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Expert Guidance for SPVs

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What is an SPV?

SPV stands for Special Purpose Vehicle, which is a legal entity created for a specific and limited purpose. An SPV is typically a subsidiary company that is formed to isolate financial risk and liabilities from its parent company, and is responsible for its own financial obligations and liabilities. The SPV is designed to achieve a specific objective, such as raising capital or holding assets, and is often used in complex financial transactions. The SPV regime is one of the most popular frameworks in the region which is highly sorted after by holding companies for the purpose of protecting personal assets from creditors, to control risk, or may be used as a property holding company. 

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Advantages of SPV

An SPV is usually created to be a separate legal entity with its own board of directors and management team. Some of the advantages of an SPV are:

Legal and corporate structure

SPVs can be incorporated either in the ADGM (Abu Dhabi Global Market) or DIFC (Dubai International Financial Center). The laws of the ADGM and DIFC follow the precedent of the English Common Law jurisdiction, and the two Free Zones have their own court systems. ADGM and DIFC have their respective Financial Regulators which help both the ADGM and DIFC to reinforce their standing as well-regulated jurisdictions. Both ADGM and DIFC offer a range of legal structures for SPVs, including limited liability companies (LLCs) and exempt companies.

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Requirements to set up an SPV

ADGM
It is a requirement that all ADGM SPVs demonstrate an appropriate connection or ‘nexus’ to ADGM, the UAE and/or the GCC Region. A connection or ‘nexus’ may be demonstrated in several ways, including but not limited to:

  • The SPV is owned or controlled by a UAE or Gulf Cooperation Council (GCC) based private company, family/family office or individual.

  • The SPV holds assets that are located in the UAE or the GCC countries.

  • The SPV facilitates transactions connected, or provides real or economic benefit, to the UAE.

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DIFC

  • The SPV is controlled by one or more GCC citizens or entities controlled by GCC citizens. 

  • The SPV is controlled by one or more DIFC registered entities (which could include a DIFC Foundation). 

  • The SPV is established for the purpose of holding a GCC registerable asset, such as a GCC company or property. 

  • The SPV is established for a qualifying purpose.

  • The SPV must maintain a registered office in the DIFC premises, which can be the registered office of a corporate services provider within the DIFC.

  • If none of the criteria can be met, then the DIFC prescribed company can still be established if a director is appointed to the entity from a DIFC Corporate Services Provider.

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How Solvus can support your SPV incorporation journey

Solvus can advise you on setting up an SPV in ADGM or DIFC and provide support through the incorporation process, navigate through the different regulatory approaches and liaising with all relevant parties on your behalf to ensure a swift and smooth setup.

Choose Solvus for SPV Incorporation

At Solvus, we specialize in setting up Special Purpose Vehicles (SPVs) tailored to your business needs. With expert guidance and a seamless process, we help you protect assets, mitigate risks, and optimize financial transactions. Whether you’re establishing an SPV in ADGM or DIFC, Solvus is your trusted partner in navigating regulatory requirements and achieving your strategic goals.

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Contact us today to create a secure and efficient SPV for your business. With Solvus, risk management becomes your competitive advantage.

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