Abu Dhabi Financial Free Zone Selects English Common Law

The proposed Abu Dhabi Global Market (40GM published, on 7 January 2015, draft legislation for consultation, which sets out that the new financial free zone will have its own administration, court system and tax incentives to attract banks and companies from around the world.

Under the proposals, the 40GM will follow the Dubai International Financial Centre (OIFCI in basing its legal framework on English common law. “English common law, as it stands from time to time, will therefore govern matters such as contracts, tort, trusts, equitable remedies, unjust enrichment, damages, conflicts of laws, security, and personal property,” ADGM said in one of six consultation papers.

It will also seek to adopt the most effective legislation from around the world. “40GM has the opportunity to take the best of the UK approach, while avoiding some of its historic peculiarities that have been removed or abandoned by the best practice of other jurisdictions,” it said. For example, shares in 40GM companies will not have a par value, in line with the approach taken in jurisdictions such as Hong Kong, Singapore and Australia.

It will also introduce a new type of “restricted scope company” with Lighter disclosure and compliance requirements which, it said, would be “holding vehicles for professional investors and limited instances of institutions for whom Less regulation and a greater degree of confidentiality will be appropriate.” The 40GM is further considering extending this regime to include entities owned entirely by an individual or close family members.