UAE Monetary Authority changes foreign funds distribution rules

The Securities and Commodities Authority (“SCA”), the federal financial regulator of the United Arab Emirates (“UAE”), has issued a series of new decisions and regulations on January 16, 2023, which will thoroughly review the public distribution of foreign funds. reforms in the UAE.

Pursuant to Decision No. 4/RM of 2023 of the Chairman of the Board of Directors of the SCA on the Procedures for the Adjustment of Circumstances for the Promotion of Foreign Fund Units in the UAE (“Foreign Fund Regulations”), which came into force on 17 January 2023, as defined in the SCA Rulebook, Promotion of foreign funds in the UAE is now limited to private placements to professional investors and/or market counterparties. As of today, the updated regulations are only available in Arabic.

In addition to other obligations under the Foreign Funds Regulations, foreign fund sponsors in the UAE must amend their arrangements with foreign fund managers to comply with the provisions of the Foreign Funds Regulations.

The Foreign Fund Regulations provide that promoters may continue to perform their obligations under contracts still in force for a period not exceeding six months from 1 January 2023 or until such contracts expire, whichever occurs first, Provided that the relevant foreign fund is renewed within the transition period and the prescribed fee is paid to the SCA.

The SCA seems to want to encourage global asset managers to set up onshore establishments and establish onshore domestic public or private funds to target investors in the UAE, in line with the new requirements and processes issued by the SCA Chairman on 16 January 2023 Board of Directors on Investment Fund Regulation 2023 Decision 1/RM. The SCA also issued decisions regarding the registration of listed securities, amending certain provisions of the SCA rulebook, clearing activities in local commodity markets, and SCA service fees.