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Posted By: Jessica Augustin | 12 Jul 2017

ISPV as a tool to mitigate financial,legal & reputational risks for Holding Groups

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Advantages of the ISPV SETUP IN DIFC

More and more businesses are not only getting aware of the ISPV but also look for experts who can facilitate the entire procedure. Read below the blog update on ISPV exclusively shared by our expert;

INTRODUCTION

ISPV stands for Intermediate Special Purpose Vehicle which is customarily used to re-structure and ring fence the investments with the activity of Intermediate Holding company under DIFC regime. ISPVs can be used by all business segments. The most common practice is done by Fund Manager or holding companies inside DIFC to ring-fence their liabilities and assets from additional fund structures further down the same group of companies.

ISPV is a tool to mitigate the reputational, financial and legal risk of the parent holding company and can be benefited with wealth planning for family owned businesses like family offices or holding groups.

An ISPV can never be the operating company nor the primary holding company of the parent company and should be incorporated as LTD or LLC subject to DIFC Company Laws/Regulations.

Modest Definition.

ISPVs are used to avoid substantial amalgamation of investments or assets under one group and diversify the holding portfolio under integrated holding companies activity. They are entirely maintained by the parent holding company.

Why an ISPV in DIFC.

  • 100 % ownership
  • Zero Tax
  • Enhanced by the UAE’s wide network of double taxation avoidance treaties.
  • Easy repatriation
  • US dollar-denominated jurisdiction.
  • Common Law.

Specific uses and benefits of DIFC ISPVs:

  • STRATEGIC PLANNING
  • INTELLECTUAL PROPERTY
  • RING-FENCE ASSETS
  • SECURITISATION
  • RISK SHARING
  • TAX EFFICIENCY
  • SUCCESSION PLANNING

Rudimentary Example

You have diverse trading & service business and you are also planning international investments and in future, you want to exit from one the business. So, you don’t want the legal, reputational or financial effect on the parent holding company-then in this case, ISPV is the best solution and you can diversify the holding portfolio under one parent company and exit for the investments will be very altruistic and unpretentious.

 

Graphic Structural Illustration of ISPVs

Graphic Structural Illustration of ISPVs

 

 

HOW CAN NASEH AHMED HELP?

 

Naseh Ahmed has expertise in DIFC incorporation and is authorized representative for some highly esteemed groups with DIFC & DFSA, He will partner with your company for guiding you through the whole process of incorporation and make sure everything falls under the compliance policies, procedures, system and controls needed to meet the DFSA’S requirement.

Role doesn’t end here- Naseh Ahmed can help you for ongoing compliance advice and connect you with training on risk and governance. He can also connect you to a compliance officer and MLRO on and outsourced basis.

Contact Naseh Today on naseh.ahmed@adamglobal.com

 

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