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ADGM Proposes Financing Reforms To Help SMEs

by Lorys Charalambous, Lowtax.net, Cyprus
14 March, 2018

Abu Dhabi Global Market (ADGM), the low-tax financial services hub, is proposing reforms to encourage increased lending to private enterprises, including start-ups and small and medium-sized enterprises (SMEs).

The reforms propose a new regulatory framework for operators of financing platforms for non-public companies. The intention is to help these enterprises access finance to grow, and to bridge the current commercial funding gap for this underserved segment in terms of financing needs.

ADGM describes its proposed framework as a calibrated, risk-appropriate regulatory framework for private financing platforms that would facilitate access by start-ups and SMEs to new, alternative sources of funding, primarily from professional clients, while imposing necessary regulatory safeguards to ensure they operate in a safe and sound manner for those clients.

Key features of the proposed new framework include the creation of a new regulated activity, which permits both investment-based and loan-based private financing platform transactions, and the ability for lenders to lend money directly or through special purpose vehicles.

The reform proposals are contained in Discussion Paper No. 1 of 2018. The closing date for comment is April 10, 2018.

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