New rules for legal, tax, and CSP firms at ADGM

ADGM proposes new rules for legal, tax, and company service providers: The ADGM Registration Authority is proposing a slate of new licensing conditions and activity restrictions for legal, tax, and company service providers, according to a new consultation paper (pdf). The proposed amendments affect the Commercial Licensing Regulations (Conditions of Licence and Branch Registrations) Rules 2024 and the Controlled Activities Rules 2024, and are open for public comment until 15 June.

The draft rules would tighten licensing requirements for firms seeking to offer legal services in ADGM. New applicants must be an established legal entity partnership operating for at least five years in another jurisdiction and must employ a minimum number of qualified lawyers — including a managing partner with at least 10 years of post-qualification experience and at least three having a minimum of 8 years of post-qualification experience..

All licensed legal service providers would also be required to maintain USD 2 mn in professional indemnity ins., comply with the Client Money Rules, maintain a physical office in ADGM with adequate and qualified full-time staff, and submit annual returns to the registration authority.

The rules would also prohibit licensed legal or audit firms from simultaneously providing company services — like business incorporation and acting as a trustee — under the same entity, and vice versa, the RA said, citing concerns around confidentiality and conflicts of interest. These firms could instead set up separate CSP subsidiaries, and would be allowed to share administrative staff and office space under certain conditions.

FOR TAX SERVICES- A majority of senior management at tax firms must also hold professional qualifications and have at least three years’ post-qualification experience. Like legal firms, tax service providers would also need to carry USD 2 mn in indemnity ins. and comply with the Client Money Rules and other professional conduct standards.

Timeline: The changes would take effect immediately for new applicants, while existing license holders would have 18 months to comply.