ADGM fines businessman and his two companies $144,000 for regulatory breaches

They were penalised over exceeding the scope of their special purpose vehicle licence and providing false information

The Abu Dhabi Global Market is an international financial centre and free zone located on Al Maryah Island. Victor Besa / The National

Abu Dhabi Global Market’s Registration Authority has imposed financial penalties totalling $144,000 on businessman Mohammed Wasim Nazir and two of his ADGM-registered companies for violating the financial centre’s regulations.

The businessman and his ADGM-registered companies, HSQ Holdings and PL1 Holdings, were fined for exceeding the scope of their special purpose vehicle licence, contravening ADGM’s company regulations administered by the RA and providing false information, the authority said in a statement on Wednesday.

HSQ and PL1 were registered by the RA in 2019 to carry out the business activities of an SPV, which is a passive entity and not an operational one.

However, the RA found that both the companies had exceeded the scope of their licence by acting as managers of two residential investment properties located in the UAE.

ADGM also said Mr Nazir had filed the applications in 2021 to voluntarily strike the two companies’ names off the RA register and knowingly provided false information to the authority, claiming that the companies did not have any liabilities or prospective liabilities, even though there were ongoing claims and disputes with the investment properties’ apartment owners.

Further, the RA found that PL1 had continued conducting business even after the submission of the voluntary strike-off application, which is a contravention of ADGM’s companies regulations administered by the RA.

Mr Nazir also concealed material information and documents in response to the RA requirement notices for conducting an investigation into the activities of the companies, it said.

Following the investigation, the RA imposed fines of $114,000 on Mr Nazir, $15,000 on HSQ and $15,000 on PL1, according to the statement.

“The fines imposed demonstrate the RA’s intolerance to the misconduct of concealing relevant information and documents during lawful investigations,” said Hamad Al Mazrouei, chief executive of the Registration Authority at ADGM.

“The RA expects complete transparency from registered directors, especially during the course of its investigations. ADGM-registered companies must also reflect the true scope of their commercial licence to prospective clients or investors to protect their interests and to ensure that the integrity of ADGM is protected.”

ADGM, opened in 2015, aims to connect the emirate with international markets in the Middle East, Africa, South Asian and East Asian economies, and is part of Abu Dhabi's efforts to diversify its economy.

It grew its assets under management by 56 per cent last year as it welcomed more businesses and expanded its workforce, retaining its status as one of the fastest growing financial centres in the Mena region.

Total active licences at the financial free zone grew by 30 per cent annually to 5,546, including permits for both financial services and non-financial companies, while ADGM Square’s workforce rose by about 29 per cent annually to 10,954, it said in March.

Last month, it was announced that the free zone will be expanded tenfold with Reem Island added to its jurisdiction, increasing the district's combined geographic area to about 1,438 hectares.

The move will make it one of the world’s largest international financial districts, ADGM said.