June 13, 2024

Advising an AI-based Fintech Company on its Global Restructuring

Introduction

The Client – a group of companies offering SaaS to financial institutions to enable them to revolutionise the lending market using proprietary Artificial Intelligence (“AI”) models.

The Client sought to revamp its existing corporate structure, which consisted of a North American holding company and branches and subsidiaries across multiple jurisdictions.

The Client engaged us to conduct an analysis and provide recommendations for overhauling its structure to optimise operations, manage existing intellectual property (“IP”), and accommodate new IP developments.

Challenge

The primary challenge involved restructuring the Client’s multi-jurisdictional corporate structure while ensuring regulatory compliance, tax efficiency, and seamless IP management. Additionally, the Client aimed to facilitate new IP development by its key personnel in a separate structure.

Strategies, Tactics, and Solutions

Our team comprehensively reviewed the Client’s existing structure, agreements, and objectives. We analysed the benefits of incorporating a new holding company in the Dubai International Financial Centre (“DIFC”) free zone, leveraging its strategic location, robust legal framework, tax advantages, and progressive regulations. We also outlined the advantages of having an existing company with the same Ultimate Beneficial Owners (“UBOs”) in the DIFC in terms of discounts and ease of incorporation.

We recommended amending the employment contracts of the Client’s key personnel to enable them to own and transfer any new IP developed by them. This involved reviewing bylaws, drafting amendments, and outlining processes for board resolutions and agreement executions.

Furthermore, we proposed a parallel structure by incorporating a new AI-licensed DIFC entity to collectively own and manage any new IP created by the Client’s key personnel.

Outcomes

Our tailored strategy provided a step-by-step roadmap for the Client’s restructuring, covering incorporation processes, agreement amendments, asset transfers, and the winding down of the existing Delaware holding company.

The recommended DIFC holding company structure offers cost efficiencies, regulatory alignment, and growth opportunities. Meanwhile, the proposed AI-licensed entity ensures collective IP ownership, reduced licensing costs, and visa benefits.

Our advice has enabled the Client to navigate the intricate restructuring process effectively while positioning the company for operational excellence and future innovation in the AI-driven fintech landscape.

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