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Saturday, June 3, 2023

Marketing foreign funds in the UAE

United Arab Emirates Securities and Commodities Authority (“SCA”) declares an investment fund registered outside the UAE mainland (“foreign fund“) can now be registered with the SCA and listed in the UAE by private placement. In order to market foreign funds to professional clients in the UAE, fund managers must pay an initial registration fee of AED 12,000, which includes a non-refundable AED 2,000 review fee and AED 10,000 for the fee for issuing the approval (from AED 35,000, non-refundable even if the registration is rejected). The fund manager must also nominate a locally licensed marketer/promoter. The approval process takes approximately five (5) working days.

The registration is valid until December 31 of the year in which the registration was issued and the renewal fee has been reduced from AED 7,500 to AED 5,000. Furthermore, state-owned entities are exempt from the applicable rules regarding the marketing of foreign funds in the UAE. The SCA also noted that it plans to introduce a requirement for SCA-registered foreign funds to have a minimum subscription of AED500,000 per professional investor investing in the fund. This provision has not yet been set in stone.

The SCA reminds the public that foreign funds are not allowed to make offers to retail investors, but are expected to use foreign funds in ADGM (“ADGM”), Dubai International Financial Center (“Dubai International Financial Center”) or UAE mainland feeder funds will be permitted to market to retail investors in the UAE mainland, provided the DIFC or ADGM feeder fund complies with the Passport Regime and the UAE mainland feeder fund complies with the SCA Fund Regulations.

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