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Annex D General (GEN)



In this Annex, underlining indicates new text and striking through indicates deleted text.

GEN 5 Management, Systems and Controls

GEN 5.1 Application

GEN 5.1.1

(1) This chapter applies to every Authorised Firm Authorised Person with respect to the Financial Services carried on in or from the DIFC.
(2) It also applies in a Prudential Context to a Domestic Firm with respect to all its activities whether they are carried on.
(3) Section 5.3 also applies to an Authorised Firm in a Prudential Context with respect to its entire DIFC branch's activities wherever they are carried on.

GEN 5.1.1 Guidance

The purpose of this chapter is:

a. to set out requirements for senior management within an Authorised Firm Authorised Person to take direct responsibility for their Authorised Firm Authorised Person's arrangements on matters likely to be of interest to the DFSA wherever they may give rise to risks to the DFSA's objectives or they affect the DFSA's functions under the legislation applicable in the DIFC; and
b. to require an Authorised Firm to vest responsibility in senior management for effective and responsible organisation and to have effective system and controls.

GEN 5.2 Senior management arrangements

Apportionment of significant responsibilities

GEN 5.2.1

An Authorised Firm Authorised Person must apportion significant responsibilities among its senior management and maintain such a way that:

(a) it is appropriate with regard to:
(i) the business an affairs of the Authorised Firm Authorised Person; and
(ii) he ability and qualifications of the responsible individuals;
(b) it is clear who is responsible for which matters; and
(c) the business and affairs of theAuthorised Firm Authorised Person can be adequately monitored and controlled by the Authorised Firm Authorised Person's Governing Body and senior management.

GEN 5.2.2

An Authorised Firm Authorised Person must allocate to the Senior Executive Officer or to the individual holding equivalent responsibility for the conduct for the Authorised Firm Authorised Person's business or the Governing Body, the functions of:

(a) dealing with the apportionment of responsibilities; and
(b) overseeing the establishment and maintenance of systems and controls.

Recording of apportionment

GEN 5.2.3

(1) An Authorised Firm Authorised Person must establish and maintain an up-to-date record of the arrangements it has made to comply with Rules 5.2.1 and 5.2.2.
(2) The record must show that the relevant senior management are aware of and have accepted the responsibilities apportioned in accordance with rule 5.2.1.
(3) Where a responsibility has been allocated to more than one individual, the record must show clearly how that responsibility is allocated between the individuals.
(4) The record must be retained for six years from the date on which it was established or superseded by a more up-to-date record.

GEN 5.3 Systems and controls

General requirement

GEN 5.3.1

(1) An Authorised Firm Authorised Person must establish and maintain systems and controls that ensure that its affairs are managed effectively and responsibly by its senior management.
(2) An Authorised Firm Authorised Person must undertake regular reviews of its systems and controls.

GEN 5.3.1 Guidance

The nature and extent of the systems and controls of an Authorised Firm Authorised Person will depend upon a variety of factors including the nature, size and complexity of its business. While all Authorised Firm Authorised Persons, irrespective of size, legal structure or organisation need to comply with this chapter, the DFSA will take into account these factors and the differences that exist between Authorised Firm Authorised Persons when assessing the adequacy of an Authorised Firm Authorised Person's systems and controls. Nevertheless, neither these factors nor the differences relieve an Authorised Firm Authorised Person from compliance with its regulatory obligations.

Organisation

GEN 5.3.2

An Authorised Firm Authorised Person must implement clear reporting lines that take into account the nature, scale and complexity of its business. These reporting lines, together with clear management responsibilities, must be communicated to all Employees and documented within the Authorised Firm Authorised Person.

GEN 5.3.3

An Authorised Firm Authorised Person must ensure that key duties and functions are segregated so as to avoid the situation where the allocation of duties and functions to be performed by the same individual could result in undetected errors or be vulnerable to abuse and thus expose the Authorised Firm Authorised Person or its customers or users to inappropriate risks.

Risk management

GEN 5.3.4

An Authorised Firm Authorised Person must establish and maintain risk management systems and controls to enable it to identify, assess, mitigate, control and monitor its risks.

GEN 5.3.5

An Authorised Firm Authorised Person must develop, implement and maintain policies and procedures to manage the risks to which the Authorised Firm Authorised Person and where applicable, its customers or users, are exposed.

GEN 5.3.6

(1) An Authorised Firm Authorised Person must appoint an individual to advise its Governing Body and senior management of such risks.
(2) An Authorised Firm Authorised Person which is part of a Group should be aware of the implications of any Group wide risk policy and systems and controls regime.

Compliance

GEN 5.3.7

An Authorised Firm must establish and maintain compliance arrangements, including processes and procedures that ensure and evidence, as far as reasonably practicable, that the Authorised Firm complies with all legislation applicable in the DIFC.

GEN 5.3.8

An Authorised Firm must document the organisation, responsibilities and procedures of the compliance function.

GEN 5.3.9

An Authorised Firm must ensure that the Compliance Officer has access to sufficient resources, including an adequate number of competent staff, to perform his duties objectively and independently of operational and business functions.

GEN 5.3.10

An Authorised Firm must ensure that the Compliance Officer has unrestricted access to relevant records and to the Authorised Firm's Governing Body and senior management.

GEN 5.3.11

An Authorised Firm must establish and maintain monitoring and reporting processes and procedures to ensure that any compliance breaches are readily identified, reported and promptly acted upon.

GEN 5.3.12

An Authorised Firm must document the monitoring and reporting processes and procedures as well as keep records of breaches of any of legislation applicable in the DIFC.

GEN 5.3.12 Guidance

Similar requirements to those in Rules 5.3.7 to 5.3.12 are set out in AMI in relation to AMIs.

Internal audit

GEN 5.3.13

(1) An Authorised Firm Authorised Person must establish and maintain an internal audit function with responsibility for monitoring the appropriateness and effectiveness of its systems and controls.
(2) The internal audit function must be independent from operational and business functions.

GEN 5.3.14

An Authorised Firm Authorised Person must ensure that its internal audit function has unrestricted access to all relevant records and recourse when needed to the Authorised Firm Authorised Person's Governing Body or the relevant committee, established by its Governing Body for this purpose.

GEN 5.3.15

An Authorised Firm Authorised Person must document the organisation, responsibilities and procedures of the internal audit function.

Business plan and strategy

GEN 5.3.16

(1) An Authorised Firm Authorised Person must produce a business plan which enables it, amongst other things, to manage the risks to which it and its customers are exposed.
(2) The business plan must take into account the Authorised Firm Authorised Person's current business activities and the business activities forecast for the next twelve months.
(3) The business plan must be documented and updated as appropriate to take account of changes in the business environment and to reflect changes in the business of the Authorised Firm Authorised Person.

Management information

GEN 5.3.17

An Authorised Firm Authorised Person must establish and maintain arrangements to provide its Governing Body and senior management with the information necessary to organise and control its activities, to comply with legislation applicable in the DIFC and to manage risks. The information must be relevant, accurate, comprehensive, timely and reliable.

Staff and agents

GEN 5.3.18

An Authorised Firm Authorised Person must establish and maintain systems and controls that enable it to satisfy itself of the suitability of anyone who acts for it.

GEN 5.3.19

(1) An Authorised Firm must ensure, as far as reasonably practical, that its staff are:
(a) fit and proper;
(b) appropriately trained for the duties they perform; and
(c) trained in the requirements of the legislation applicable in the DIFC.
(2) An Authorised Firm must establish and maintain systems and controls to comply with (1).

GEN 5.3.19 Guidance

When assessing the fitness and propriety of individuals, the Authorised Firm should satisfy itself that the conditions set out in AUT section A1.3 continue to apply as appropriate and should monitor conflicts or potential conflicts of interest arising from all of the individual's links and activities.

Conduct

GEN 5.3.20

An Authorised Firm Authorised Person must establish and maintain systems and controls that ensure, as far as reasonably practical, that the Authorised Firm Authorised Person and its Employees do not engage in conduct, or facilitate others to engage in conduct, which may constitute:

(a) market misconduct;
(b) Money laundering; or
(c) a financial crime under any applicable u.a.e. laws.

Outsourcing

GEN 5.3.1

(1) An Authorised Firm Authorised Person which outsources any of its functions or activities directly Related to Financial Services to third party providers (including within its Group) is not relieved of its regulatory obligations and remains responsible for compliance with legislation applicable in the DIFC.
(2) The outsourced function under this rule shall be deemed as being carried out by the Authorised Firm Authorised Person itself.
(3) An Authorised Firm Authorised Person which uses such third party providers must ensure that it:
(a) has undertaken due diligence in choosing suitable third party providers;
(b) effectively supervises the outsourced functions or activities; and
(c) deals effectively with any act or failure to act by the third party provider that leads, or might lead, to a breach of any legislation applicable in the DIFC.

GEN 5.3.1 Guidance

1. An Authorised Firm Authorised Person's outsourcing arrangements should include consideration of:
a. applicable guiding principles for outsourcing in Financial Services issued by the Joint Forum; or
b. any equivalent principles or regulations the Authorised Firm Authorised Person is subject to in its home country jurisdiction.
2. As a minimum, the DFSA expects an Authorised Firm Authorised Person which has material outsourcing arrangements to:
a. establish and maintain comprehensive outsourcing policies, contingency plans and outsourcing risk management programmes;
b. enter into an appropriate and written outsourcing contract; and
c. ensure that outsourcing arrangements neither reduce its ability to fulfil its obligations to customers and the DFSA, nor hinder the supervision by the DFSA.

GEN 5.3.2

An Authorised Firm Authorised Person must inform the DFSA about any material outsourcing arrangements.

Business continuity and disaster recovery

GEN 5.3.3

(1) An Authorised Firm Authorised Person must have in place adequate arrangements to ensure that it can continue to function and meet its obligations under the legislation applicable in the DIFC in the event of an unforeseen interruption.
(2) These arrangements must be kept up to date and regularly tested to ensure their effectiveness.

GEN 5.3.3 Guidance

1. In considering the adequacy of an Authorised Firm Authorised Person's business continuity arrangements, the DFSA will have regard to the Authorised Firm Authorised Person's management of the specific risks arising from interruptions to its business including its crisis management and disaster recovery plans.
2. The DFSA expects an Authorised Firm Authorised Person to have:
a. arrangements which establish and maintain the Authorised Firm Authorised Person's physical Security and protection for its information systems for business continuity purposes in the event of planned or unplanned information system interruption or other events that impact on its operations;
b. considered its primary data centres' and business operations' reliance on infrastructure components, for example transportation, telecommunications networks and utilities and made the necessary arrangements to minimise the risk of interruption to its operations by arranging backup of infrastructure components and service providers; and
c. considered, in its plans for dealing with a major interruption to its primary data centre or business operations, its alternative data centres' and business operations' reliance on infrastructure components and made the necessary arrangements such that these do not rely on the same infrastructure components and the same service provider as the primary data centres and operations.

Complaints

GEN 5.3.4

An Authorised Firm Authorised Person must establish and maintain a register of Customer Complaints and their resolutions. Records of the complaints must be maintained for a minimum of six years.

GEN 5.3.4 Guidance

Depending on the nature, size and complexity of its business, it may be appropriate for an Authorised Firm Authorised Person to have a suitable complaint handling procedure in place in order to ensure that Customer Complaints are properly handled and that remedial action is taken promptly. Such complaint handling procedures would be expected to include provisions about the independence of staff investigating the complaint and bringing the matter to the attention of senior management.

Records

GEN 5.3.5

(1) An Authorised Firm Authorised Person must make and retain records of matters and dealings, including accounting records which are the subject of requirements and standards under the legislation applicable in the DIFC.
(2) Such records, however stored, must be capable of reproduction on paper within a reasonable period not exceeding three days.

GEN 5.3.6

Subject to rule 5.3.27, the records required by rule 5.3.25 or by any other rule in this Rulebook must be maintained by the Authorised Firm Authorised Person in the English language.

GEN 5.3.7

If an Authorised Firm Authorised Person's records relate to business carried on from an establishment in a territory outside the DIFC, an official language of that territory may be used instead of the English language as required by rule 5.3.26.

GEN 5.3.8

An Authorised Firm Authorised Person must have systems and controls to fulfil the Authorised Firm Authorised Person's legal and regulatory obligations with respect to adequacy, access, period of retention and Security of records.

GEN 6 General Provisions

GEN 6.1 Application

GEN 6.1.1

(1) Sections 6.1, 6.2, 6.3 and 6.2, 6.9 apply to every Person to whom any provision in the Rulebook applies.
(2) Section 6.3 and 6.4 applyies to every Authorised Firm and Authorised Market Institution Person.
(3) Sections 6.5 and 6.6 apply to every Authorised Firm, Authorised Market Institution and Person who has submitted an application for authorisation to carry on one or more Financial Services.
(4) Section 6.7 applies to any Person who has been affected by the activities of the DFSA.
(5) Section 6.8 applies to the DFSA.

GEN 6.2 Interpreting the rulebook

GEN 6.2 Guidance

Interpretation

1. Every provision in the Rulebook must be interpreted in the light of its purpose. The purpose of any provision is to be gathered first and foremost from the text of the provision in question and its context among other relevant provisions.
2. When this section refers to a provision, this means every type of provision, including Rules and Guidance.
3. Where reference is made in the Rulebook to another provision of the Rulebook or other DIFC legislation, it is a reference to that provision as amended from time to time.
4. Unless the contrary intention appears:
a. words in the Rulebook importing the masculine gender include the feminine gender and words importing the feminine gender include the masculine; and
b. words in the Rulebook in the singular include the plural and words in the plural include the singular.
5. If a provision in the Rulebook refers to a communication, notice, agreement, or other document 'in writing' then, unless the contrary intention appears, it means in legible form and capable of being reproduced on paper, irrespective of the medium used. Expressions Related to writing must be interpreted accordingly.
6. Any reference to 'dollars' or '$' is a reference to United States Dollars unless the contrary intention appears.
7. References to Articles made throughout the Rulebook are references to Articles in the Regulatory Law 2004 unless otherwise stated.
8. Unless the contrary intention appears, a day or business day refers to:
a. in relation to anything done or to be done in (including to be submitted to a place in) the u.a.e. any day which is not a Friday or Saturday or an official u.a.e. Bank holiday; and
b. in relation to anything done or to be done by reference to a market outside the u.a.e. any day on which that market is normally open for business.

Defined Terms

9. Defined terms are identified throughout the Rulebook by the capitalisation of the initial letter of a word or of each word in a phrase and are defined in the Glossary (GLO). Unless the context otherwise requires, where capitalisation of the initial letter is not used, an expression has its natural meaning.

GEN 6.3 Emergency

GEN 6.3.1

(1) If an Authorised Firm or Authorised Market Institution Person is unable to comply with a particular rule due to an emergency which is outside its or its Employees' control and could not have been avoided by taking all reasonable steps, the Authorised Firm or Authorised Market Institution Person will not be in contravention of that rule to the extent that, in consequence of the emergency, compliance with that rule is impractical.
(2) This rule applies only for so long as the consequences of the emergency continue and the Authorised Firm or Authorised Market Institution Person is able demonstrate that it is taking all practical steps to deal with those consequences, to comply with the rule, and to mitigate losses and potential losses to its customers or users.
(3) An Authorised Firm or Authorised Market Institution Person must notify the DFSA as soon as practical of the emergency and of the steps it is taking and proposes to take to deal with the consequences of the emergency.

GEN 6.3.1 Guidance

1. Procedures for notification to the DFSA are set out in SUP chapter 7.
2. The Rules in section 6.3 do not affect the powers of the DFSA under Article 9 of the Markets Law 2004.

GEN 6.4 Disclosure of regulatory status

GEN 6.4.1

An Authorised Firm or Authorised Market Institution Person must not misrepresent its status expressly or by implication.

GEN 6.4.2

(1) An Authorised Firm or Authorised Market Institution Person must take reasonable care to ensure that every key business document which is in connection with the Authorised Firm or Authorised Market Institution Person carrying on a Financial Service in or from the DIFC includes one of the disclosures under this rule.
(2) A key business document includes letterhead whether issued by post, fax or electronic means, terms of business, Client agreements, written promotional materials, business cards, prospectuses and websites but does not include compliment slips, account statements or text messages.
(3) The disclosure required under this rule is:
(a) 'Regulated by the DIFC Financial Services Authority'; or
(b) 'Regulated by the DFSA'.
(4) The DFSA logo must not be reproduced without express written permission from the DFSA and in accordance with any conditions for use.

GEN 6.5 Location of offices

GEN 6.5.1

(1) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services, is a Body Corporate incorporated under the Companies Law 2004, its head office and registered office must be in the DIFC.
(2) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services, is a Partnership established under the Limited Liability Partnership Law 2004 or the General Partnership Law 2004, its head office must be in the DIFC.
(3) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services is an unincorporated association formed within the jurisdiction of the DIFC, its head office must be in the DIFC.

GEN 6.5.1 Guidance

1. In considering the location of an Authorised Firm's or Authorised Market Institution's head office, the DFSA will have regard to the location of its Directors, partners and senior management and to the main location of its day-to-day operational, control, management and administrative arrangements and will judge matters on a case by case basis.
2. Under the fit and proper test for Authorised Firms and the lLicensing rRequirements for Authorised Market Institutions, an Authorised Firm or Authorised Market Institution which does not satisfy the DFSA with respect to the location of its offices will, on this point alone not be considered fit and proper or able to satisfy the Licensing Requirements.

GEN 6.6 Close links

GEN 6.6.1

(1) Where an Authorised Firm or Authorised Market Institution Person or a Person who has submitted an application for authorisation to carry on one or more Financial Services has Close Links with another Person, the DFSA must be satisfied that those Close Links are not likely to prevent the effective supervision by the DFSA of the Authorised Firm or Authorised Market Institution Person.
(2) If requested by the DFSA the Authorised Firm and Authorised Market Institution Person must submit a Close Links report or notification, in a form specified by the DFSA. This may be requested on an ad hoc or periodic basis.

GEN 6.6.1 Guidance

1. Procedures for notification to the DFSA are set out in SUP chapter 7.
2. Under the fit and proper test for Authorised Firms and the lLicensing rRequirements for Authorised Market Institutions, an Authorised Firm or Authorised Market Institution which does not satisfy the DFSA with respect of its Close Links will, on this point alone, not be considered fit and proper or able to satisfy the Licensing Requirements.

GEN 6.7 Complaints against the DFSA

GEN 6.7 Guidance

1. A Person who feels he has been adversely affected by the manner in which the DFSA has carried out its functions may make a complaint to the DFSA about its conduct or the conduct of its Employees.
2. A complaint must be in writing and should be addressed to the Chief Executive of the DFSA. The complaint will be dealt with by the DFSA in a timely manner.

GEN 6.8 Public register

Maintenance and publication

GEN 6.8.1

The registers required to be maintained and published by the DFSA pursuant to Article 62 shall be published and maintained in either or both of the following manners:

(a) by maintaining hard copy registers which are made available for inspection at the premises of the DFSA during normal business hours; or
(b) by maintaining an electronic version of the registers and making the information from those registers available through the DFSA website.

GEN 6.9 Communication with the DFSA

GEN 6.9.1

An Authorised Firm Person or Recognised Person must ensure that any communication with the DFSA is conducted in the English language.

GEN 7 Fees

GEN 7.1 Application

GEN 7.1.1

This chapter applies to every:

(a) Authorised Firm, Authorised Market Institution Person and applicant for a Licence;
(b) applicant for Recognition as a Recognised Body;
(c) Recognised Body;
(bd) applicant for registration as an auditor with the DFSA; and
(ce) auditor registered with the DFSA.

GEN 7.2 General provisions

GEN 7.2.1

Where a Fee is payable for any application to the DFSA, the application will not be regarded as submitted until the Fee and any supplementary Fee has been paid in full.

GEN 7.2.2

Where an annual Fee or supplementary Fee in relation to ongoing supervision is due from any Person under a provision of these Rules, the Person must pay it by the date on which it becomes due. If he fails to do so then, without limiting the right of the DFSA to take any other action, the sum due shall be increased by 1% for each calendar month, or part of a calendar month, that it remains outstanding beyond the due date.

GEN 7.2.2 Guidance

If a Fee is not paid by the date on which it becomes due, the Person is in breach of a rule and the DFSA is entitled to take action including, but not limited to, taking steps to withdraw authorisation to conduct one or more Financial Services.

GEN 7.2.3

The DFSA may reduce, waive or refund all or part of any Fee if it considers that, in the exceptional circumstances of a particular case, it would be equitable to do so.

GEN 7.2.4

(1) The DFSA may require a Person to pay to the DFSA a supplementary Fee in circumstances where it expects to incur substantial additional costs in dealing with an application or conducting ongoing supervision.
(2) In such cases the DFSA will notify the Person as soon as reasonably possible of the amount of the supplementary Fee.

GEN 7.2.4 Guidance

1. A supplementary Fee may be levied by the DFSA because it expects that certain applications will require more intensive scrutiny than others. An example is where the entity is a Branch from a jurisdiction where there are not or are not expected to be in place arrangements for co-operation between the DFSA and the relevant Regulators in that jurisdiction. Equally, where the entity is incorporated in the DIFC, a full analysis of the prudential and systems arrangements will be required.
2. A supplementary Fee may also be levied by the DFSA in cases where the ongoing supervision of the Authorised Firm or Authorised Market Institution Person appears to the DFSA to be likely to cause it to incur substantial additional costs.

GEN 7.3 Application fees

GEN 7.3.1

The following Persons:

(a) an applicant for a Licence; and
(b) an Authorised Firm or Authorised Market Institution Person applying for authorisation to carry on an additional Financial Service,
must pay to the DFSA:
(c) the applicable Fee specified in section A5.2 or A5.3 as appropriate; and
(d) any supplementary Fee required by the DFSA.

GEN 7.3.2

An applicant for registration as an auditor with the DFSA must pay to the DFSA the applicable Fee specified in App6.

GEN 7.3.3

An applicant for Recognition as a Recognised Body must pay to the DFSA the applicable Fee specification in App 7.

-para;

GEN 7.4 Annual fees

GEN 7.4.1

An Authorised Firm or Authorised Market Institution Person must pay to the DFSA:

(a) the applicable Fee specified in section A5.4; and
(b) any supplementary Fee required by the DFSA.

GEN 7.4.2

An auditor registered with the DFSA must pay to the DFSA the applicable Fee specified in App6.

GEN 7.4.3

(1) The initial annual Fee must be paid in full to the DFSA within 21 days of the date on which the Licence or registration is granted.
(2) Subsequent annual Fees must be paid in full to the DFSA on or before 1 January of any calendar year.

GEN 7.4.3 Guidance

In regard to the payment of an annual Fee on or before 1 January, invoices will be issued at least 21 days before that date.

GEN 8. Accounting and Auditing

GEN 8.1 Application

GEN 8.1.1

This chapter applies to every:

(a) Authorised Firm Authorised Person;
(b) applicant for registration as an auditor with the DFSA; and
(c) auditor registered with the DFSA.

GEN 8.2 Accounting standards

GEN 8.2.1

(1) An Authorised Firm Authorised Person must prepare and maintain all financial accounts and statements in accordance with the International Financial Reporting Standards (IFRS) unless (2) or (3) applies.
(2) If an Authorised Firm Authorised Person is an Islamic Financial Institution it must prepare and maintain all financial accounts and statements in accordance with the accounting standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
(3) If an Authorised Firm Authorised Person operates an Islamic Window it must prepare and maintain all financial accounts and statements in accordance with the IFRS, as supplemented by AAOIFI FAS 18 in respect of its Islamic Financial Business.

GEN 8.2.1 Guidance

1. AAOIFI FAS 18 sets out the accounting rules for recognising, measuring and presenting the assets managed and funds mobilised on the basis of Islamic Shari'a rules and principles in the financial accounts and statements of conventional Financial Institutions that Offer Islamic Financial Services, as well as the income generated from these services. The standard also determines the necessary disclosures Related to these services.
2. Under AAOIFI FAS 18,Authorised Firm Authorised Persons which operate Islamic Windows must disclose (in their relevant financial statements) the following:
a. whether or not they co-mingle funds Related to Islamic Financial Business with funds relating to conventional financial business;
b. the sources and applications of funds mobilised and invested through their Islamic Financial Business and the sources of funds used to cover a deficit if it occurs;
c. any reserves of expenditures prohibited by Shari'a and the disposition of any revenues, the latter shall be determined by the Shari'a Supervisory Board;
d. any reserves deducted from the funds mobilised according to Shari'a, the purpose of such reserves and to whom the reserves shall revert in the case where the activities in respect of which the reserves were deducted have ceased; and
e. the percentage amount of funds relating to Islamic Financial Business in comparison with the percentage amount of funds relating to conventional financial business.

GEN 8.3 Accounting records and regulatory returns

GEN 8.3.1

Every Authorised Firm Authorised Person must keep accounting records which are sufficient to show and explain transactions and are such as to:

(a) be capable of disclosing the financial position of the Authorised Firm Authorised Person on an ongoing basis; and
(b) record the financial position of the Authorised Firm Authorised Person as at its financial year end.

GEN 8.3.2

Accounting records must be maintained by an Authorised Firm Authorised Person such as to enable its Governing Body to ensure that any accounts prepared by the Authorised Firm Authorised Person comply with the legislation applicable in the DIFC.

GEN 8.3.3

An Authorised Firm Authorised Person's accounting records must be:

(a) retained by the Authorised Firm Authorised Person for at least ten years from the date to which they relate;
(b) at all reasonable times, open to inspection by the DFSA or the auditor of the Authorised Firm Authorised Person; and
(c) if requested by the DFSA capable of reproduction, within a reasonable period not exceeding three days, in hard copy and in English.

GEN 8.3.4

All regulatory returns prepared by the Authorised Firm must be prepared and submitted in accordance with the requirements set out in PIB appendix 7 or PIN chapter 6 as applicable.

Changes to the financial year end

GEN 8.3.5

(1) If an Authorised Firm is a Domestic Firm and intends to change its financial year end, it must obtain the DFSA's prior consent before implementing the change.
(2) The application for consent must include reasons for the change.
(3) The DFSA may require the Authorised Firm to obtain written confirmation from its auditor that the change of financial year end would not result in any significant distortion of the financial position of the Authorised Firm.

GEN 8.3.6

If an Authorised Firm is not a Domestic Firm and intends to change its financial year, it must provide the DFSA with reasonable advance notice prior to the change taking effect.

GEN 8.4 Appointment and termination of auditors

GEN 8.4.1

An Authorised Firm Authorised Person must:

(a) notify the DFSA of the appointment of an auditor, including the name and business address of the auditor and the date of the commencement of the appointment;
(b) prior to the appointment of the auditor, take reasonable steps to ensure that the auditor has the required skills, resources and experience to audit the business of the Authorised Firm Authorised Person for which the auditor has been appointed; and
(c) if it is a Domestic Firm, ensure that the auditor, at the time of appointment and for the duration of the engagement as auditor, is registered with the DFSA.

GEN 8.4.2

An Authorised Firm Authorised Person must notify the DFSA immediately if the appointment of the auditor is or is about to be terminated, or on the resignation of its auditor, giving the reasons for the cessation of the appointment.

GEN 8.4.3

An Authorised Firm Authorised Person must appoint an auditor to fill any vacancy in the office of auditor and ensure that the replacement auditor can take up office at the time the vacancy arises or as soon as reasonably practicable.

GEN 8.4.4

(1) An Authorised Firm Authorised Person must take reasonable steps to ensure that the relevant audit staff of the auditor are independent of and not subject to any conflict of interest with respect to the Authorised Firm Authorised Person.
(2) An Authorised Firm Authorised Person must notify the DFSA if it becomes aware, or has reason to believe, that the relevant audit staff of the auditor are no longer independent of the Authorised Firm Authorised Person, or have a conflict of interest which may affect their judgement in respect of the Authorised Firm Authorised Person.

GEN 8.4.4 Guidance

1. The relevant staff of an auditor are independent if their appointment or retention by an Authorised Firm Authorised Person is not contrary to any applicable ethical Guidance issued by the professional supervisory body.
2. An Authorised Firm Authorised Person should consider rotating the appointed relevant staff of the auditor every five years to ensure that the relevant staff of the auditor remains independent.

GEN 8.4.5

If requested by the DFSA, an Authorised Firm Authorised Person which carries on Financial Services through a Branch must provide the DFSA with information on its appointed or proposed auditor with regard to the auditor's, skills, experience and independence.

GEN 8.4.6

Where an auditor appointed by an Authorised Firm Authorised Person is not suitable in the opinion of the DFSA, or where an auditor has not been appointed, the DFSA may direct an Authorised Firm Authorised Person to replace or appoint an auditor in accordance with the requirements in this chapter.

GEN 8.5 Co-operation with auditors

GEN 8.5.1

An Authorised Firm Authorised Person must take reasonable steps to ensure that it and its Employees:

(a) provide such assistance as the auditor reasonably requires to discharge its duties;
(b) give the auditor right of access at all reasonable times to relevant records and information;
(c) do not interfere with the auditor's ability to discharge its duties;
(d) do not provide false or misleading information to the auditor; and
(e) report to the auditor any matter which may significantly affect the financial position of the Authorised Firm Authorised Person.

GEN 8.6 Function of the auditor

GEN 8.6.1

An Authorised Firm or Authorised Market Institution, as applicable, must in writing require its auditor to:

(a) conduct an audit of the Authorised Firm Authorised Person's accounts in accordance with the requirements of the relevant standards published by the International Auditing and Assurance Standards Board (IAASB) in respect of conventional financial business and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) in respect of any Islamic Financial Business undertaken;
(b) produce a report on the audited accounts which states:
(i) whether, in the auditor's opinion, the accounts have been properly prepared in accordance with the requirements imposed by this chapter;
(ii) in particular, whether the accounts give a true and fair view of the financial position of the Authorised Firm Authorised Person for the financial year and of the State of the Authorised Firm Authorised Person's affairs at the end of the financial year end; and
(iii) any other matter or opinion relating to the requirements of this chapter;
(c) produce an Auditor's Annual Report which states whether:
(i) the auditor has audited the Authorised Firm Authorised Person's annual financial statements in accordance with the IAASB or AAOIFI in respect of Islamic Financial Business;
(ii) the auditor has carried out any other procedures considered necessary, having regard to the IAASB and to AAOIFI auditing standards in respect of Islamic Financial Business;
(iii) the auditor has received all necessary information and explanations for the purposes of preparing this report to the DFSA;
(iv) (in the case of an Authorised Firm) in the auditor's opinion, the regulatory returns specified by the applicable Rules in PIN or PIB have been properly prepared by the Authorised Firm and provide a true and fair representation of the financial position of the Authorised Firm, as at the date of the Authorised Firm's financial year end;
(v) in the auditor's opinion, the Authorised Firm Authorised Person's regulatory returns to the DFSA have been properly reconciled with the appropriate audited accounts;
(vi) (in the case of an Authorised Firm) in the auditor's opinion, that an Authorised Firm which is subject to an expenditure based requirement has calculated the expenditure based requirement in accordance with the Rules;
(vii) in the auditor's opinion, the Authorised Firm Authorised Person's financial resources as at its financial year end have been properly calculated in accordance with the Rules and are sufficient to meet the relevant prudential requirements or minimum financial resources requirement; and
(viii) in the auditor's opinion, the Authorised Firm Authorised Person has kept proper accounting records, in compliance with the applicable Rules in PIN or PIB;
(d) produce, if the Authorised Firm controls or holds Client Money, a Client Money Auditor's Report which states whether, in the opinion of the auditor:
(i) the Authorised Firm has maintained throughout the year systems and controls to enable it to comply with the relevant provisions of COB chapter 9 and, if applicable, COB App5;
(ii) the Authorised Firm's controls are such as to ensure that Client Money is identifiable and secure at all times;
(iii) any of the requirements in COB chapter 9 and the Client Money Provisions have not been met;
(iv) if applicable, Client Money belonging to Segregated Clients has been segregated in accordance with the Client Money Provisions;
(v) if applicable, the Authorised Firm was holding and controlling an appropriate amount of Client Money in accordance with COB chapter 9 and with the Client Money Provisions as at the date on which the Authorised Firm's audited balance sheet was prepared; and
(vi) if applicable, there have been any material discrepancies in the reconciliation of Client Money;
(e) produce, if the Authorised Firm controls or holds Insurance Monies, an Insurance Monies Auditor's Report which states whether, in the opinion of the auditor:
(i) the Authorised Firm has maintained throughout the year systems and controls to enable it to comply with the relevant provisions of COB chapter 14;
(ii) the Authorised Firm's controls are such as to ensure that Insurance Monies are identifiable and secure at all times;
(iii) any of the requirements in COB chapter 14 have not been met;
(iv) if applicable, the Authorised Firm was holding and controlling an appropriate amount of Insurance Monies in accordance with COB chapter 14 as at the date on which the Authorised Firm's audited balance sheet was prepared; and
(v) if applicable, there have been any material discrepancies in the reconciliation of Insurance Monies;
(f) produce, if the Authorised Firm Provides Custody in or from the DIFC, a Safe Custody Auditor's Report in respect of such business which states whether, in the opinion of the auditor:
(i) the Authorised Firm has, throughout the year, maintained systems and controls to enable it to comply with the Safe Custody Provisions in COB App6;
(ii) the Safe Custody Investments are registered, recorded or held in accordance with the Safe Custody Provisions;
(iii) there have been any material discrepancies in the reconciliation of Safe Custody Investments; and
(iv) any of the requirements of the Safe Custody Provisions have not been met;
(g) submit the reports produced pursuant to Rules 8.6.1(b)-8.6.1(f) above to the Authorised Firm Authorised Person; and
(h) notify the DFSA in writing if he resigns due to significant concerns which have previously been raised with senior management of the Authorised Firm Authorised Person and which have not been addressed.

GEN 8.6.2

An Authorised Firm Authorised Person must submit any auditor's reports and financial statements required by this chapter to the DFSA within four months of the Authorised Firm Authorised Person's financial year end.

GEN 8.6.3

If requested, an Authorised Firm Authorised Person must provide to any Person a copy of its most recent audited accounts, together with the auditor's report referred to in rule 8.6.1(b). If the copy is made available in printed form, the Authorised Firm Authorised Person may make a Charge to cover reasonable costs incurred in providing the copy.

GEN 8.7 Auditor registration and qualification

GEN 8.7.1

An auditor applying for registration must use the appropriate form in PFN, supported by such additional material as may be required by the DFSA and pay the prescribed Fee in App6.

GEN 8.7.2

Before the DFSA grants registration as an auditor, an applicant must satisfy the DFSA that it: (a) is fit and proper to be registered as an auditor taking into account the applicant's: (i) background and history; (ii) ownership and Group; and (iii) resources; (b) has adequate professional indemnity insurance which provides cover in respect of work undertaken in the DIFC; and (c) meets any other requirements prescribed by the DFSA.

GEN 8.7.3

An auditor must pay the annual Fee prescribed in App6 to remain registered as an auditor.

GEN 8.7.4

(1) An auditor must file with the DFSA:
(a) at the time of filing an application for registration; and
(b) at the time of payment of the annual Fee or by such later time that the DFSA may direct;
an assessment completed within the preceding three months by an independent body and addressing such matters relating to the auditor as notified by the DFSA.
(2) If upon receiving an annual assessment the DFSA forms the view that the auditor is no longer fit and proper to be on the register of auditors, the DFSA may cancel the registration of the auditor.
(3) The auditor must pay for the services of the independent body in (1).

GEN 8.7.5

If, at any time after registration, an auditor no longer meets the requirements for registration as an auditor, the auditor must immediately inform the DFSA in writing.

GEN 8.8 Register of auditors

GEN 8.8.1

The DFSA will maintain the register of auditors by recording the following information in respect of current and former registered auditors:

(a) full name;
(b) address;
(c) date of registration as auditor with the DFSA; and
(d) date of cessation of registration as auditor.

GEN App 6 Fees

GEN A6.1 Fees table for in relation to auditors

GEN A6.1.1

A6.1.1

The Fees table in relation to auditors.

Upon receipt by the DFSA of:  
Application for registration of auditor $5,000
Annual Fee for registration as an auditor $2,000

GEN App 7 Fees

GEN A7.1 Fees table

A7.1 Fees

GEN A7.1.1

The Fees table in relation to applicants for Recognition as Recognised Bodies.

Upon receipt by the DFSA of:  
Application for Recognition as a Recognised Body $10,000

Annex E Supervision (SUP)

In this Annex, underlining indicates new text and striking through indicates deleted text.

GEN 2 Information Gathering

GEN 2.1 Application

GEN 2.1.1

This chapter applies to an Authorised Firm Authorised Person with respect to the carrying on of all of its activities and takes into account any activities of other Members of the Group of which the Authorised Firm Authorised Person is a Member.

GEN 2.2 Information and documents

GEN 2.2 Guidance

1. In order to supervise the conduct and activities of Authorised Firm Authorised Persons and Authorised Individuals the DFSA needs to have access to a broad range of information about an Authorised Firm Authorised Person's business.
2. The power for the DFSA to obtain information and require an Authorised Firm Authorised Person to produce information and documents is provided under Article 73.
3. The DFSA will provide Authorised Firm Authorised Persons with written notice of the documents and information that are required.
4. The Regulatory Law 2004 allows the DFSA to make a request for information and documents from an Authorised Firm Authorised Person wherever that Authorised Firm Authorised Person may be located. This allows the DFSA access to the head office of a Branch or Subsidiary and the provision of documents from its head office.
5. Article 73(4) allows the DFSA, on application to the Court, to exercise these rights outside the jurisdiction of the DIFC in relation to a Person other than an Authorised Firm Authorised Person and require such a Person to comply with the requirement or permit the exercise of the DFSA's rights.

GEN 2.2.1

An Authorised Firm Authorised Person must where reasonable:

(a) give or procure the giving of specified information, documents, files, tapes, computer data or other material in the Authorised Firm Authorised Person's possession or control to the DFSA;
(b) make its Employees, readily available for meetings with the DFSA;
(c) give the DFSA access to any information, documents, records, files, tapes, computer data or systems, which are within the Authorised Firm Authorised Person's possession or control and provide any facilities to the DFSA;
(d) permit the DFSA to copy documents or other material on the premises of the Authorised Firm Authorised Person at the its DFSA's reasonable expense and to remove copies and hold them elsewhere or;
(e) to provide any copies as requested by the DFSA; and
(f) answer truthfully, fully and promptly, all questions which are put to it by the DFSA.

GEN 2.2.2

An Authorised Firm Authorised Person must take reasonable steps to ensure that its Employees act in the manner set out in this chapter.

GEN 2.2.3

An Authorised Firm Authorised Person must take reasonable steps to ascertain if there is any secrecy or data protection legislation that would restrict access to any data by the Authorised Firm Authorised Person or the DFSA. Where such legislation exists, the Authorised Firm Authorised Person must keep copies of relevant documents or material in a jurisdiction which does allow access in accordance with legislation applicable in the DIFC.

GEN 2.3 Access to premises

GEN 2.3 Guidance

1. Under Article 73, the DFSA may enter the premises of any Authorised Firm Authorised Person during normal business hours or at any other time as may be agreed, for the purpose of inspecting and copying information or documents stored in any form on such premises, as it considers necessary or desirable to meet the objectives of the DFSA.
2. The DFSA expects to be able to give reasonable notice to an Authorised Firm Authorised Person or Person when it seeks information, documents, meetings or access to premises. On rare occasions however, the DFSA may seek access to premises without notice. The prospect of unannounced visits is intended to encourage Authorised Firm Authorised Persons to comply with the legislation applicable in the DIFC.
3. Pursuant to Articles 67 and 72 (2), Authorised Firm Authorised Persons are required to give full co-operation and respond to any regulatory request.

GEN 2.4 Third party providers and supliers

GEN 2.4.1

An Authorised Firm Authorised Person must ensure that the terms of its contract with each third party provider or supplier under a material outsourcing arrangement requires the third party to:

(a) provide for the provision of information under this chapter in relation to the Authorised Firm Authorised Person and access to their business premises; and
(b) deal in an open and co-operative way with the DFSA.

GEN 2.4.1 Guidance

1. The DFSA will normally seek information from an Authorised Firm Authorised Person in the first instance, but reserves the right to seek it from supplier under a material outsourcing arrangement if appropriate.
2. A material outsourcing arrangement would be a service of such importance that weakness, or failure of the service would cast serious doubt on the Authorised Firm Authorised Person's continuing ability to remain fit and proper or comply with applicable laws including Rules.
3. GEN rule 5.3.22 requires an Authorised Firm Authorised Person to inform the DFSA about any material outsourcing arrangements.
4. The Regulatory Law 2004 requires co-operation and disclosure by an Authorised Firm Authorised Person's auditor and may involve the DFSA meeting or requesting documents or information from the Authorised Firm Authorised Person's auditors.

GEN 2.5 Lead regulation

GEN 2.5.1

(1) If requested by the DFSA, an Authorised Firm Authorised Person must provide the DFSA with information that the Authorised Firm Authorised Person or its auditor has provided to a Financial Services Regulator.
(2) If requested by the DFSA, an Authorised Firm Authorised Person must take reasonable steps to provide the DFSA with information that other Members of the Authorised Firm Authorised Person's Group has provided to a Financial Services Regulator.

GEN 2.5.1 Guidance

1. Under Article 39 the DFSA may exercise its powers for the purpose of assisting other Regulators or agencies.
2. The DFSA may also delegate functions and powers to representatives of other Regulators or agencies as prescribed in Article 40.

GEN 3. Waivers

GEN 3.1 Application

GEN 3.1.1

This chapter applies to every Authorised Firm Authorised Person.

GEN 3.1.1 Guidance

1. Under Article 25, the DFSA may by means of a written notice provide that one or more provisions of the Rules either:
a. shall not apply in relation to a particular person; or
b.shall apply to a particular Person with such modifications as a reset out in the written notice.
2. This chapter sets out Rules in connection with the provision of a written notice under Article 25 including Rules prescribing procedures for the making of applications and providing of consents.
3. It is unlikely that the DFSA will waive the following Rules:
a. Rules in GEN chapters 2 and 3; or
b. Rules in COB part 1.

GEN 3.1.2

Throughout the Rulebook reference to the written notice under Article 25 will be referred to as a 'waiver'.

GEN 3.2 Procedures for application for waivers

GEN 3.2 Guidance

A wWaiver application forms are is contained in PFN.

Application by an Authorized Firm

GEN 3.2.1

If an Authorised Firm wishes to apply for a waiver, it must apply in writing and the application must be delivered to the DFSA as outlined insection 7.10. 11

GEN 3.2.2

The application must contain:

(a) the name and Licence number of the Authorised Firm Authorised Person;
(b) the rule to which the application relates;
(c) a clear explanation of the waiver that is being applied for and the reason why the Authorised Firm Authorised Person is requesting the waiver;
(d) details of any other requirements; for example, if there is aspecific period for which the wavier is required;
(e) if the Authorised Firm Authorised Person has any reason why the waiver should not be published or why it should be published without disclosing the identity of the Authorised Firm Authorised Person; and
(f) all relevant facts to support the application.

GEN 3.2.3

An Authorised Firm Authorised Person must immediately notify the DFSA if it becomes aware of any material change in circumstances which may affect the application for a waiver.

Determination of waivers

GEN 3.2.3 Guidance

1. The DFSA will acknowledge an application for a waiver and may request further information. The time taken to determine the application for a waiver will depend upon the issues it raises.
2. The determination of a waiver is at the discretion of the DFSA and it will generally only apply a waiver where there is shown to be an appropriate and justifiable reason.
3. The DFSA may impose conditions on a waiver, for example additional reporting requirements
4. A waiver may be given for a specified period of time only, after which time it will cease to apply.
5. If the DFSA decides not to give a waiver, it will give reasons for the decision.
6. An Authorised Firm Authorised Person may withdraw its application for a waiver at any time up until the giving of the waiver. In doingso, an Authorised Person should give reasons for the withdrawing of the application.

General waivers

7. Where the DFSA considers that a waiver should apply to a number of Authorised Firm Authorised Persons, for example, where a rule unmodified may not meet the particular circumstances of a particular Category of Authorised Firm Authorised Person the DFSA will inform the Authorised Firm Authorised Persons concerned that the waiver is available, either by contacting Authorised Firm Authorised Persons individually or by publishing details of the availability of the waiver on the DFSA's website. An Authorised Firm Authorised Person will not have to make a formal application but will have to give its written consent for the waiver to apply.

Consent during application for authorisation

8. An applicant for authorisation may request a waiver whilst its application for authorisation is being processed. Insome circumstances, the applicant may need to work with the DFSA in developing the waiver and may not be required to use the formal application process. However, the written consent to the waiver by the Authorised Firm Authorised Person will then be required once the applicant is authorised.

Application of waived rules

9. If a waiver directs that a rule is to apply to an Authorised Firm Authorised Person with modifications, then contravention of the modified rule could lead to the DFSA taking enforcement action.
10. If a waiver is given subject to a condition, the waiver will not apply to activities conducted in breach of the condition, and those activities, if in breach of the original rule, could lead to enforcement action.

GEN 3.3 Publication of waivers

GEN 3.3 Guidance

1. Under the Regulatory Law 2004, unless the DFSA dissatisfied that it is inappropriate or unnecessary to doso, it must publish a waiver in such a way as it considers appropriate for bringing the notice to the attention of:
a. those likely to be affected by it; and
b. others who may be likely to become subject to similar notice.
2. The principal method of publication of waivers is by publication on the DFSA website.
3. If an Authorised Firm Authorised Person believes there are reasonable grounds for the DFSA either to withhold publication or to publish the waiver without disclosing the identity of the Authorised Firm Authorised Person it should make this clear in its application.

GEN 3.4 Continuing relevance of waivers

GEN 3.4.1

An Authorised Firm Authorised Person must immediately notify the DFSA if it becomes aware of any material change in circumstances which could affect the continuing relevance of a waiver.

GEN 3.5 Withdrawal or variation of waivers

GEN 3.5 Guidance

Under Article 25, the DFSA may:

a. on its own initiative or on the application of the Person to whom it applies, withdraw a written notice; or
b. on the application of, or with the consent of, the Person to whom it applies, vary a written notice.

GEN 4 Requirement to provide a Report

GEN 4.1 Application

GEN 4.1.1

This chapter applies to every Authorised Firm Authorised Person.

GEN 4.1.1 Guidance

1. In summary, under Article 74, the DFSA may require an Authorised Firm Authorised Person to provide it with a report on any matter.
2. The Person appointed to make a report, must be a Person nominated or approved by the DFSA. This Person will be referred to throughout the Rulebook as an independent expert.
3. Where such a requirement has been made of an Authorised Firm Authorised Person it must take all reasonable steps to ensure that any Person who is providing or has provided services to the Authorised Firm Authorised Person shall give all such assistance as the independent expert may reasonably require.
4. As outlined in Article 74, information given or a document produced is admissible in evidence in administrative and civil proceedings, provided that any such information or document also complies with any requirements relating to the admissibility of evidence in such proceedings.
5. An Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee in respect of the requirement to provide a report.

GEN 4.2 Appointment and reporting process

GEN 4.2.1

(1) The DFSA may, by sending a notice in writing, require an Authorised Firm Authorised Person to provide a report by an independent expert. The DFSA may require the report to be in whatever form it specifies in the notice.
(2) The DFSA will give written notification to the Authorised Firm Authorised Person of the purpose of its report, its scope, the timetable for completion and any other relevant matters.
(3) The independent expert must be appointed by the Authorised Firm Authorised Person and be nominated or approved by the DFSA.
(4) The Authorised Firm Authorised Person must pay for the services of the independent expert.

GEN 4.2.1 Guidance

1. If the DFSA decides to nominate the independent expert, it will notify the Authorised Firm Authorised Person accordingly. Alternatively, if the DFSA is content to approve the independent expert selected by the Authorised Firm Authorised Person it will notify it of that fact.
2. The DFSA will only approve an independent expert that in the DFSA's opinion has the necessary skills to make a report on the matter concerned.

GEN 4.3 Requirements

GEN 4.3.1

When an Authorised Firm Authorised Person appoints an independent expert, the Authorised Firm Authorised Person must ensure that:

(a) the independent expert co-operates with the DFSA; and
(b) the Authorised Firm Authorised Person provides all assistance that the independent expert may reasonably require.

GEN 4.3.2

When an Authorised Firm Authorised Person appoints an independent expert, the Authorised Firm Authorised Person must, in the contract with the independent expert:

(a) require and permit the independent expert to co-operate with the DFSA in relation to the Authorised Firm Authorised Person and to communicate to the DFSA information on, or his opinion on, matters of which he has, or had, become aware of in his capacity as an independent expert reporting on the Authorised Firm Authorised Person in the following circumstances:
(i) the independent expert reasonably believes that, as regards the Authorised Firm Authorised Person concerned:
(A) there is or has been, or may be or may have been, a contravention of any relevant requirement that applies to the Authorised Firm Authorised Person concerned; and
(B) that the contravention may be of material significance to the DFSA in determining whether to exercise, in relation to the Authorised Firm Authorised Person concerned, any powers conferred on the DFSA under any provision of the Regulatory Law 2004;
(ii) the independent expert reasonably believes that the information on, or his opinion on, those matters may be of material significance to the DFSA in determining whether the Authorised Firm Authorised Person concerned satisfies and will continue to satisfy the fit and proper requirements; or
(iii) the independent expert reasonably believes that the Authorised Firm Authorised Person is not, may not be, or may cease to be, a going concern;
(b) require the independent expert to prepare a report, as notified to the Authorised Firm Authorised Person by the DFSA, within the time specified by the DFSA; and
(c) waive any duty of confidentiality owed by the independent expert to the Authorised Firm Authorised Person which might limit the provision of information or opinion by that independent expert to the DFSA in accordance with (a) or (b).

GEN 4.3.3

An Authorised Firm Authorised Person must ensure that the contract required under rule 4.3.2:

(a) is governed by the laws of the DIFC;
(b) expressly provides that the DFSA has a right to enforce the provisions included in the contract under rule 4.3.2;
(c) expressly provides that, in proceedings brought by the DFSA for the enforcement of those provisions, the independent expert is not to have available by way of defence,set-off or counter claim any matter that is not relevant to those provisions;
(d) if the contract includes an arbitration agreement, expressly provides that the DFSA is not, in exercising the right in (b) to be treated as a party to, or bound by, the arbitration agreement; and
(e) provides that the provisions included in the contract under rule 4.3.2 are irrevocable and may not be varied or rescinded without the DFSA's consent.

GEN 5 Imposing Restrictions

GEN 5.1 Application

GEN 5.1.1

This chapter applies to every Authorised Firm Authorised Person.

GEN 5.1.1 Guidance

1. Article 75 provides the DFSA with the power to impose restrictions on an Authorised Firm Authorised Person's business. This includes prohibiting an Authorised Firm Authorised Person from entering into specific or certain types of transactions, from soliciting business from specific or certain types of Person or from carrying on business in aspecific manner. The DFSA may also require an Authorised Firm Authorised Person to carry on business in, and only in, specified manner.
2. Article 76 provides the DFSA with the power to prohibit or require an Authorised Firm Authorised Person to deal with any relevant Property in a certain manner.
3. The DFSA may exercise its powers to impose a prohibition or requirement in the circumstances prescribed in the Rules.
4. The DFSA is conscious that the decision to exercise these powers will have significant impact on the Authorised Firm Authorised Person and accordingly will only doso in exceptional circumstances.

GEN 5.2 Restrictions on an Authorised Firm Authorised Person's business or on an Authorised Firm Authorised Person dealing with property

GEN 5.2.1

The DFSA has the power to impose a prohibition or requirement on an Authorised Firm Authorised Person in relation to the Authorised Firm Authorised Person's business or in relation to the Authorised Firm Authorised Person dealing with Property under Article 75 or Article 76 in circumstances where:

(a) there is a reasonable likelihood that the Authorised Firm Authorised Person will contravene a requirement of any legislation applicable in the DIFC;
(b) the Authorised Firm Authorised Person has contravened a relevant requirement and there is a reasonable likelihood that the contravention will continue or be repeated;
(c) there is loss, risk of loss, or other adverse effect on the Authorised Firm Authorised Person's customers;
(d) an investigation is being carried out in relation to an act or omission by the Authorised Firm Authorised Person that constitutes or may constitute a contravention of any applicable law or Rule;
(e) enforcement action has commenced against the Authorised Firm Authorised Person for a contravention of any applicable law or Rule;
(f) civil proceedings have commenced against the Authorised Firm Authorised Person;
(g) the Authorised Firm Authorised Person or any Employee of the Authorised Firm Authorised Person may be or has been engaged in market abuse;
(h) the Authorised Firm Authorised Person issubject to a merger;
(i) a meeting has been called to consider a resolution for the winding up of the Authorised Firm Authorised Person;
(j) an application has been made for the commencement of any insolvency proceedings or the appointment of any receiver, administrator or provisional liquidator under the law of any country for the Authorised Firm Authorised Person;
(k) there is a notification to dissolve the Authorised Firm Authorised Person or strike it from the DIFC Registrar of Companies or the comparable register in another jurisdiction;
(l) there is information to suggest that the Authorised Firm Authorised Person is involved in financial crime; or
(m) the DFSA considers that this prohibition or requirement is necessary to ensure customers, users, Authorised Firm Authorised Persons or the financial system are not adversely affected.

GEN 5.3 Procedure to restrict an Authorised Firm Authorised Person's business or property

GEN 5.3 Guidance

1. Where possible an Authorised Firm Authorised Person will receive an opportunity to make representations prior to the DFSA imposing a restriction on its business or Property unless the DFSA concludes that any delay likely to arise as a result of such requirement is prejudicial to the interests of the DIFC. When making a representation the process in END App3should be followed.
2. An Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee in respect of a restriction imposed on its business or Property.
3. When the DFSA imposes a restriction it will doso in writing setting out:
a. the restriction on the business or property;
b. the date and time when the restriction takes effect;
c. where applicable, the duration of the restriction;
d. the reasons for the restriction; and
e. the fact that the Authorised Firm Authorised Person may appeal to the Regulatory Appeals Committee.

GEN 6 [Not currently used]

GEN 7 Notifications

GEN 7.1 Application

GEN 7.1.1

This chapter applies to every Authorised Firm Authorised Person with respect to the carrying on of Financial Services and any other activities whether financial or not.

GEN 7.1.1 Guidance

1. This chapter sets out Rules unspecific events, changes or circumstances that require notification to the DFSA and outlines the process and requirements for notifications.
2. The list of notifications outlined in this chapter is not exhaustive. Other areas of the Rulebook may also detail additional notification requirements.
3. An Authorised Firm Authorised Person and its auditor are also required under Article 67 to disclose to the DFSA any matter which may indicate a breach or likely breach, a failure or likely failure to comply with laws or Rules. An Authorised Firm Authorised Person is also required to establish and implement systems and procedures to enable its compliance and compliance by its auditor with notification requirements.

GEN 7.2 Core information

GEN 7.2.1

An Authorised Firm Authorised Person must provide the DFSA with reasonable advance notice of a change in:

(a) the Authorised Firm Authorised Person's name;
(b) any business or trading name under which the Authorised Firm Authorised Person carries on a Financial Service in or from the DIFC;
(c) the address of the Authorised Firm Authorised Person's principal place of business in the DIFC;
(d) in the case of a Branch, its registered office or head office address;
(e) its legal structure; or
(f) an Authorised Individual's name or any material matters relating to his fitness and propriety.

GEN 7.2.2

A Domestic Firm must provide the DFSA with reasonable advance notice of the establishment or closure of a Branch office anywhere in the world from which it carries on Financial Services.

GEN 7.2.2 Guidance

Authorised Firms should refer to AUT in respect of notification requirements in relation to fitness and propriety and change in control matters.

GEN 7.3 Regulatory impact

GEN 7.3.1

An Authorised Firm Authorised Person must advise the DFSA immediately it becomes aware, or has reasonable grounds to believe, that any of the following matters may have occurred or may be about to occur:

(a) the Authorised Firm Authorised Person's failure to satisfy the fit and proper requirements;
(b) any matter which could have significant adverse effect on the Authorised Firm Authorised Person's reputation;
(c) ]any matter in relation to the Authorised Firm Authorised Person which could result inserious adverse financial consequences to the financial system or to other firms;
(d) a significant breach of a rule by the Authorised Firm Authorised Person or any of its Employees;
(e) a breach of any requirement imposed by any applicable law by the Authorised Firm Authorised Person or any of its Employees;
(f) any proposed restructuring, merger, acquisition, reorganisation or business expansion which could have a significant impact on the Authorised Firm Authorised Person's risk profile or resources;
(g) any significant failure in the Authorised Firm Authorised Person's systems or controls, including a failure reported to the Authorised Firm Authorised Person by the firm's auditor;
(h) any action that would result in a material change in the capital adequacy or solvency of the Authorised Firm Authorised Person; or
(i) non-compliance with Rules due to an emergency outside the Authorised Firm Authorised Person's control and the steps being taken by the Authorised Firm Authorised Person.

GEN 7.3.1 Guidance

The DFSA would also require notification of the implementation, or planned implementation of major new or revised IT systems or new technology affecting the Authorised Firm Authorised Person's business, risk profile or resources.

GEN 7.4 Fraud and errors

GEN 7.4.1

An Authorised Firm Authorised Person must notify the DFSA immediately if one of the following events arises in relation to its activities in or from the DIFC:

(a) it becomes aware that an Employee may have committed a fraud against one of its customers or users;
(b) a serious fraud has been committed against it;
(c) it has reason to believe that a Person is acting with intent to commit a serious fraud against it;
(d) it identifies significant irregularities in its accounting or other records, whether or not there is evidence of fraud; or
(e) it suspects that one of its Employees who is Connected with the Authorised Firm Authorised Person's Financial Services may be guilty of serious misconduct concerning his honesty or integrity.

GEN 7.5 Other regulators

GEN 7.5.1

An Authorised Firm Authorised Person must advise the DFSA immediately of:

(a) the granting or refusal of any application for or revocation of authorisation to carry on Financial Services in any jurisdiction outside the DIFC;
(b) the granting, withdrawal or refusal of an application for, or revocation of, membership of the Authorised Firm Authorised Person of any regulated Exchange or clearing house;
(c) the Authorised Firm Authorised Person becomes aware that a Financial Services Regulator has started an investigation into the affairs of the Authorised Firm Authorised Person;
(d) the appointment of inspectors, howsoever named, by a Financial Services Regulator to investigate the affairs of the Authorised Firm Authorised Person; or
(e) the imposition of disciplinary measures or disciplinary sanctions on the Authorised Firm Authorised Person in relation to its Financial Services by any Financial Services Regulator or any regulated Exchange or Clearing House.

GEN 7.6 Action against an Authorised Firm Authorised Person

GEN 7.6.1

An Authorised Firm Authorised Person must notify the DFSA immediately if:

(a) civil proceedings are brought against the Authorised Firm Authorised Person and the amount of the claim insignificant in relation to the Authorised Firm Authorised Person's financial resources or its reputation; or
(b) the Authorised Firm Authorised Person is prosecuted for, or convicted of, any offence involving fraud or dishonesty, or any penalties are imposed on it for tax evasion.

GEN 7.7 Winding up, bankruptcy and insolvency

GEN 7.7.1

An Authorised Firm Authorised Person must notify the DFSA immediately on:

(a) the calling of a meeting to consider a resolution for winding up the Authorised Firm Authorised Person;
(b) an application to dissolve the Authorised Firm Authorised Person or to strike it from the register, maintained by the DIFC Registrar of Companies, or a comparable register in another jurisdiction;
(c) the presentation of a petition for the winding up of the Authorised Firm Authorised Person;
(d) the making of, or any proposals for the making of, a composition or arrangement with creditors of the Authorised Firm Authorised Person; or
(e) the application of any person against the Authorised Person for the commencement of any insolvency proceedings, appointment of any receiver, administrator or provisional liquidator under the law of any country.

GEN 7.8 Change in an Authorised Firm's financial year end.

GEN 7.8 Guidance

1. GEN rule 8.3.5 requires a Domestic Firm to obtain DFSA consent prior to implementing a change to its financial year end.
2. GEN rule 8.3.6 requires an Authorised Firm which is not a Domestic Firm to provide the DFSA with reasonable advance notice when it intends to change its financial year.

GEN 7.9 Accuracy of information

GEN 7.9 Guidance

Article 66 states that a Person shall not:

a. provide information that is false, misleading or deceptive to the DFSA; or
b. conceal information where the concealment of such information is likely to mislead or deceive the DFSA.

GEN 7.9.1

An Authorised Firm Authorised Person must take reasonable steps to ensure that all information that it provides to the DFSA in accordance with any legislation applicable in the DIFC is:

(a) factually accurate or, in the case of estimates and judgements, fairly and properly based; and
(b) complete, in that it should include anything of which the DFSA would reasonably expect to be notified.

GEN 7.9.2

(1) An Authorised Firm Authorised Person must notify the DFSA immediately it becomes aware, or has information that reasonably suggests, that it:
(a) has or may have provided the DFSA with information which was or may have been false, misleading, incomplete or inaccurate; or
(b) has or may have changed in a material particular.
(2) subject to (3) the notification in (1) must include details of the information which is or may be false or misleading, incomplete or inaccurate, or has or may have changed and an explanation why such information was or may have been provided and the correct information.
(3) If the correct information in (2) cannot be submitted with the notification it must be submitted as soon as reasonably possible.

GEN 7.10 Provision of notifications

GEN 7.10.1

(1) Unless a rule states otherwise, an Authorised Firm Authorised Person must ensure that each notification it provides to the DFSA is:
(a) in writing and contains the Authorised Firm Authorised Person's name and license number; and
(b) addressed for the attention of the supervision Division and delivered to the DFSA by:
(i) post to the current address of the DFSA;
(ii) hand delivered to the current address of the DFSA;
(iii) electronic mail to an address provided by the DFSA; or
(iv) faxed to a fax number provided by the DFSA.
(2) In (1)(b)(ii),(iii) and (iv) confirmation of receipt must be obtained.

GEN 8 Reporting

GEN 8.1 Application

GEN 8.1.1

This chapter applies to every Authorised Firm Authorised Person.

GEN 8.1.1 Guidance

1. The purpose of this chapter is to outline the process and requirements that must be followed when making a report to the DFSA.
2. Other sections of the Rulebook outline the specific reports that must be provided and states the due date, frequency, timeframe for delivery and the contents that are required in the report.
3. In order to discharge its obligations and meet its objectives under the Regulatory Law 2004, the DFSA requires timely and accurate information about an Authorised Firm Authorised Person.

GEN 8.2 Provision of regulatory reports

GEN 8.2.1

(1) Unless a rule states otherwise, an Authorised Firm Authorised Person must ensure that each report it provides to the DFSA is:
(a) in writing and contains the Authorised Firm name and Licence number; and
(b) addressed for the attention of the supervision Division and delivered to the DFSA by:
(i) post to the current address of the DFSA;
(ii) hand delivered to the current address of the DFSA;
(iii) electronic mail to an address provided by the DFSA; or
(iv) faxed to a fax number provided by the DFSA.
(2) In (1)(b)(ii),(iii) and (iv) confirmation of receipt must be obtained.
(3) If the report is submitted in paper form, it must be submitted with the coversheet contained in PFN.