The Riffle
The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has issued Consultation Paper No. 2 of 2026, proposing significant reforms to the framework governing the transfer of financial services businesses under Part 7 of the Financial Services and Markets Regulations (FSMR).
The proposals seek to modernise the existing Transfer Scheme regime by moving away from a universal requirement for court-sanctioned business transfers. Instead, the FSRA proposes a more proportionate, risk-based framework that retains mandatory court oversight for insurance business transfers while introducing a new Modified Transfer Scheme for most other regulated activities.
If implemented, these changes are expected to reduce transaction costs and timelines while preserving appropriate regulatory oversight and client protections.
Key Highlights
1. Mandatory court sanctioning would be limited primarily to insurance business transfers
Under the proposal, mandatory court approval would no longer apply to every transfer of regulated business. Instead, it would remain mandatory primarily for insurance business transfers, recognising the heightened need to protect policyholder interests.
2. Most other regulated businesses would move to a Modified Transfer Scheme
Transfers involving banking businesses, investment firms and other financial services businesses would generally be able to proceed under a new Modified Transfer Scheme without obtaining mandatory court sanction.
Domestic funds would continue to be governed under the existing funds framework rather than the proposed transfer scheme regime.
3. Firms could still choose to seek court approval where appropriate
Although court sanction would no longer be mandatory for many transfers, firms would retain the option of applying for a court order where additional legal certainty is desirable.
The FSRA indicates that this may be appropriate for complex transfers, transactions affecting a large number of clients, or situations where enhanced judicial certainty is beneficial.
4. New regulatory safeguards would apply to Modified Transfer Schemes
To ensure that streamlined transfers continue to protect clients, the FSRA proposes several minimum safeguards, including:
Prior written notification to the FSRA.
Direct notification to all affected clients explaining the proposed transfer and its impact.
Publication of a public notice on the transferor’s or transferee’s website.
These measures are intended to maintain transparency while avoiding the delays associated with mandatory court proceedings.
5. Banking and certain insurance transfers would require FSRA ‘no-objection’
Although banking transfers would not require court sanction, they would remain subject to enhanced regulatory oversight through a formal FSRA no-objection process.
Similarly, intragroup insurance transfers and reinsurance transfers that are exempt from mandatory court approval would also require an FSRA no-objection before completion.
6. Consultation remains open until 21 September 2026
The consultation closes on 21 September 2026. Following industry feedback, the FSRA will consider amendments before implementing changes to the General Rulebook (GEN), Glossary (GLO) and Guidance and Policies Manual (GPM). Firms have also been advised not to rely on the proposals until the final rules are formally issued.
Next Steps
The FSRA is currently seeking industry feedback on the proposed enhancements before finalising the amendments.
Following the consultation, the FSRA will review stakeholder responses and determine whether any modifications are required before implementing changes to the General Rulebook (GEN), Glossary (GLO), and Guidance and Policies Manual (GPM). Until the final rules are issued, Authorised Persons and Recognised Bodies have been advised not to act on the proposals as though they are already in force.
The Riffle Takeaway
The FSRA’s proposals represent a significant shift towards a more proportionate and risk-based approach to business transfers within ADGM. By reserving mandatory court sanctioning for insurance business while introducing a streamlined Modified Transfer Scheme for most other regulated activities, the regulator aims to reduce unnecessary costs and delays without compromising regulatory oversight or client protection.
For authorised firms considering restructurings, acquisitions or business transfers, these reforms could materially simplify future transactions if adopted in their current form. However, firms should continue to monitor the consultation process, as the proposals remain subject to feedback before being finalised.
