How Consultrio Can assist
Regulatory licensing and FSRA liaison
We handle end-to-end coordination with the FSRA to ensure smooth approval of your ADGM CAT 4 license application.
Drafting compliance manuals and policies
Our team prepares tailored AML/CFT compliance manuals and internal policies that meet FSRA regulatory standards.
Company formation and office setup
We assist with company incorporation in ADGM, including securing your office space or flexi-desk as per licensing needs.
Bank Account Opening Assistance
Our team facilitates corporate and personal bank account openings with leading UAE banks, ensuring compliance and faster approvals.
Visa and Relocation Assistance
We manage the entire visa application process and support your relocation to Abu Dhabi, including Emirates ID registration, medicals, and family sponsorship.
Ongoing compliance support
Stay fully compliant with ADGM regulations through our continuous compliance monitoring and reporting services.
Setting Up an ADGM CAT 4 License: A Complete Guide
Are you considering setting up an ADGM CAT 4 license? The Abu Dhabi Global Market (ADGM) offers one of the most prestigious and flexible regulatory frameworks in the Middle East for financial services firms. A Category 4 license is specifically designed for firms providing non-discretionary financial services, such as advising on investments and arranging credit or deals in investments.
In this comprehensive guide, we’ll walk you through the process, requirements, benefits, and costs involved in setting up an ADGM CAT 4 license.
Access to Institutional-Grade Regulatory Infrastructure
ADGM’s FSRA provides a robust yet business-friendly regulatory framework based on English Common Law, eliminating the legal ambiguities found in other offshore jurisdictions. The Category 4 license is tailored for firms offering advisory and intermediation services—allowing you to operate in a regulatory environment that balances investor protection with operational flexibility.
Streamlined Market Entry for Fintech & Advisory Firms
ADGM offers a Category 4 license specifically tailored to non-custodial financial firms—those that provide advisory and arranging services without holding or managing client funds. This includes independent financial advisors, fintech platforms offering investment intermediation, wealth structuring consultants, and boutique corporate finance or M&A advisory firms.
Global Recognition + Passporting Opportunities
Operating within ADGM significantly enhances your firm’s international credibility. It opens up access to cross-border opportunities through MoUs and passporting arrangements with key regulators including the UK’s FCA, the Monetary Authority of Singapore (MAS), and the Securities and Futures Commission (SFC) in Hong Kong. This is particularly valuable if your strategy includes servicing HNWIs or institutional clients across the GCC, Europe, and Asia.
Low Regulatory Capital + Predictable Compliance Burden
With a minimum capital requirement starting at just USD 10,000, and no requirement to hold client assets, the ADGM CAT 4 license offers a low-barrier regulatory path to enter the UAE market. Additionally:
1. You can appoint outsourced compliance officers and MLROs
2. FSRA accepts shared workspace models, reducing operational overhead
3. The compliance burden is lighter compared to CAT 3 or CAT 2 license holders
Advantages of ADGM CAT 4 License
ADGM CAT 4 License Requirements
Setting up an ADGM CAT 4 license involves meeting specific regulatory, operational, and documentation standards as defined by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM)
1. Regulatory Capital Requirement
Licensed entities are generally not subject to corporate income tax in Anjouan, allowing you to retain more of your revenue and reinvest in growth. This makes it highly attractive for startups, established operators, and international gaming companies.
2. Fit and Proper Personnel
The FSRA mandates that all regulated firms appoint individuals who meet the “fit and proper” criteria—assessing integrity, competence, financial soundness, and relevant experience. At a minimum, the firm must designate:
-
A Licensed Director, responsible for governance and high-level oversight.
-
A Compliance Officer (CO) to ensure alignment with ADGM regulations.
-
A Money Laundering Reporting Officer (MLRO) who will monitor and report suspicious transactions in line with UAE AML/CFT obligations.
In smaller firms, the same individual can sometimes act as both CO and MLRO, subject to FSRA approval. These individuals may be outsourced to an FSRA-approved third-party compliance service provider if internal resources are limited.
3. Physical Office within ADGM
To proceed with the application, firms are required to secure a physical presence within ADGM. This can be satisfied by leasing a dedicated office space or operating from an approved serviced business center within the ADGM jurisdiction. The space must be fit for regulatory audits, staff operations, and maintaining statutory records. It also reinforces the firm’s commitment to ADGM’s ecosystem and its operational substance.
4. Comprehensive Business Plan
Applicants must submit a detailed business plan that outlines the firm's strategic intent, target markets, financial projections, service offerings, and operational structure. The FSRA typically expects:
-
A breakdown of regulated activities the firm intends to carry out
-
Description of the target client base (retail, professional, or market counterparties)
-
Anticipated revenue model and 3-year financial forecasts
-
Organizational chart and outsourcing arrangements
-
Risk assessment and mitigation plans
This plan forms the backbone of the FSRA’s risk assessment during the application review process.
5. Robust Internal Policies and Procedures
As part of setting up an ADGM CAT 4 license, firms must submit a suite of internal governance documents that demonstrate regulatory readiness and operational integrity. These include:
-
Compliance Manual: outlining the framework for ongoing regulatory compliance
-
AML & CFT Policies: demonstrating how the firm will detect and report suspicious activities
-
Data Protection Policy: especially important given ADGM’s alignment with international data privacy norms
-
Risk Management Framework: identifying operational, financial, and strategic risks
-
Business Continuity Plan (BCP): showing how the firm will manage disruptions
-
Client Onboarding and KYC Policies: customized to suit target client types and jurisdictions
These documents must be tailored, not templated, and reflect the unique nature of your business model and operations.
Tax Considerations of ADGM CAT 4 License
One of the key advantages of setting up an ADGM CAT 4 license is the favorable and transparent tax environment offered by the Abu Dhabi Global Market (ADGM), making it highly attractive for financial advisory firms, fintech startups, and wealth management entities targeting regional and international clients.
1. Zero Corporate Tax in ADGM Free Zone (Subject to Conditions)
Companies licensed under the ADGM CAT 4 license are potentially eligible for 0% corporate tax on qualifying income earned within the ADGM Free Zone. This tax exemption is granted to firms that qualify as Qualifying Free Zone Persons (QFZP) under the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022).
To benefit from the 0% tax rate, your ADGM-licensed Category 4 firm must:
-
Be a legal entity established in ADGM, such as a private company limited by shares (Ltd.)
-
Conduct core income-generating activities (CIGA) such as financial advisory or arranging deals entirely within the ADGM ecosystem
-
Maintain adequate substance in ADGM, including physical premises, full-time employees, and active local management
-
Not be used merely as a conduit for mainland UAE or foreign business without substantial activity inside ADGM
Failure to meet these conditions may lead to disqualification from the zero-tax regime, triggering the standard UAE corporate tax.
2. 9% UAE Corporate Tax for Non-Qualifying Income
While ADGM CAT 4 licensed firms enjoy favorable tax treatment, income that falls outside the definition of “qualifying income”—such as services rendered to UAE mainland clients—may be subject to the standard 9% UAE corporate tax.
For example, if your firm under the ADGM CAT 4 license advises mainland clients or provides certain non-financial services, you must:
-
Segregate income streams between qualifying and non-qualifying sources
-
Maintain separate accounting records for each line of business
-
Consider setting up a dual-structure model (e.g., ADGM entity + mainland branch) if mainland exposure is significant
3. No Withholding Tax and Full Profit Repatriation
Firms operating under an ADGM Category 4 license also benefit from the absence of withholding taxes on dividends, interest, or royalties. This makes ADGM an ideal jurisdiction for international financial services companies seeking to repatriate profits or pay cross-border fees without tax leakage.
In addition, ADGM imposes no restrictions on capital or profit repatriation, ensuring seamless movement of funds to shareholders or parent companies abroad.
4. 100% Foreign Ownership & Global Tax Treaty Access
One of the key advantages of setting up an ADGM CAT 4 license is the ability to enjoy 100% foreign ownership, with no requirement for a local Emirati partner. This makes ADGM a strategic choice for global investment firms, asset managers, and fintech founders who wish to retain full control of their business.
Moreover, the UAE has signed over 140 Double Taxation Avoidance Agreements (DTAAs) with countries worldwide. These treaties help reduce or eliminate withholding tax in the investor’s home jurisdiction, further enhancing ADGM’s attractiveness as a global financial hub.
5. VAT Implications for ADGM CAT 4 Licensed Firms
While most financial services activities under an ADGM CAT 4 license are exempt from UAE Value Added Tax (VAT), certain advisory or ancillary services provided to UAE-based clients may trigger VAT obligations. If your firm's taxable supplies exceed AED 375,000 annually, VAT registration becomes mandatory.
Firms must evaluate:
-
Whether their services are VAT-exempt or zero-rated
-
If reverse charge mechanisms apply for foreign clients
-
Their obligations around VAT invoicing, filing, and compliance
It is advisable to conduct a VAT impact assessment during the early setup phase to avoid penalties and ensure smooth operations post-licensing.
ADGM CAT 4 License Registration Process
Step 1: Define Your Regulated Activities and Business Model
Start by clearly outlining the nature of your financial services. The ADGM CAT 4 license is suitable for firms engaged in non-discretionary financial activities such as investment advisory, arranging deals in investments, or introducing clients to fund managers. Ensure that your business model aligns with the permissions granted under Category 4 and prepare a high-level overview of your services, target clients, and projected AUM (Assets Under Management), if applicable.
Step 2: Engage with the Financial Services Regulatory Authority (FSRA)
Before submitting a formal application, it is mandatory to conduct a pre-application meeting with the FSRA, the financial regulator of ADGM. This is your opportunity to present your proposed business activities, ownership structure, compliance framework, and get initial feedback on your licensing pathway. This step helps reduce approval time by addressing regulatory expectations early on.
Step 3: Submit Your ADGM CAT 4 License Application
Following the pre-engagement, you will prepare and submit the full application via the FSRA’s online portal. Your submission must include:
-
Detailed business plan
-
3-year financial projections
-
Organizational structure & governance model
-
AML/CFT compliance policies
-
Fit-and-proper documentation for key individuals and shareholders
Engaging legal or compliance consultants with ADGM experience can significantly improve your application’s success rate.
Step 4: Regulatory Review, Licensing & Incorporation
The FSRA will thoroughly review your application, request clarifications if needed, and conduct interviews with key personnel. Once your ADGM CAT 4 license is approved, you will proceed to:
-
Incorporate your legal entity within ADGM (e.g., a private company limited by shares)
-
Receive your commercial license and regulatory approval
-
Activate office space within ADGM (physical or Regus/Flexi-desk options available)
-
Finalize banking setup and operational launch
