SPVs are not restricted by the purpose defined at the time of incorporation.
An ADGM SPV is a flexible holding company that can be used for a wide-range of passive holding purposes, including holding shares, real estate, Intellectual Property rights or being used as part of financing transactions. Importantly, an ADGM SPV cannot be used to engage in commercial activities or sponsor employees.
At the time of incorporating the SPV, the applicant must describe the purpose of the company. The purpose must be clearly defined and certain (rather than vague or hypothetical) and be a purpose that can be achieved within 6 months of the incorporation of the company.
The purpose, as described at the time of incorporation, does not limit the future use of the SPV. Provided the new or additional use does not take the SPV outside its permitted licensing activities, it is acceptable to use the company for additional purposes. There is no obligation to submit any filings or notification to ADGM when this occurs. The SPV should notify Clara and provide relevant documentation so that the Company's statutory books are up to date and reflect the current use of the SPV.
ADGM does carry out regular company inspections, during which the purpose of the SPV will be analyzed. It is therefore important that the company maintains records of the use of the SPV.
With the introduction of corporate tax in the UAE, owners must consider whether a proposed change of use impacts on the overall tax situation for the group. Different tax classifications apply to different types of assets (for example, real estate versus intellectual property) and when the the type of use changes, a restructuring of the assets may be preferable. Clara can provide advisory services through its Partners.