In the UAE, funds are structured as collective investment vehicles that aggregate capital from several investors to pursue common financial objectives, such as capital growth, income generation, or a combination of both.
In Which Locations Can Funds Be Set Up in the UAE?
Mainland UAE
Supervised by the Securities and Commodities Authority (SCA) and operated under federal legislation.
Dubai International Financial Centre (DIFC)
Supervised by the Dubai Financial Services Authority (DFSA) and governed by specific free-zone regulations.
Abu Dhabi Global Market (ADGM)
Regulated by the Financial Services Regulatory Authority (FSRA) and operating under its own set of rules and regulations.
Categories of Funds in the UAE
01
Exempt Funds
Administered by experienced professionals with full discretion to make investment decisions in accordance with predetermined objectives and risk parameters.
- The minimum investment required in DIFC and ADGM is set at USD 50,000.
- The maximum number of investors allowed per fund in DIFC and ADGM is 100.
02
Public Funds
Funds with an open-ended structure designed to aggregate capital from retail, institutional, and professional investors through a public offering.
- There is no minimum investment requirement
03
Qualified Investor Funds - QIFs
Designed for high-net-worth individuals (HNWIs), institutional investors, and experienced clients who can manage higher levels of risk.
- The minimum investment required per investor in DIFC and ADGM is USD 500,000.
- The maximum number of investors permitted per fund in DIFC and ADGM is 50.
Corporate Governance
Fund Manager
Must hold the appropriate license to oversee fund management.
Oversees the fund and its assets to achieve investment goals.
Administrator
Designated by the Fund Manager, which may either assume the role itself or appoint a registered service provider.
In charge of the daily operational and administrative oversight of investment funds, including the maintenance of fund records.
Custodian
Designated by the Fund Manager and required to be a separate legal entity from the Fund Manager.
Holds legal ownership of the fund’s assets and ensures their protection.
Establishment Process of a Fund in the UAE
01
Choose Fund Type and Jurisdiction
- Select a suitable fund structure and determine the appropriate jurisdiction based on the fund’s target market and investment objectives.
02
Designate Fund Manager
- Appoint a licensed fund manager responsible for selecting and assigning members of key bodies, including administrators, custodians, auditors, and other essential personnel.
- Ensure compliance with regulatory requirements, including anti-money laundering and counter-terrorism measures.
03
Draft Fund Documentation
- Prepare the necessary documentation based on the fund type, including a private placement memorandum or fund prospectus, an investment management agreement, a subscription agreement, and operational policies.
04
Secure Regulatory Approval
- Obtain authorization from the relevant regulatory authority and complete the fund’s registration.
05
Open Operational Accounts
- Set up a corporate bank account and onboard essential service providers to ensure efficient fund management and operations.
To learn more about opening a corporate bank account in the UAE, click here.
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