The Abu Dhabi Global Market (ADGM), a financial center based at Al Maryah Island in Abu Dhabi, has made it easier for venture capital (VC) funds to operate on the island.
The ADGM’s Financial Services Regulatory Authority, the financial free zone’s regulator, has removed the need for VC firms to put up cash to start businesses.
The move to simplify regulations for venture capital funds operating in the zone came to effect on May 15. Now, VC funds operating on the island are not subject to any capital or expenditure-based capital base requirements.
In consultation with industry players, the regulatory framework for VC managers simplifies the regulatory requirements while maintaining the necessary safeguards to ensure that they operate in a safe and sound manner, ADGM said in a statement.
As part of ADGM’s efforts in fostering a vibrant ecosystem for fintech firms and small and medium enterprises (SMEs), the framework is an enhancement to ADGM’s funds’ regime, the statement added.
ADGM has been trying to simplify regulations as it tries to attract more business.
Last month, it announced lower capital requirements for managers of selected funds established in the free zone, bringing its regulations in line with other international jurisdictions.
The ADGM’s Financial Services Regulatory Authority said it was adopting an enhanced tier structure for base capital requirements (BCR), previously set at $250,000.
Under the new structure, the BCR requirement for CIF managers of Public Funds will be revised down to $150,000. Managers of exempt funds and qualified investor funds will have a BCR of $50,000.
In May 2016, ADGM signed an agreement with startup accelerator Flat6Labs to develop a fintech ecosystem in the emirate.
The agreement came ADGM announced plans to create a Regulatory Laboratory (RegLab) aimed at helping fintech firms to operate in a controlled and cost-effective environment, creating products that are beneficial for smaller businesses.