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Starting a financial advisory or arranging firm in the UAE is a good business. It is the greatest business opportunity within the Abu Dhabi Global Market (ADGM). Among the various licenses, the ADGM Category 4 License is the most favourable for operations. It intends to provide financial services. However, it does not intend to keep customer money or execute transactions on their behalf.

In this guide, we will explore the major features and benefits of the ADGM CAT 4 License. Moreover, eligibility criteria and costs of it have also been explained. This licence is also referred to as Abu Dhabi Cat 4.

Features of the ADGM CAT 4 License

This License is specifically tailored for firms that are engaged in advisory and arranging services in the financial marketplace. Let’s look into some of the most important features:

Advisory Services

Companies operating with an ADGM Category 4 License are licensed to offer investment advising services. That means they can offer professional advice on security, bonds, investment funds, and many more. However, companies that work with such licenses cannot buy and sell anything on behalf of the clients. This feature is very useful for companies. It helps investors to make informed decisions about where and how to put their money.

Arranging Deals 

Companies licensed under this class can offer to facilitate agreement on terms between financial product buyers and sellers by acting as an intermediary. For example, a business can present two parties interested in entering into an investment deal and assist them in negotiating the terms. However, such companies cannot enter into deals themselves a marked difference between this class of license and the higher classes.

Non-Dealing License

The Abu Dhabi Cat 4 is a non-dealing license. It means that the firm cannot deal directly with financial products. Hence, it is a less risky license. This is specifically for advisory services or deal arrangements. It does not involve the complexity of managing funds or assets. This feature provides a more streamlined business model. That is why, it is perfect for people who focus on advisory services.

Lower Capital Requirements

Since there is no trading and the firm is not holding client money, capital requirements under this License are substantially lower as compared to other categories. Companies generally require only a minimum capital of $50,000. Thus, it makes the financial burden on the startups or small firms entering the financial advisory space very minimal.

FSRA Oversight

All companies with this license are further placed under close and stern regulation of the Financial Services Regulatory Authority (FSRA) of ADGM. This serves to ensure that companies act within legal frames and uphold the best of ethics. Moreover, they become conversant with the best practices worldwide. The regulations serve to enhance the reputation of such firms as well as foster faith with clients.

Benefits of the ADGM CAT 4 License

Let’s now shift the attention to some of the benefits of gaining an ADGM Category 4 License:

  • Access to Global Markets: ADGM is a world-class international financial centre. The License opens access to global markets, investors, etc.
  • Low Financial Risk: CAT 4 License holders also are not allowed to trade or hold client money. So, low financial risk is here as compared to other categories.
  • Flexible Operations: This License is ideal for companies offering consulting services financially. Furthermore, it is best for the firms advising clients on the structure of financial arrangements. For example, merger or acquisition.
  • Lower Setup Cost: The initial investment required to obtain this License is much lower as compared to other licenses that provide trading or asset management. This is very attractive to new businesses and startups.
  • Enhanced Reputation: Registration with the FSRA under ADGM adds value to your business. You can assure your clients that your firm operates under international standards of operation and governance.
  • No Corporate Tax: The tax-friendly environment of ADGM means 0% corporate tax for businesses, along with further profits.

Eligibility Requirements for an ADGM CAT 4 License

ADGM CAT 4 License

To successfully apply for an ADGM Category 4 License, meet the business requirements. Here’s what you should have:

  • Business Plan: This includes a complete business plan. It must outline the aims and objectives of your company. Furthermore, the types of financial services it will offer and plans for future growth must be mentioned.
  • Financial Standing: Though lower compared to other licenses, the requirement in terms of capital has to be shown by companies applying for this License.
  • Fit and Proper Test: ADGM is going to vet your company’s directors and shareholders on qualification and be financially free of malpractices.
  • FSRA Approval: The other requirement is FSRA approval, for which the firms have to get approval from the FSRA. The FSRA will analyze whether the firm complies with the requirements under ADGM or not.
  • Professional Expertise: Your firm should have qualified professionals who also have experience in terms of advisory or arranging services.

Costs to Obtain the CAT 4 License

Costs to Obtain the CAT 4 License

The costs of acquiring this License encompass several constituents, such as application fees, annual license fees, and capital. Among the costs, the following summarizes the usual costs:

  • Application Fee: The cost of submitting the initial application ranges from $15,000 to $20,000. It depends on the size and scale of the business.
  • Annual License Fee: After one year, the company has to pay an annual renewal fee. It generally lies between $12,000 to $15,000.
  • Capital Requirement: When we talk about the capital requirements with other riskier licenses, the License capital requirement is much smaller in magnitude. However, they are still required to hold a capital requirement of at least $50,000.

Other Expenses: You may need additional fees for office space, administrative costs, and PRO services in Dubai to manage all the legal paperwork and regulatory clearances.

Comparison of ADGM CAT 4 License with other Licenses in the UAE

While this ADGM Category 4 License is a fantastic option for business ventures that provide financial advisory services, one needs to balance it with other UAE business licenses. For instance, the Sharjah Free Zone license, the RAK Free Zone license, and the Abu Dhabi CAT 4.

  • Sharjah Free Zone License: This business license will permit one to run within Sharjah’s Free Zone, free and, in general, much cheaper, though not opening access to international financial markets like ADGM.
  • RAK Free Zone License Cost: A license in the RAK free zone is relatively cheaper compared to an ADGM license, but financial firms with an interest in advisory services could not be found.
  • Abu Dhabi CAT 4 License: It is the second name ADGM Category 4 License. It targets the financial sector of Abu Dhabi.

From that, we can learn the differences to make the right choice for your business.

PRO Services in Dubai for CAT 4 License Applications

The process of applying for an Abu Dhabi Cat 4 is a very detailed exercise. The procedure requires explicit approval by the government. Most companies outsource this process to Dubai PRO services. There, they handle all paper-based documents and liaison with the government department.

Dubai PRO services cover the following

  • Application Form Filing: They take care of filling out all the documentation. Moreover, they submit it to the authorities properly.
  • Government Liaison: They communicate with the ADGM and the FSRA on your behalf.
  • Managing Renewals: PRO services in Dubai also assist companies with yearly license renewals. They ensure ongoing compliance with the regulations of ADGM.

Engagement of PRO services saves the companies against all typical mistakes. This prevents delays in ADGM Category 4 License approval.

 

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