deter contraventions. The commencement and progress on investigations will not generally be publicised.e. Cooperation: the Registration Authority works closely with relevant U.A.E. Government Authorities to ensure the comprehensive, effective and efficient oversight of all non-financial business sectors in ADGM.
Enforcement process2.3 When taking enforcement action, the Registration Authority will generally adopt the enforcement process described in this Manual. The enforcement process consists of the following elements:- Receipt of allegation;- Assessment of allegation;- Investigation;- Decision making;- Warning Notice;- Representations;- Decision Notice; and- Final Notice or ADGM Courts (if appealed).2.4 A diagram of the Registration Authority’s Enforcement Process is set out at Annex 3.
Receipt of allegation2.5 The Registration Authority becomes aware of complaints, allegations of misconduct, suspected contraventions of ADGM’s commercial legislation or matters that warrant investigation or enforcement action in a number of ways, including:a. reports of misconduct or complaints from members of the public or other ADGM firms;b. the Registration Authority’s monitoring operations;c. referrals from the FSRA and other regulatory or law enforcement authorities; andd. reports submitted by licensed persons as required under ADGM’s commercial legislation.
Complaints2.6 The scope of this Manual covers complaints received by the Registration Authority regarding licensed persons, that are made by third parties in relation to ADGM’s commercial legislation, as follows:a. any conduct by or dissatisfaction with a licensed person1;b. any alleged contravention of ADGM’s commercial legislation; orc. any conduct that causes, or may cause, damage to the reputation of the ADGM.2.7 A person wishing to lodge a complaint with the Registration Authority should do so in writing. Complaints can be lodged:a. By emailing the complaint to: email@example.com;b. By posting the complaint to:Registration Authority,
Abu Dhabi Global Market
PO BOX 111999,
Abu Dhabi, U.A.E.; orc. By delivering the compliant to: The Registration Authority, Level 3, ADGM Authorities Building, Al Maryah Island, Abu Dhabi.2.8 When a complaint is received, the Registration Authority will send a written acknowledgement to the complainant which will include the contact details of the relevant team responsible for managing the complaint.2.9 All complaints lodged with the Registration Authority are held in confidence and in accordance with ADGM’s commercial legislation, including the Data Protection Regulations 2015.2.10 However, to assess a complaint properly, the Registration Authority may need to contact third parties including the person who is the subject of the complaint. Where the Registration Authority contacts third persons it will not disclose the identity of the complainant without the prior written consent of the complainant.
1 Except in relation to obligations pursuant to the ADGM Employment Regulations 2019, which are not within the scope of this Decision Procedures, Disqualification & Enforcement Manual.
Referrals2.11 Referrals or allegations of misconduct arise both from other divisions within the Registration Authority, or from the FSRA and other government or regulatory authorities.
Assessment of allegation2.12 The assessment of allegations of suspected misconduct or contraventions of the ADGM’s commercial legislation is a core aspect of the Registration Authority’s monitoring and control function. Every allegation, regardless of the source, is assessed to determine whether an investigation should take place.2.13 The Registration Authority’s Monitoring & Enforcement Division is responsible for assessing complaints and allegations of misconduct, and the Division Head decides whether a matter should be investigated.2.14 The Registration Authority may request further information from the complainant or source of an allegation to help it assess the allegation. The licensed person that is the subject of an allegation may also be contacted to obtain further information.2.15 At the assessment stage the Registration Authority generally obtains information voluntarily. However, as per section 29 of CLR 2015, the Registration Authority does have non-investigative information gathering powers, which may be used at the allegation assessment phase if necessary.2.16 To ensure consistency and transparency in determining whether to commence an investigation, the Registration Authority considers allegations against certain criteria. The application of the criteria depends on the particular circumstances of a matter and include:a. whether the Registration Authority has jurisdiction in relation to the alleged misconduct;b. the seriousness of the alleged misconduct, its duration and whether it is ongoing;c. the nature of the alleged misconduct including whether it was deliberate, reckless, routine or minor;d. the effect of the misconduct, including whether it resulted in a benefit to a person, or detriment or loss to others;e. the compliance history of the licensed person, and likelihood of cooperation;f. the likelihood of the alleged misconduct being proven, and if so, the remedies available;g. the person’s conduct after the alleged misconduct, including whether they brought it to the Registration Authority’s attention;h. whether another authority has sought the Registration Authority’s cooperation, or is able to take its own action against the alleged misconduct;i. whether the alleged misconduct is by nature a commercial dispute and if so, whether the complainant is able to take their own action (and has the resources) to seek relief; andj. whether the alleged misconduct undermines or damages the integrity, transparency, confidence in, or reputation of, the ADGM.2.17 Not every allegation of misconduct received by the Registration Authority will result in an investigation. This may occur where, for example, the facts and contraventions are not in dispute and the licensed person has confirmed at an early stage that it is willing to resolve an issue by way of settlement; or where the matter can be investigated sufficiently without the need to exercise formal powers beyond the Registration Authority’s information gathering powers.2.18 Based on the assessment of the alleged misconduct against the criteria set out at paragraph 2.16 (above), the Head of the Registration Authority’s Monitoring & Enforcement Division will determine what action will be taken or recommended to the relevant decision maker.2.19 The range of actions that may follow the assessment of an allegation of misconduct vary depending on the facts and circumstances and may include:a. taking no further action;b. referring the alleged misconduct to another authority;c. commencing an investigation;d. taking immediate enforcement action; ore. taking other action such as a private warning.
Investigation2.20 Following the assessment of an allegation, the Registration Authority may decide to commence an investigation.2.21 Where the Registration Authority decides to commence an investigation it will not generally disclose to any party that an investigation has commenced or is ongoing, except for the Person who is the subject of an investigation, unless the disclosure is likely to prejudice or frustrate the investigation.2.22 Following a decision to commence an investigation, the Registration Authority will decide whether it is appropriate to appoint investigators under sections 30 and 31 of CLR 2015.2.23 Where the Registration Authority’s Monitoring & Enforcement Division decides to investigate a matter it may exercise the Registration Authority’s power to require information.
Information Gathering Powers2.24 Under section 29 of CLR 2015, the Registrar may, by written notice given to a licensed person, require him to:a. provide specified information or information of a specified description; orb. produce specified documents or documents of a specified description.2.25 The Registration Authority will provide a reasonable period for compliance with the requirement to give information. The period of time will depend on the circumstances of a particular case. Where the giving of prior notice may prejudice a case, the Registration Authority may require the giving of information immediately.2.26 Section 29 also provides the Registrar with powers to require any information provided to be verified and any document to be authenticated in such manner as it requires.2.27 This information gathering power applies to licensed persons (including a person who was at any time a licensed person but who has ceased to be a licensed person). However, the Registration Authority may also impose requirements on a person who is connected with a licensed person.2.28 A connected person is connected to a licensed person if he is or has at any relevant time been a member of the licensed person’s group, or is a controller of the licensed person, or is a member of a partnership of which the licensed person is a member.
Appointment of Investigators - general2.29 The Registrar may decide to appoint investigators if it appears that there is good reason for doing so. In determining whether there is “good reason” in a particular case, the Registration Authority takes into consideration the same assessment criteria that it applies when considering allegations of misconduct (see ‘Assessment of allegations’ section, above).2.30 Section 30 of CLR 2015 specifies that an investigator may conduct an investigation into the following:a. the nature, conduct or state of the business of the licensed person;b. a particular aspect of that business; orc. the ownership or control of a licensed person.2.31 In addition, the investigator appointed may, by written notice given to a person, extend the scope of the investigation to include the affairs of related businesses of the person.2.32 Furthermore, the power conferred under section 30 of CLR 2015 also includes that an investigation may look into the business carried on by a former licensed person or the ownership or control of a former licensed person.2.33 Following the appointment of an investigator, the Registrar may by direction given to the investigator, extend the investigation to additional matters.
Appointment of investigators – particular cases2.34 Section 31 of CLR 2015 allows the Registration Authority to appoint investigators where it appears to it that there are circumstances suggesting that a person may have committed a contravention of any enactment or subordinate legislation where such contravention is punishable by a fine.
Notice of appointment of investigators2.35 Section 32(2) of CLR 2015 requires the Registration Authority to give written notice of the appointment of an investigator (under section 30 or 31) to the person who is the subject of an investigation. This written notice must specify the provisions under which the investigator is appointed and the reason for his appointment.2.36 However, where the Registration Authority believes that the notification of an investigation would be likely to result in the investigation being frustrated, the Registration Authority may decide not to give it.2.37 Section 32(7) of CLR 2015 enables the Registrar to control the scope and conduct of the investigation by issuing directions to the investigator.2.38 Where there is a subsequent material change in the scope or conduct of an investigation and it is likely to significantly prejudice the person(s) subject to the investigation if not made aware of the change, the Registration Authority must give the person(s) written notice of the change.2.39 Where the Registration Authority decides to discontinue an investigation without taking any action, the Registration Authority is not required to notify the person(s) subject to the investigation that it is being discontinued. However, in cases where person(s) have been notified that they are subject to an investigation and the Registration Authority has decided to discontinue the investigation, it generally will confirm this to the person(s) concerned when considered appropriate to do so.
Investigation powers2.40 An investigator appointed under sections 30 and 31 of CLR 2015 has additional powers over and above the information gathering powers described in paragraphs 2.24 to 2.28 above. Investigators’ powers are set out at sections 33 and 34 of CLR 2015.2.41 In support of an investigation, an investigator may require the person who is the subject of an investigation (or any connected person) to:a. attend before the investigator at a specified time and place and answer questions; orb. otherwise to provide such information as the investigator may require.2.42 Further, an investigator may also require any person to produce any specified documents or documents of a specified description.
Enforcement of information gathering and investigative powers2.43 The Registration Authority will enforce compliance with its information gathering and investigative powers where required by seeking orders in the ADGM Courts.2.44 Section 37 of CLR 2015 allows the Registration Authority to apply to the Court for the issuance of a search warrant in order to enforce compliance with information requirements. An application to the Court will be made in circumstances where there are reasonable grounds for believing that either:a. a person on whom an information requirement has been imposed has failed to comply with it; andb. the required information or documents are located on the premises specified in the warrant;orc. the premises specified on the warrant is the premises of a licensed person;d. the premises contains information or documents on which an information requirement could be imposed; ande. if such a requirement were to be imposed it would not be complied with, or the documents or information would be removed, tampered with or destroyed.2.45 A warrant under section 37 of CLR 2015 authorizes the person executing it to enter the premises specified in the warrant, to search the premises and take possession of any documents or information appearing to be of a kind in respect of which the warrant was issued, to require any person on the premises to provide an explanation of any document or information appearing to be relevant, and to use such force as may reasonably be necessary.
Retention and return of documents2.46 Any document of which possession is taken under section 37 may be retained so long as it is necessary to retain it.
Obstruction of the Registration Authority2.47 The Registration Authority expects that licensed persons and individuals that are subject to investigation to cooperate fully with the Registration Authority.2.48 However, as per section 39 of CLR 2015, if a person fails to comply with a requirement imposed under the Registration Authority’s information gathering and investigation powers, the person imposing the requirement may certify that fact in writing to the ADGM Courts. If the Court is satisfied that the person has failed to comply, it may treat the person as if he were in contempt.2.49 Furthermore, conduct intended to obstruct the Registration Authority in exercising its investigative powers includes:a. falsifying, concealing, destroying or otherwise disposing of documents;b. causing or permitting the falsification, concealment, destruction or disposal of documents;c. providing false or misleading information; ord. recklessly providing information which is false or misleading.2.50 Any person who carries out the conduct set out in paragraph 2.49 commits a contravention under sections 39(3) and 39(4) of CLR 2015 and shall be liable to a fine. Where such contraventions are committed the Registration Authority will, take action accordingly, which may include additional action in respect of licensed persons.2.51 Any person who intentionally obstructs the exercise of any rights conferred by a warrant, commits a contravention under section 39(6) of CLR 2015 and the Registration Authority will, where appropriate, take action accordingly.
Conclusion of an investigation2.52 The Registration Authority will conclude an investigation when it determines to take no further action in response to an allegation or suspected contravention of the commercial legislation subject of the investigation, or all remedies imposed as a result of an investigation are concluded and fulfilled.
Chapter 3 Chapter 3 – Decision Making
Introduction3.1 The purpose of this Chapter is to set out the Registration Authority’s approach and procedure for making decisions which give rise to an obligation to give a statutory notice – i.e. a warning notice, decision notice, final notice, supervisory notice or notice of discontinuance.3.2 The types of decisions which give rise to an obligation to issue a warning notice, decision notice and final notice are explained in Chapter 4 (Enforcement) and Chapter 7 (Disqualification) and are listed in Annex 1 to this Manual. They include, for example, decisions made by the Registration Authority to make a disqualification order, impose a fine and to exercise its own-initiative action to cancel or suspend a licence.3.3 The types of decisions which give rise to an obligation to issue a supervisory notice are explained in Chapter 6 (Own-Initiative Action) and are listed in Annex 2 to this Manual. They include decisions made by the Registration Authority to vary or impose a requirement on a licence.3.4 The Registration Authority’s exercise of certain powers may affect the rights, interests and liabilities of a person or persons on whom those powers are being exercised. As a result, decisions made by the Registration Authority to exercise those powers require the Registration Authority to give an affected person notice of the proposed action and offer them the right to make representations before a final decision is made. The procedures for these types of decisions is covered in this Chapter.3.5 The person subject to a decision notice or supervisory notice may have the right to refer the matter to the ADGM Courts.
The Decision Maker3.6 The principal decision maker at the Registration Authority is the Registrar. The Registrar may delegate his decision-making power to a member of senior management of the Registration Authority. For the purposes of this Chapter, a reference to the Registrar is also a reference to a delegated decision maker, if any.3.7 In accordance with section 54(2) of CLR 2015, the Registrar will ensure that a decision to issue a supervisory notice, warning notice or decision notice will be made by (i) a person who was not directly involved in establishing the evidence on which such decision will be based, or (ii) two or more persons, of which one person was not directly involved in establishing such evidence.3.8 However, the Registrar may permit a person who established evidence to also issue a supervisory notice, if the Registrar deems it necessary in order to advance one or more of the RA’s objectives and such person is an Executive Director of the Registration Authority.3.9 The Registrar makes a decision as to whether to give a statutory notice.
General procedures3.10 The Registrar follows the procedure described in this Chapter to enable him to determine matters under consideration fairly and efficiently.3.11 In each case the Registrar makes decisions based on all relevant information available to him by applying the relevant statutory tests, having regard to the context and nature of the matter, that is, the relevant facts, law and the Registration Authority’s priorities and policies.3.12 The Registration Authority will make and retain appropriate records of those decisions, including records of meetings and the representations (if any) and materials considered by the Registrar.
Warning notices and first supervisory notices3.13 A warning notice is issued in relation to proposed disciplinary action such as making a disqualification order, imposing a fine, suspending a licence or imposing a restriction on the carrying on of a controlled activity by a licensed person. Please refer to Annex 1 to this Manual for further information.3.14 Supervisory notices are issued in relation to supervisory actions, namely varying a licence or imposing or varying a requirement. Please refer to Annex 2 to this Manual for further information.3.15 If Registration Authority staff consider that action is appropriate, they will make a recommendation to the Registrar that a warning notice or a supervisory notice should be given.3.16 If the Registrar considers it relevant to his consideration, he may ask Registration Authority staff to explain or provide the following:a. additional information about the matter (which Registration Authority staff may seek by further investigation); orb. further explanation of any aspect of the Registration Authority staff recommendation or supporting documents.3.17 The Registrar will consider whether the circumstances warrant a warning notice or supervisory notice being issued, having regard to the following considerations:a. whether the material on which the recommendation is based is adequate to support it – the Registrar may seek additional information about or clarification of the recommendation from Registration Authority staff; andb. whether the recommendation is appropriate in the circumstances.3.18 If the Registrar decides that he should give a warning notice setting out details of the action he proposes to take, then he will:a. ensure that the notice complies with the relevant provisions of CLR 2015 or CR 2020 (as applicable);b. determine:i. the period for making representations (which may not be less than 14 business days);ii. whether to give a copy of the notice to any third party and, if so, the period for the third party to make representations; andc. ensure that the relevant Registration Authority staff make appropriate arrangements for the notice to be given.3.19 If the Registrar decides that he should give a first supervisory notice, then he will:a. ensure that the notice complies with the relevant provisions of CLR 2015;b. determine the period for making any representations; andc. ensure that the relevant Registration Authority staff make appropriate arrangements for the notice to be given.
Representations3.20 A warning notice or first supervisory notice will specify the time allowed for the recipient to respond in writing to the Registrar.3.21 The recipient of a warning notice or a first supervisory notice may request an extension of the time allowed for making representations. The request should be made within seven business days of the notice being given.3.22 If a request for an extension of time is made, the Registrar will decide whether to allow the extension, and if so, how much additional time is to be allowed for making representations. In reaching his decision the Registrar will take into account all relevant factors including any factors outside the control of the recipient of the notice that would impact on their ability to respond within the period set out in the warning notice or first supervisory notice, as well as any comments from the relevant Registration Authority staff.3.23 If the recipient of a warning notice or a first supervisory notice indicates that he wishes to make oral representations, the Registrar will fix a date or dates for a meeting at which the Registrar will receive those representations. The Registrar will ensure that the meeting is conducted so as to enable:a. the recipient of the notice to make representations;b. the relevant Registration Authority staff to respond to those representations;c. the Registrar to raise with those present any points or questions about the matter; andd. the recipient of the notice to respond to any points made by Registration Authority staff or the Registrar.3.24 The Registrar may ask the recipient of the notice or Registration Authority staff to limit their representations or response in length or to particular issues arising from the warning notice or first supervisory notice.3.25 The recipient of the warning notice or supervisory notice may elect to be legally represented at the meeting, but this is not a requirement.3.26 Where the Registrar deems appropriate, he may ask those present at the meeting to provide additional information in writing after the meeting. If the Registrar does so, he will specify the timeframe within which that information is to be provided.3.27 Registration Authority staff responsible for making a recommendation to the Registrar will continue to assess its appropriateness in the light of any new information or representations they receive and any material change in the facts or circumstances relating to a particular matter.
Decision notices and second supervisory notices3.28 If the Registrar receives no response or representations within the period specified in a warning notice, the Registrar may regard as undisputed the matters in the notice and a decision notice will be given accordingly.3.29 If the Registrar receives no response or representations within the period specified in a first supervisory notice, the Registrar will not give a second supervisory notice. If the action under the first supervisory notice:a. took effect immediately, or on a specified date which has already passed, it continues to have effect (subject to any proceedings on a referral to the ADGM Courts);b. was to take effect on a specified date which is still in the future, it takes effect on that date (subject to any proceedings on a referral to the ADGM Courts); andc. was to take effect when the matter was no longer open for review, it takes effect when the period to make representations (or for referral to the ADGM Courts, if longer) expires, unless the matter has been referred to the Court.3.30 In any case in which representations are made, the Registrar will consider whether it is right in the circumstances to give the decision notice or a second supervisory notice (as appropriate). In doing so, the Registrar will:a. consider all material before him;b. consider all representations made (whether written, oral or both) and any comments by Registration Authority staff or others in respect of those representations; andc. decide whether to give the notice and the terms of any notice given.3.31 If the Registrar decides to give a decision notice or a second supervisory notice, the Registrar will ensure that:a. the notice complies with the relevant provisions of CLR 2015 or CR 2020 (as applicable);b. the notice includes a summary of the key representations made and how they have been taken into account; andc. the Registration Authority staff make appropriate arrangements for the notice to be given.3.32 If applicable, the Registrar will determine whether the Registration Authority is required to give a copy of the notice to a third party and, if so, facilitate the giving of the notice.
Notice of Discontinuance3.33 If the Registrar decides not to take the action proposed in a warning notice, or to which a decision notice given by it relates, the Registrar will issue a notice of discontinuance to the person to whom the warning notice or decision notice was given.
Final Notices3.34 If the Registrar has given a person a decision notice and the period for referral to the ADGM Courts lapses, the Registrar will issue a final notice in accordance with the relevant provisions of CLR 2015 or CR 2020 (as applicable).
Right to refer matters to the Court3.35 A decision to give a decision notice or supervisory notice may lead to a referral to the Court under CLR 2015 or CR 2020 (as applicable).
Chapter 4 Chapter 4 – Enforcement
Introduction4.1 The purpose of this Chapter is to set out the Registration Authority’s approach to the exercise of its enforcement powers and the considerations that it applies.4.2 The Registration Authority has several remedies available to it, in order to achieve its objectives. This includes, the imposition of fines, the imposition of limits or restrictions on a licence, and suspending a licence to carry on controlled activities.4.3 The Registration Authority will follow the policy and procedures set out in this Manual in relation to the use of enforcement powers. The Registration Authority does not have criminal jurisdiction, hence, should criminal conduct be identified, it will be referred to the relevant law enforcement agency.
Fines4.4 This section sets out the Registration Authority’s approach in relation to the imposition of fines under section 41 of CLR 2015.4.5 Under section 41(1) of CLR 2015, if the Registration Authority considers that a licensed person has contravened a relevant requirement imposed on the person, it may impose on him a fine in respect of the contravention.4.6 Under section 41(2) of CLR 2015, if the Registration Authority considers that a person has committed a contravention of an enactment or subordinate legislation, it may impose on him a fine of an amount not exceeding the maximum specified for such contravention in the relevant enactment or subordinate legislation.
Purpose of fines4.7 The purpose of imposing fines on persons is to promote compliance with the Regulations and achieve the Registration Authority’s objectives by:a. penalising persons who have committed contraventions;b. deterring persons that have committed or may commit similar contraventions; andc. depriving persons of any benefit they may have gained as a result of their contraventions.
Determining the appropriate amount of a fine4.8 Under section 45(2) of CLR 2015, to determine the amount of a fine to be imposed under section 41, the Registration Authority must have regard to the following factors:a. the seriousness of the contravention in question in relation to the nature of the relevant requirement or provision of the Regulations contravened;b. the extent to which the contravention was deliberate or reckless; andc. whether the licensed person against whom action is to be taken is an individual.4.9 In addition to having regard to the factors in paragraph 4.8 above, where the Registration Authority decides that a fine is appropriate, further considerations may also be relevant to determining the amount of that fine. The following paragraphs set out a non-exhaustive list of factors and considerations that the Registration Authority will consider to determine the amount of fines.
Seriousness4.10 The Registration Authority has regard to the seriousness of the contravention in relation to the nature of the requirement contravened. In considering the seriousness of the contravention, the following list of factors may be relevant:a. the duration and frequency of, and the period that has elapsed since, the contravention;b. if the person is (or was) a licensed person – whether the contravention happened because:i. of weak corporate governance arrangements;ii. of absent or weak policies and procedures regarding relevant licence conditions and/or requirements; oriii. inadequate resources (including staffing);c. if the person is (or was) a licensed person and the firm’s shareholders, officers or senior management were aware of the contravention – whether they took any steps to stop or prevent the contravention, the adequacy of any steps and when the steps were taken;d. the effect or potential effect of the contravention on the following:i. the integrity, transparency and efficiency of the ADGM; andii. confidence in the ADGM by participants and potential participants of the ADGM; andiii. the reputation of the ADGM;e. any loss or risk of loss caused to clients, customers and other affected people;f. whether the contravention had an effect on particularly vulnerable people, whether intentionally or otherwise;g. the scope for any potential financial crime to be caused or facilitated by the contravention; andh. whether publically available guidance or published materials raised concerns about the conduct constituting the contravention.
Deliberate or reckless4.11 The Registration Authority has regard to the extent to which the contravention was deliberate or reckless. If the contravention was deliberate or reckless, the Registration Authority is likely to impose a larger fine on the person than would otherwise be the case.4.12 In this regard, the Registration Authority considers the following:a. whether the breach was intentional, in that the person concerned intended or foresaw that their actions would or might result in a contravention;b. whether the person concerned knew that their actions were not in accordance with internal procedures;c. whether any steps were taken in an attempt to conceal the misconduct;d. whether the contravention was committed in such a way as to avoid or reduce the risk that the contravention would be discovered;e. whether the decision to commit the contravention was influenced by a belief that it would be difficult to detect;f. whether the contravention occurred more than once, and if so, how often; andg. whether reasonable professional advice was obtained before or during the contravention and was not followed or responded to appropriately. Obtaining professional advice does not remove a person’s responsibility for compliance with relevant requirements.4.13 Factors tending to show that a contravention was reckless include:a. the person knowing that there was a risk that their actions or inaction could result in a contravention but failing to mitigate that risk adequately; andb. the person knowing that there was a risk that their actions or inaction could result in a contravention but failing to check if they were acting in accordance with relevant internal procedures.
Whether the person is an individual4.14 The Registration Authority has regard to whether the person on whom the fine is to be imposed is an individual. In determining the amount of a fine to be imposed on an individual, the Registration Authority takes the following into account:a. that individuals may not have the resources of a firm;b. that enforcement action may have a greater effect on an individual than on a firm; andc. that it may be possible to achieve effective deterrence by imposing a smaller penalty on an individual than on a firm.4.15 The Registration Authority also considers whether the person’s position or responsibilities are such as to make a contravention committed by the person more serious and whether a larger fine should therefore be imposed.
Effect on third parties4.16 The Registration Authority has regard to the effect of the contravention on clients, customers or third parties.4.17 The Registration Authority considers a contravention to be more serious where it results in a loss, or the risk of loss, to clients, customers or third parties or if it had an effect on particularly vulnerable people, whether intentionally or otherwise.
Deterrence4.18 The Registration Authority’s policy is that deterrence is one of the main purposes of taking enforcement action. That is, deterring persons who have committed contraventions from committing further contraventions, and deterring others from committing similar contraventions.4.19 The Registration Authority has regard to the need to ensure that any fine imposed has the appropriate deterrent effect. In this regard, the Registration Authority considers the extent to which it is necessary to impose a fine of an appropriate amount in order to ensure that the deterrent effect of the action is not diminished.
Financial gain or loss avoided4.20 To the extent possible, the Registration Authority will seek to deprive a person who commits a contravention of the amount of any benefit gained or loss avoided by that person as a result of their contravention.4.21 Accordingly, if the person has made a profit or avoided a loss, the Registration Authority will impose a fine consistent with the principle that a person who commits a contravention should not benefit from the contravention, subject to the prescribed maximum penalty under CLR 2015.4.22 Further, in taking into consideration the amount of any financial advantage gained by a person who committed a contravention, the Registration Authority has regard to the need to ensure that the amount of the fine acts as a deterrent to the person (and to others).
Subsequent conduct4.23 The Registration Authority takes into consideration the conduct of the person after the contravention in determining the amount of the fine, including, for example, the following:a. the conduct of the person in bringing (or failing to bring) the contravention quickly, effectively and completely to the attention of the Registration Authority;b. the degree of cooperation the person showed during the investigation of the contravention;c. any remedial steps the person has taken in relation to the contravention, including whether they were taken on the person’s own initiative or that of the Registration Authority. Remedial steps might include, for example:i. correcting any misleading statement or impression;ii. recruiting new staff to enhance or increase resources;iii. ascertaining whether clients or customers suffered loss and compensating them if they have;iv. if appropriate, taking disciplinary action against, or providing additional training for, staff involved in the contravention; andv. introducing or improving policies, procedures or systems and controls to reduce the likelihood of the contravention arising in future; andd. whether the person has complied with any requirements or decisions of the Registration Authority in relation to the contravention.4.24 That the person has fully cooperated in the investigation of the contravention by the Registration Authority is a consideration tending to reduce the amount of the fine.4.25 Generally, a licensed person is given recognition for being open and cooperative with the Registration Authority. The assessment of the level of cooperation offered by a person depends on the particular circumstances of the matter. A licensed person can demonstrate cooperation in many ways including, promptly reporting a contravention, taking responsibility for the matter and being open and communicative with the Registration Authority, taking steps to limit damage and being proactive in bringing the matter to an early conclusion.
Disciplinary record and compliance history4.26 The Registration Authority takes into consideration a person’s disciplinary record and compliance history in determining the amount of the fine, including, for example:a. the person’s general compliance history;b. whether the Registration Authority has previously taken any disciplinary action resulting in adverse findings against the person;c. whether the Registration Authority has previously taken action against the person under sections 13 or 14 of CLR 2015 (own initiative action); andd. whether the Registration Authority has previously given the person a notice under section 43 (fines, suspensions and restrictions).4.27 The disciplinary record of a person could lead to the Registration Authority imposing a larger fine than otherwise might be appropriate: for example, the fine might be increased if the person has committed similar contraventions in the past or been warned about similar misconduct. In assessing the relevance of the person’s disciplinary record and compliance history, generally the older the contravention is, the less significant it is regarded as being.
Maximum penalty4.28 The CLR 2015 prescribes the maximum level of financial penalty for contraventions of relevant requirements under the Regulations. The prescribed levels refer to the standard fines scale set out in the Commercial Licensing Regulations 2015 (Fines) Rules 2020. In determining the appropriate amount of a fine, notwithstanding all other considerations, the Registration Authority shall not exceed the prescribed maximum penalty per contravention.
Settlement discount4.29 In the event that the Registration Authority and the person concerned agree on the action to be taken in a particular case, it is possible that any fine imposed on the person will be reduced to take account of the settlement that has been reached.4.30 However, any settlement discount applied relates only to the punitive element of the fine and not to an amount included to deprive the person concerned of any profit made, or loss avoided, as a result of their contravention or to any restitution or compensation payable under the terms of the settlement.
Serious financial hardship4.31 Where a person claims that payment of a fine proposed by the Registration Authority will cause them serious financial hardship, the Registration Authority will consider whether to reduce the proposed fine based on the following considerations:a. the person provides verifiable evidence that payment of the proposed fine would cause them to suffer serious financial hardship; andb. the person provides full and timely disclosure of the verifiable evidence and cooperates fully with any enquiries the Registration Authority may make about their financial position.4.32 It is the responsibility of the person concerned to satisfy the Registration Authority that payment of the proposed fine would cause them to suffer serious financial hardship. It is not the Registration Authority’s responsibility to establish that the person has the means to pay the proposed fine.4.33 However, in some cases, even where a person has demonstrated that a proposed fine would cause serious financial hardship, the Registration Authority may consider the contravention to be so serious that it is not appropriate to reduce the proposed fine.4.34 Such circumstances include, providing false or misleading information to the Registration Authority, deliberate and repeated breaches of licensing requirements or where previous action by the Registration Authority has not been successful in bringing about a change in behavior by the person involved.
Suspend, Limit or Restrict Licence4.35 This section sets out the Registration Authority’s policy in relation to it suspending a licence to carry on a controlled activity or imposing limitations or restrictions in relation to the carrying on of a controlled activity by the person, under section 42 of CLR 2015.4.36 Under section 42(1) of CLR 2015, if the Registration Authority considers that a licensed person has contravened a relevant requirement imposed on the person, it may:a. suspend, for such period as it considers appropriate, any licence which the person has to carry on a controlled activity; orb. impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the carrying on of a controlled activity by the person as it considers appropriate.4.37 Section 42(2) of CLR 2015 states that the period for which a suspension or restriction is to have effect may not exceed 12 months.
Scope of suspension or restriction4.38 Under section 42(3), a suspension may relate only to the carrying on of an activity in specified circumstances.4.39 Under section 42(4), a restriction may, in particular, be imposed so as to require the person concerned to take or refrain from taking, specified action.4.40 Having regard to the circumstances of the case, the Registration Authority may suspend or restrict a licensed person from carrying on a controlled activity. The Registration Authority considers that suspending a licence to carry on controlled activities is more restrictive and therefore more serious than imposing a restriction or limitation in relation to the carrying on of a controlled activity.4.41 Whether the Registration Authority imposes a suspension or restriction will depend on the facts of the matter, such as risk of harm to clients or customers, the need to protect the integrity of the ADGM and to ensure the confidence of its participants.
Determining the period for a suspension or restriction4.42 Under section 45(2) of CLR 2015, to determine the period for which a suspension or restriction is to have effect, the Registration Authority must have regard to the following factors:a. the seriousness of the contravention in question in relation to the nature of the relevant requirement or provision of the Regulations contravened;b. the extent to which the contravention was deliberate or reckless; andc. whether the licensed person against whom action is to be taken is an individual.4.43 In this regard, the considerations that the Registration Authority will consider are set out in paragraphs 4.10 to 4.27 (above).
Suspensions, restrictions and other action4.44 In appropriate cases, the Registration Authority may take other action against a person such as imposing a fine, in addition to imposing a suspension or restriction in relation to the same contravention.
Chapter 5 – Settlement
Introduction5.1 This Chapter sets out the Registration Authority’s policy regarding settlement of enforcement actions.5.2 Settlement of an enforcement action has many advantages for both the Registration Authority and the person who is the subject of the action. Settlement avoids the need for further disciplinary proceedings and is thus time and resource effective for both the Registration Authority and persons who are the subjects of enforcement actions.5.3 Settlement discussions may be initiated by either the Registration Authority or the person concerned. Generally, the Registration Authority publicises the details of the settlement of an enforcement or disciplinary action.
Approach to settlement5.4 Under a settlement, a person against whom enforcement action is being or may be taken agrees to the imposition of a financial penalty or other enforcement outcome and to waive any rights to contest the financial penalty or other enforcement outcome. A settlement requires the agreement of both the Registration Authority and the person. A settlement is intended to bring the matters subject to the settlement to conclusion.5.5 Before engaging in settlement discussions, the Registration Authority satisfies itself that taking enforcement action is in the public interest and appropriate in the circumstances of the matter.5.6 The terms of the settlement of an enforcement action vary depending on the circumstances of the matter. The Registration Authority settles only if the agreed terms of the settlement result in an acceptable policy and regulatory outcomes.
Timing5.7 Settlement discussions can be held at any stage of the enforcement process, including at an early stage, provided the Registration Authority is satisfied that it understands the full nature and extent of the misconduct or issue. Therefore, settlement discussions may be more likely to occur following the issuance of a warning notice. This is to enable the person to understand the Registration Authority’s concerns and what it considers to be the appropriate action.5.8 However, the Registration Authority is unlikely to settle a matter through negotiation after a decision notice has been given to the person.5.9 Where the Registration Authority decides to exercise a disciplinary power, it must give the person a decision notice. Accordingly, the Registration Authority must give the person a decision notice where the terms of a settlement include disciplinary action. A person who receives a decision notice has the right to refer the matter to the ADGM Courts. However, if settlement has been reached, the Registration Authority expects the person concerned to waive their referral rights.5.10 Settlement discussions should also take place in a timely and diligent manner. The Registration Authority will set appropriate timetables for settlement discussions to ensure that the discussions do not delay or shift focus away from the formal enforcement process. Settlement discussions are held on a “without prejudice” basis, unless the parties agree otherwise. “Without prejudice” means that a communication between negotiating parties will not be admissible in the ADGM Courts and cannot be adduced in evidence against the interest of the party that made it, if the without prejudice privilege is attached to such communication.
Decisions regarding proposed settlements5.11 If settlement discussions between Registration Authority staff and the person concerned result in a proposed settlement, the Registration Authority’s staff will document the proposed settlement and refer the matter to the Registration Authority decision maker.5.12 Only a formal decision by the Registration Authority decision maker binds the Registration Authority to a settlement.5.13 Once the decision maker receives a recommendation from Registration Authority staff the decision maker decides whether to (a) settle the matter, (b) recommend other terms, or (c) decline to settle the matter.
Terms of settlements5.14 The Registration Authority only accepts settlements where the person subject to the enforcement action accepts that it contravened relevant requirements and admits relevant facts regarding those contraventions in the settlement. When it agrees to the terms of a settlement the Registration Authority ensures that those terms are consistent with the Registration Authority’s objectives.
Fines and early settlement5.15 Where the Registration Authority considers that a person has been open and cooperative and has demonstrated a commitment to settling an enforcement matter as early as possible, the person should be given appropriate recognition.5.16 Where a fine is imposed on a person as a result of an early settlement, the amount of the fine payable by the person should generally be less than if the fine had been imposed on the person at a later stage in the enforcement process. Accordingly, the Registration Authority may reduce the fine payable by a person to reflect the stage of the enforcement process at which settlement was reached.5.17 Where a fine includes an element to deprive a person of any profits they made or losses they avoided as a result of their contravention, there is no reduction in respect of that part of the fine. Similarly, no reduction will be applied to any restitution or compensation payable to clients or customers under the settlement agreement.5.18 Where the Registration Authority is prepared to agree to a discounted fine through settlement, the settlement agreement will contain a statement as to the appropriate penalty and any discount agreed. In any public statements regarding the settlement, the Registration Authority will disclose the appropriate fine and the amount that is actually payable as a result of the settlement.
Publicity5.19 The Registration Authority generally publicises the outcome of a settlement, including the names of the persons who were subjects of the enforcement action and the key terms of the settlement. Such a public statement ensures transparency and accountability in the settlement of enforcement actions.5.20 However, the Registration Authority is mindful of the sensitivity of confidential information that may be provided as part of settlement negotiations and takes this into consideration when deciding on the information to be published.
Third party rights5.21 Where a decision notice has been given to a person following the settlement of an enforcement action with that person, the Registration Authority is required under section 52 of CLR 2015 to consider the effect of the decision on third party rights.5.22 Generally, if a decision notice identifies a third party a copy of the notice must be given to the third party unless it is impractical to do so. Third parties have the right to make representations and ultimately can refer the matter to the ADGM Courts.5.23 It is therefore important that any settlement reached with the Registration Authority takes account of the position of any third party.
Chapter 6 – Own-Initiative Action
Introduction6.1 The purpose of this Chapter is to set out the Registration Authority’s policy on the exercise of its powers to take action on its own-initiative.6.2 The CLR 2015 enables the Registration Authority to take the following actions on its own-initiative:a. vary a license to carry on controlled activities;b. cancel a license to carry on controlled activities; orc. impose requirements on a licence to carry on controlled activities.6.3 Circumstances may arise as part of the Registration Authority’s supervision of a licensed person, or issues may arise during an enforcement investigation, which prompt the Registration Authority to consider taking own-initiative action.6.4 Additionally, where a licensed person applies for a variation of a licence, the Registrar may impose on that person such requirements, taking effect on the variation of the licence, as the Registration Authority considers appropriate.6.5 The Registration Authority exercises its power to take own-initiative action when it considers it appropriate to do so in pursuit of one or more of its statutory objectives. The decision whether to take own-initiative action is based on the information available to the Registration Authority at the time the decision is made on a case by case basis.
Variation or cancellation of licence6.6 Section 13 of CLR 2015 details the power of the Registrar to vary or cancel a licence to conduct controlled activities on its own-initiative, which is collectively referred to as own-initiative variation power.6.7 The Registration Authority’s power under this section is the power to:a. vary the licence by:i. adding a controlled activity to those to which the licence relates;ii. removing a controlled activity from those to which the licence relates; oriii. varying the description of a controlled activity to which the licence relates; orb. to cancel the licence.
Grounds for taking own-initiative variation power6.8 Section 13(1) of CLR 2015 sets out the grounds for the Registration Authority to exercise own-initiative variation power. The grounds are as follows:a. the person is failing, or is likely to fail, to satisfy the conditions of licence applicable to him;b. that person has failed, during a period of at least 12 months, to carry on a controlled activity to which the licence relates; orc. it is desirable to exercise the power in the interests of the ADGM.6.9 The Registration Authority may exercise own-initiative variation power if it is satisfied that the grounds in section 13(1) apply.6.10 In circumstances where a licensed person has ceased carrying on controlled activities for a significant period of time (at least 12 months) and in particular, where the person is non-responsive, it may be a relatively routine matter for the Registration Authority to cancel that person’s licence, along with own-initiative de-registration considerations.6.11 In other cases, where a licensed person is carrying on controlled activities, then to vary, impose restrictions or cancel a licence may have serious consequences for that person. In such cases, the Registration Authority takes own-initiative action, particularly in respect of cancelling a licence, only where it has serious concerns regarding a licensed person.6.12 Having regard to the grounds specified under CLR 2015, examples of circumstances where the Registration Authority might consider it appropriate to cancel a licensed person’s licence include:a. if it is found that a licensed person provided false or misleading information to the Registration Authority during the licensing process;b. if a licensed person appears to be failing, or is likely to fail to satisfy, relevant licensing criteria under ADGM’s commercial legislation;c. if a licensed person carrying on a controlled activity repeatedly fails to lodge filings with the Registration Authority as and when it is required to do so;d. if a licensed person knowingly provides misleading or false information in any filings lodged with the Registration Authority; ore. if a licensed person fails to pay fees to the Registration Authority as required, or renew its licence on or before its expiry.6.13 Depending on the circumstances, the Registration Authority may initially vary a licensed persons’ scope of licence or impose requirements. However, where that action does not resolve the Registration Authority’s concerns, the Registration Authority may then decide to cancel the licence.
Requirements6.14 Section 14 of CLR 2015 details the power of the Registrar to impose requirements on a licensed person on its own-initiative, which is referred to as own-initiative requirement power.6.15 The Registration Authority’s power under this section is the power to impose on a licensed person such requirements as the Registration Authority considers appropriate, where a person has applied for a variation of a licence. The own-initiative requirement power is a power to:a. impose a new requirement;b. vary a requirement imposed by the Registration Authority; orc. cancel a requirement.6.16 A requirement may be imposed so as to require the person concerned to take specified action or so as to require the person concerned to refrain from taking specified action. A requirement may also extend to activities which are not controlled activities.6.17 Under section 15(5) of CLR 2015, a requirement may be expressed to expire at the end of such period as the Registration Authority may specify, but the imposition of a requirement that expires at the end of the specified period does not effect the Registration Authority’s power to impose a new requirement.
Grounds for taking own-initiative requirement power6.18 Section 14(2) sets out the grounds for the Registration Authority to exercise own-initiative requirement power. The grounds are as follows:a. the person is failing, or is likely to fail, to satisfy the conditions of licence applicable to him;b. that person has failed, during a period of at least 12 months, to carry on a controlled activity to which the licence relates; orc. it is desirable to exercise the power in the interests of the ADGM.6.19 The Registration Authority may exercise own-initiative requirement power if it is satisfied that the grounds in section 14(2) apply.6.20 When deciding whether to take own-initiative requirement power on a licensed person, the Registration Authority takes into account the effect of the powers exercised and seeks to ensure that any requirement imposed is proportionate to the objective the Registration Authority is seeking to achieve by taking action.6.21 In the course of monitoring of licensed persons or during the enforcement process, the Registration Authority might consider it appropriate to agree formally or informally with a licensed person on certain steps required to resolve the Registration Authority’s concerns.6.22 However, in some cases the Registration Authority forms the view that it is appropriate to take own initiative action to ensure that its concerns are satisfied. Such action is likely to be necessary where the Registration Authority:a. has serious concerns about a licensed person or about the way its business is being conducted;b. is concerned that there will be serious consequences if the licensed person fails to take the steps required by the Registration Authority; orc. considers that the action will demonstrate the importance that the Registration Authority attaches to the need for the firm to satisfy the Registration Authority’s concerns.
Own-initiative power procedure6.23 Where the Registration Authority decides to take own initiative action, it informs the licensed person of that action by written notice. That written notice is called a first supervisory notice.6.24 The Registration Authority will also generally give a licensed person an opportunity to make representations before the action is taken.6.25 The Registration Authority may extend the period allowed under the notice for making representations. After having considered any representations made by a licensed person, regardless of whether the Registration Authority decides to proceed or not proceed with the exercise of own-initiative power, it must give the licensed person a written notice. That written notice is called a second supervisory notice.6.26 Details on the Registration Authority’s decision making process is set out in Chapter 3 of this Manual.6.27 In some circumstances, a variation of a licence or the imposition or variation of a requirement, may be expressed to take effect immediately if the Registration Authority reasonably considers that it is necessary to do so. In these circumstances, the licensed person will not have the opportunity to make representations.6.28 A decision to exercise own-initiative action on an immediate basis depends on the circumstances of the matter. However, examples of the circumstances where the Registration Authority may consider such action include:a. where there is information to suggest that clients or customers of a licensed person have been harmed or are at significant risk of harm;b. where there are serious problems regarding the licensed person and/or its controllers, which raise concerns about the licensed person’s ability to continue its operations or meet its conditions of licence; orc. where a licensed person has provided false or misleading information to the Registration Authority in a material way.6.29 Where the Registration Authority decides to take immediate own-initiative action, it provides an opportunity for the licensed person to make representations promptly after the power has been exercised.
Chapter 7 – Disqualification
Introduction to disqualification orders7.1 A disqualification order is an order made by the Registrar disqualifying a person from:a. being a director of a company;b. acting as a receiver of a company;c. taking part in the promotion, formation or management of a company; ord. acting as an insolvency practitioner.7.2 A disqualification order may be issued to:a. a person convicted of a criminal offence in the UAE in connection with the promotion, formation, management, liquidation or striking off of a company, with the receivership of a company’s property, or with their being an administrative receiver of a company;b. a person who has been persistently in default of any regulation in the ADGM requiring any return, account or other document to be given to the Registrar;c. a person who is guilty of fraudulent trading, or other fraud in relation to the company; ord. a person who is, or has been, a director or shadow director of a company, where the Registrar is satisfied that the person’s conduct in relation to the company makes them unfit to be concerned in the management of a company and it is in the public interest to make the order.7.3 Unless the Registrar otherwise orders, the period of disqualification begins 21 days after the order is made.7.4 If a disqualification order is made against a person who is already subject to a disqualification order or a disqualification undertaking, then the periods of disqualification run concurrently.7.5 The minimum period to be specified in a disqualification order is two years, while the maximum period of a disqualification order is 15 years.
Disqualification orders against directors7.6 Chapter 2 of Part 10 of CR 2020 sets out the general duties of a director of a company. These are:a. the duty to act within powers of the company’s constitution;b. the duty to promote the success of the company;c. the duty to exercise independent judgement;d. the duty to exercise reasonable care, skill and diligence;e. the duty to avoid conflicts of interest;f. the duty not to accept benefits from third parties; andg. the duty to declare an interest in a proposed transaction or arrangement.7.7 A breach of any of these duties may lead to the director receiving a disqualification order and ultimately being disqualified from acting as a director.7.8 A disqualification order must be issued to a person who is or has been a director of a company which has at any time become insolvent (whether while the person was a director or subsequently), and their conduct as a director of that company (and any other company) makes them unfit to be concerned in the management of a company.7.9 A disqualification order may not be made for participation in wrongful trading more than two years after the company of which the person is or has been a director became insolvent.
Disqualification undertakings7.12 A disqualification undertaking is an undertaking given by a person to the Registrar in which the person undertakes that they will not:a. be a director;b. act as receiver of a company’s property;c. take part in the promotion, formation or management of a company; ord. act as an insolvency practitioner.7.13 The minimum period of a disqualification undertaking is two years. The maximum period is 15 years.7.14 If a disqualification undertaking is made by a person who is already subject to a disqualification order or undertaking, then the periods specified in those orders and undertakings run concurrently.7.15 The Registrar may accept a disqualification undertaking if it appears to the Registrar that it is expedient in the public interest that the Registrar should do so.
Process of making a disqualification order7.16 The Registration Authority’s Monitoring and Enforcement Division may become aware of actual or suspected contraventions while conducting supervisory activities such as investigations, on-site assessments, ad-hoc inspections and management meetings with ADGM registered entities, as well as through referrals and complaints from third parties.7.17 M&E conducts an assessment of the facts of the matter and provides a recommendation to the Registrar (or delegate). The Registrar will decide whether to make a disqualification order preventing the person from acting as a director, receiver or promoter of a company or insolvency practitioner as the case may be.
In what circumstances might the Registrar disqualify a person?7.18 The administrative action of disqualifying a person from acting as a director, receiver or promoter of a company, or acting as an insolvency practitioner, indicates to ADGM registered entities and their stakeholders that the particular conduct is unacceptable. This in turn promotes the objects of ADGM’s regulatory regime and may deter industry participants from engaging in misconduct.7.19 Whether the Registrar will make a disqualification order will depend on the facts of each matter. Factors underlying the decision about whether to take this type of administrative action may include:a. whether taking the action will promote the objects of ADGM’s regulatory regime;b. whether taking the action will deter misconduct;c. the strategic significance of taking action;d. the need to protect investors and consumers;e. other benefits of pursuing misconduct;f. whether taking the proposed action is preferable to taking another type of administrative action, in terms of cost and timeliness;g. in the case of directors, whether there has been a breach of the director’s duties to the company; orh. any other issues specific to the case.7.20 If there are aggravating factors, the Registrar may be more likely to impose a disqualification order. Aggravating factors include, but are not limited to:a. the seriousness of the conduct;b. whether the conduct involved dishonesty ;c. whether the conduct was intentional, reckless or negligent;d. the amount of any financial losses to investors and consumers;e. whether the conduct is continuing, or likely to recur; orf. whether there has been previous misconduct.7.21 However, the Registrar will also take into account mitigating factors. These include, but are not limited to:a. the extent to which there may be personal hardship if a disqualification order is made;b. the level of co-operation with the investigation;c. whether the misconduct is an isolated case;d. whether there has been attempts at remedial steps;e. whether the person has been co-operative in compensating any losses;f. whether the misconduct was inadvertent; org. whether the misconduct was self-reported.7.22 The key factors the Registrar considers in deciding whether to make a disqualification order are set out in Table 3, below.Table 3: Key factors
Key Factors Relevant Considerations Nature and seriousness of the person’s conduct• whether the conduct involved dishonesty, or was intentional, reckless or negligent• the amount of any benefit gained or detriment suffered as a result of the misconduct• the amount of any financial losses to investors and consumers• the impact of the misconduct on ADGM• whether the conduct is continuing, or likely to recur• whether there has been previous misconduct• whether there has been a failure to manage a material conflict of interest Conduct after the alleged misconduct occurs• the level of co-operation with the Registrar’s investigation The expected level of public benefit• the protective effect for investors and consumers• the reinforcement of the integrity of the ADGM’s regulatory regime• whether a disqualification order is likely to help directors, receivers, administrators and insolvency practitioners in understanding their obligations and thereby promote compliance. Whether the person’s behavior will change in response to the particular action• assessment of submissions or representations made by the person about their future compliance The deterrence effect on others• whether the behavior of other directors, receivers, administrators and insolvency practitioners is likely to change if a disqualification order is made
Warning notice7.23 If the Registrar proposes to make a disqualification order, the Registrar will first issue a warning notice.7.24 The warning notice must:a. state the action which the Registrar proposes to take;b. be in writing;c. give reasons for the proposed action; andd. state whether section 257 (access to material) applies and, if it does, describe its effect and state whether any secondary material exists to which the person receiving the notice must be allowed access under it.7.25 The warning notice must specify a reasonable time (which may not be less than 14 days) within which the person concerned may make representations to the Registrar.7.26 The recipient of a warning notice may request an extension of the time allowed for making representations. The request should be made within seven business days of the notice being given.7.27 If the person concerned provides representations to the Registrar and the Registrar is decides not to take the action proposed in the warning notice, the Registrar must issue a notice of discontinuance to the person concerned.7.28 If no representations are made in response to the warning notice within 14 days, the Registrar will regard the allegations or matters set out in the notice as undisputed and proceed accordingly.7.29 Note: refer to Chapter 3 (Decision Making) for further detail on the processes and procedures regarding decision making on and issuing warning notices.
Decision notice7.30 If the Registrar decides to issue a decision notice, the decision notice must:a. be in writing;b. give the reasons of the Registrar for the decision to take the action to which the notice relates;c. state whether section 257 (access to material) applies and, if it does, describe its effect and state whether any secondary material exists to which the person receiving the notice must be allowed access under it; andd. give an indication of any right to have the matter referred to the ADGM Courts the procedure on such a reference.7.31 A person may appeal to the ADGM Courts from a decision of the Registrar to issue a decision notice.
Final notice7.32 If the appeal is dismissed by the ADGM Courts, the Registrar will issue a final notice. If the appeal is upheld, the Registrar must issue a discontinuation notice.7.33 If the decision notice is not referred to ADGM Courts within 28 days, the Registrar will issue a final notice.
Register of disqualification orders7.34 The Registrar maintains a register of:a. disqualification orders;b. disqualification undertakings; andc. cases in which permission is granted by the Registrar for a person subject to a disqualification order or undertaking to do anything which otherwise the order or undertaking prohibits them from doing.7.35 The register is open for inspection, upon payment of a fee.
Penalties for breaching disqualification orders and undertakings
Breach by an individual7.36 If a person acts in contravention of a disqualification order or disqualification undertaking, that person is liable to a fine of up to level 5 on the ADGM standard fines scale.
Breach by a body corporate7.37 Where a body corporate acts in contravention of a disqualification order or disqualification undertaking, officers of the body corporate including any director, manager, secretary or other similar officers also commit a contravention.
Personal liability for company’s debts7.38 A person is personally responsible for all the relevant debts of a company if:a. at any time they are involved in the management of the company in contravention of a disqualification order or undertaking; orb. they are involved in the management of a company and act on instructions given (without the permission of the Registrar) by a person they know to be the subject of a disqualification order or undertaking accepted under the CR 2020 or is an undischarged bankrupt.7.39 A person is involved in the management of a company if he is a director of the company or if he is concerned, whether directly or indirectly, or takes part, in the management of the company.
Chapter 8 – Publicity
Introduction8.1 This Chapter sets out the Registration Authority’s policy on publicity in relation to statutory decision making and the exercise of its investigation and enforcement powers. Specifically, the policy covers the following:a. general policy on publicity of enforcement actions;b. ongoing investigations or enforcement matters;c. publication of warning notices;d. publication of decision notices and supervisory notices;e. proceedings in the ADGM Courts;f. publication of settlements; andg. actions taken by the Registration Authority on its own-initiative.
General policy on publicity of enforcement and disciplinary actions8.2 Publicity about enforcement action improves the understanding of registration and licensing standards among licensed persons and potential users of the ADGM, it deters other persons from engaging in similar misconduct, and demonstrates how the Registration Authority uses its disciplinary and enforcement powers to meet its statutory objectives.8.3 The Registration Authority’s general policy is to publicise enforcement and disciplinary actions, providing information, statements and/or notices in the form and manner it regards as appropriate and most effective.8.4 However, the Registration Authority retains discretion regarding the approach to publication and in particular, the timing of publications of enforcement or disciplinary action, depending on the circumstances of a particular matter and in order to best advance ADGM’s interests.
Publicity about ongoing matters8.5 The Registration Authority’s general policy is not to publicise the fact that it is or is not investigating, or considering enforcement action about a matter.8.6 However, in certain circumstances the Registration Authority will make exceptions to this policy and make a public announcement about an ongoing investigation or enforcement action. For example, the Registrar may make a public announcement about an ongoing investigation which he believes may lead to a party providing a disqualification undertaking. The Registration Authority will consider a public announcement if it will:a. assist in maintaining the integrity of and confidence in ADGM or the Registration Authority;b. protect the public, for example by announcing unlicensed conduct by a person who is under investigation by the Registration Authority;c. prevent and restrain conduct which may cause damage to the reputation of the ADGM, for example to alert licensed persons that certain conduct is under investigation to stop and deter others from engaging in similar conduct; ord. assist the investigation itself, for example by encouraging witnesses to come forward.8.7 The Registration Authority may also make a public announcement about a matter under investigation if it has become the subject of public speculation or rumour, if it is considered that doing so will contain or prevent further speculation.
Publication of warning notices8.8 The Registrar will not publish a warning notice or any details concerning a warning notice.
Publication of decision notices, final notices and supervisory notices8.9 Generally, the Registrar’s policy is:a. not to publish decision notices;b. publish final notices if the matter has not been referred to the ADGM Courts within one month; andc. publish such information about a supervisory notice as the Registrar considers appropriate.8.10 The Registrar may publish a decision notice if doing so will protect the public. If the Registrar publishes a decision notice, the Registrar will indicate that the person who is the subject of the decision notice has a right to appeal to the ADGM Courts.8.11 Under section 51(2) of CLR 2015, a person to whom a decision notice is given or copied may not publish the notice or any details concerning it unless the Registrar has published the notice or those details.8.12 Such a disclosure is a contravention under section 51(12) of CLR 2015 and the Registration Authority will, where appropriate, take action accordingly.8.13 The Registrar may not publish a decision notice, final notice or supervisory notice if publication would be:a. unfair to the person subject to the decision notice;b. detrimental to the interests of participants of the ADGM registered entities and their stakeholders; orc. detrimental to the interests of the ADGM.8.14 Under section 51(2) of CLR 2015, a person to whom a decision notice is given or copied may not publish the notice or any details concerning it unless the Registrar has published the notice or those details.8.15 Such a disclosure is a contravention under section 51(12) of CLR 2015 and the Registration Authority will, where appropriate, take action accordingly.
Publication about proceedings8.17 Section 98 of the ADGM Courts, Civil Evidence, Judgements, Enforcement and Judicial Appointments Regulations 2015, provide that matters will be heard in public unless otherwise directed by the ADGM Courts. As publicity about proceedings is subject to such directions, the Registration Authority generally does not make any public statement about the commencement of proceedings until the ADGM Courts has given directions about publicity.8.18 The Registration Authority’s general policy is to make public statements about the outcome of enforcement proceedings in the ADGM Courts, unless the ADGM Courts directs otherwise. However, the Registration Authority retains discretion to not publicise the outcome of proceedings, or to not do so immediately, where it considers appropriate, such as where publication would not be in the public interest or be prejudicial to the interests of clients and customers.
Publication of Discontinuation Notices8.16 Pursuant to section 51(3) of CLR 2015, if the person to whom a discontinuation notice is given consents, the Registration Authority may publish such information as it considers appropriate about the matter to which the discontinued proceedings related.
Publication of settlements8.19 The Registration Authority’s approach to publicity in respect of settlements is set out in Chapter 5 of this Manual.
Publication of own-initiative action8.20 The Registration Authority may take action on its own-initiative against licensed persons under sections 13 and 14 of CLR 2015. Further details about the Registration Authority’s policy and procedure on own-initiative action is set out in Chapter 6 of this Manual.8.21 Where the Registration Authority exercises its power to take action on its own-initiative it must give a statutory notice under sections 19 and 20. Therefore the Registration Authority’s approach to publicising own-initiative action follows the policy set out in paragraphs 8.9 to 8.15 (see ‘Publication of decision notices, final notices and supervisory notices’ section, above).8.22 Where the Registration Authority exercises its power to take action on its own-initiative, the licensed person to which that action relates has the right to refer the matter to the ADGM Courts. Where a referral is made to the Court, the Registration Authority follows its policy in relation to publication of matters subject to proceedings, as set out in paragraphs 8.17 and 8.18 (see ‘Publication about proceedings’ section, above).
This Manual provides information on the Registration Authority’s policy and processes on decision making and enforcement in relation to the requirements of ADGM’s commercial legislation. The Manual also provides information on the disqualification of directors, receivers and promoters of companies, and insolvency practitioners.
This is only a guide and should be read together with the relevant legislation, in particular, ADGM Commercial Licensing Regulations 2015, ADGM Companies Regulations 2020 and any other relevant regulations and enabling rules (which may change over time without notification). Further advice from a specialist professional may be required.
The Registration Authority makes no representations as to the accuracy, completeness, correctness or suitability of any information and will not be liable for any error or omission.
Information in this statement of policy and procedure is not to be deemed, considered or relied upon as legal advice and should not be treated as a substitute for specific advice concerning any individual situation. Any action taken based on the information provided in this statement is strictly at your own risk and the Registration Authority will not be liable for any loss and damages in connection with the use of or reliance on information provided in this statement of policy and procedure.
For more information, please contact the Registration Authority by:
Telephone: +971 2 333 8888