Setting up a fund in ADGM: what international managers need to know in 2026

A credit manager in London put it to me bluntly in July: "Our anchor is an Abu Dhabi institution. Do we actually need to be in Abu Dhabi, or is a DIFC licence close enough?" It is a fair question. It is also the wrong way round, because the answer depends less on the licence and more on what the anchor's investment team expects to see when they visit you.

That conversation has become common. ADGM's own figures for the first half of 2026, published on 8 September, show 190 fund and asset managers in the jurisdiction, up 23% year on year, and 276 funds managed from ADGM, up 32%. Financial services entities reached 392. Assets under management rose 54%, although ADGM did not publish an absolute figure, so treat that as a direction of travel rather than a size. The FSRA also issued 50 in-principle approvals and 45 new Financial Services Permissions in the half.

ADGM is not DIFC with a different postcode

On paper the two centres look alike: independent regulators, common law courts, professional investor funds, similar vehicles. We have written a side-by-side comparison of DIFC and ADGM for funds and a broader piece on choosing between the two financial free zones, so I will not repeat that here. What matters for a manager actually setting up in Abu Dhabi comes down to three things.

The law. ADGM applies English common law directly. DIFC has its own codified body of law. If your fund documents, side letters and GP agreements are already drafted by English-law counsel, ADGM will feel familiar in a way that is more than cosmetic.

The investor base. Abu Dhabi is home to some of the largest sovereign and institutional allocators in the world. If they are the reason you are here, being physically near their investment teams, in the same market, has a commercial value that no comparison table captures.

The regulator's posture. In our experience you tend to deal with a consistent FSRA team from first meeting to permission. The regulator is direct about what it wants to see, and it reads the regulatory business plan as a description of how the firm will really operate, not as a form.

The fund types under the FSRA Fund Rules

Fund classification decides who you can sell to and how much of the FSRA's attention the fund attracts. The table below reflects FSRA guidance; the thresholds have been stable for some years, but confirm against the current FSRA rules, particularly with reform proposals pending.

Specialist classes sit on top of these: private credit funds, private REITs and green or climate transition funds each carry extra conditions. The FSRA has asked the market whether those frameworks still work, so expect changes.

Choosing the vehicle

ADGM gives you the structures an international lawyer will recognise. An investment company, open-ended or closed-ended, suits a fund with regular subscriptions and redemptions or one that may list. A limited partnership is the default for closed-ended private equity, credit and venture strategies, usually with a separate general partner vehicle. An investment trust is available, but its trustee must be authorised by the FSRA, which narrows the field. Protected cell companies and incorporated cell companies let you run several strategies or client mandates with legally segregated assets under common management.

Umbrella and master-feeder structures are permitted, including an ADGM feeder into a foreign master. For GP entities, carry vehicles and asset-holding SPVs, many managers use an ADGM Restricted Scope Company. Our fund and SPV support covers that layer.

My view: pick the vehicle your investors' counsel will accept without a memo. A PCC is elegant, but if your anchor's legal team has never reviewed one, you have added weeks to their diligence.

The manager's permission sets the timetable

A fund cannot exist without a manager, and the manager is where the real work sits. Managing collective investment funds is a regulated activity, usually described as a Category 3C licence. The firm needs a Financial Services Permission and approved individuals in controlled functions: a Licensed Director, a Senior Executive Officer, a Finance Officer, a Compliance Officer and a Money Laundering Reporting Officer. These are generally required to be UAE resident, subject to exemptions; confirm the current position for your firm's size against the FSRA rules.

There are lighter routes. Qualifying venture capital managers can use the Venture Capital Fund Manager regime, which carries reduced requirements. In November 2025 the FSRA published Consultation Paper No. 12 of 2025, proposing a Sub-Threshold Fund Manager category for managers with no more than USD 200 million of committed capital across closed-ended funds, and an Institutional Fund Manager category for managers whose funds take only institutional investors with a minimum subscription of USD 5 million and no natural persons. Both would drop the mandatory Finance Officer and internal audit function. The consultation closed on 30 January 2026. As of early September 2026 the rules had not been finalised and a second consultation was expected later in the year. Do not build a business plan that only works under the proposed regime.

The same paper would tighten the position for foreign fund managers running ADGM funds: closed-ended QIFs only for new funds, a UAE-resident director, an ADGM-based administrator and an ADGM-licensed corporate service provider. If your plan is to run an ADGM fund from London without a local entity, that plan has a shelf life. Our note on what an ADGM company service provider does explains the role.

What the FSRA wants to understand before it grants in-principle approval

The formal steps are published: an initial meeting, a draft regulatory business plan, formal submission, review and interviews with proposed approved persons, then in-principle approval with pre-conditions. What the steps do not tell you is where the questions land.

In our experience the FSRA spends its time on a handful of points. Who actually makes the investment decision, and where are they sitting when they make it? If the investment committee is three people in Mayfair and the ADGM entity implements their decisions, expect to be asked why the ADGM entity needs a fund management permission at all. The FSRA also asks whether the proposed Senior Executive Officer has run something comparable, not just worked near it, and the interview is where that becomes obvious. It asks how the compliance monitoring programme will work in month three, who owns it and whether they wrote it. And it reads the financial projections against the capital plan, particularly the assumption about when management fees start.

Then comes the part that catches people. In-principle approval is conditional. The conditions typically include obtaining the commercial licence from the ADGM Registration Authority, securing premises in ADGM, opening bank accounts and, where relevant, capitalising the entity. Banks want to see the IPA before they progress an account; the FSRA wants the account before it grants the permission. Start the bank conversation the week the IPA arrives, not after the office fit-out.

The order we would actually do it in

1. Settle the investor case first. Who are the first three investors, what fund type can they buy, and does their counsel accept the vehicle?
2. Decide what the ADGM entity really does. Management, advisory or distribution, and who sits in Abu Dhabi. This determines the permission you apply for.
3. Hold the initial FSRA meeting with a draft business plan and named individuals, not placeholders.
4. Run the application and the corporate set-up in parallel, so the Restricted Scope Company, GP and fund vehicle documents are ready when the IPA lands.
5. Clear the IPA conditions, receive the permission, then notify or register the fund according to its type before the first close.

Tax sits alongside all of this. An ADGM manager is within UAE corporate tax and may be able to access Qualifying Free Zone Person status on qualifying income, subject to conditions. There is no personal income tax on employment or investment income for the individuals who relocate, which matters to the team, though their home-country exit rules are a separate question.

Substance is judged on what happens, not what is filed

The FSRA expects resident senior management and decisions taken locally. The Qualifying Free Zone Person conditions separately look for adequate substance in the free zone. Both point the same way: people in Abu Dhabi with real authority, board and investment committee meetings held there and minuted there, and records that show it.

What we see go wrong is a firm that meets the resident-officer rule on paper while every decision is still made in the home office. It passes authorisation. It then struggles at the first supervisory visit, and it gives a tax auditor an easy argument. If you are moving people as well as permissions, our guide to relocating a fund manager to the UAE covers the personal side, and most of it applies equally to Abu Dhabi.

What changed in 2026, and what has not yet

Two FSRA changes are final. The anti-money laundering framework was updated to reflect federal legislation and FATF recommendations, with the AML and Sanctions Rulebook revised in May 2026; expect your MLRO's procedures to be read against the new text. And on 29 April 2026 the FSRA finalised its framework for staking of virtual assets, which is relevant if a digital asset fund intends to stake holdings. The funds reform under Consultation Paper No. 12 is still a proposal.

Who ADGM suits, and who should look elsewhere

ADGM suits a manager whose anchor or pipeline is Abu Dhabi institutional capital, a venture or smaller private markets manager who can use the lighter regimes, and a firm whose documents and counsel are rooted in English law. It also suits managers prepared to put genuine decision-makers on the ground.

It suits less well a manager whose investors are mainly Dubai family offices and private banks, a hedge fund that needs a dense local prime brokerage community from day one, or a firm hoping to run an ADGM vehicle remotely under the foreign fund manager route. That last plan may still work today. I would not launch a new product on it.

Where Atlas fits

We work on the corporate side of ADGM fund structures: entity formation for the manager, GP and SPVs, company service provider support, governance and board administration, and coordinating the practical IPA conditions, working alongside the manager's regulatory counsel on the FSRA application. Our ADGM page sets out that work, and our fund setup service covers both centres. Atlas is part of the GTAG/Assetica group, and where a structure needs tax advice we can bring in GTAG's tax advisory team. If you are weighing Abu Dhabi for a fund, send us the investor case and the team you plan to put there, and we will tell you honestly whether ADGM is the right answer.