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  • Chapter 2: Types of Funds and Relevant Criteria

    • 13. Domestic and Foreign Funds

      (1) A Fund is either a Domestic Fund or a Foreign Fund.
      (2) A Fund is a Domestic Fund if it is either:
      (a) established or domiciled in the DIFC; or
      (b) an External Fund as defined in Article 14(1).
      (3) A Fund that does not meet the Domestic Fund criteria in Article 13(2) is a Foreign Fund.

    • 14. An External Fund

      (1) An External Domestic Fund is a Fund which is:
      (a) established or domiciled in a jurisdiction other than the DIFC; and
      (b) managed by a Fund Manager which is an Authorised Firm.
      (2) The requirements relating to Domestic Funds do not apply to an External Fund except to the extent otherwise provided in this Law or the Rules.

    • 15. Types of Domestic Funds

      (1) A Domestic Fund shall be one of the following types of Fund:
      (a) a Public Fund;
      (b) an Exempt Fund; or
      (c) a Qualified Investor Fund.
      (2) The DFSA may treat any type of Domestic Fund referred to in Article 15(1) as a specialist class of a Domestic Fund pursuant to Article 17.

    • 16. Domestic Fund Criteria

      (1) A Domestic Fund shall be constituted as a Public Fund if:
      (a) some or all of its Units are offered to investors by way of a public offer; or
      (b) its Unitholders include, or may include, Retail Clients.
      (2) A Domestic Fund may be constituted either as an Exempt Fund or as a Qualified Investor Fund but only if that Fund satisfies all of the conditions in Article 16(4) or (5) as applicable.
      (4) A Domestic Fund is an Exempt Fund, subject only to Article 16(6), if:
      (a) its Units are offered to persons only by way of a Private Placement;
      (b) all its Unitholders are persons who meet the criteria to be classified as Professional Clients; and
      (c) the initial subscription to be paid by a person to become a Unitholder is at least US$50,000;

      and it does not satisfy the conditions in Article 16(5) to be a Qualified Investor Fund.
      (5) A Domestic Fund is a Qualified Investor Fund, subject only to Article 16(6), if:
      (a) it has 50 or fewer Unitholders;
      (b) its Units are offered to persons only by way of a Private Placement;
      (c) all its Unitholders are persons who meet the criteria to be classified as Professional Clients; and
      (d) the initial subscription to be paid by a person to become a Unitholder is at least US$500,000.
      (6) A Domestic Fund does not cease to be an Exempt Fund or a Qualified Investor Fund under Article 16(4) or (5) merely because one or more Units in that Fund is registered in the name of a person who does not meet the criteria to be a Unitholder of that particular type of Fund as a result of:
      (a) inheritance from a registered Unitholder of the Fund; or
      (b) any legal action brought for or against a registered Unitholder.
      (7) The DFSA shall, by Rules, prescribe:
      (a) the relevant criteria for a person to be classified as a Retail Client or a Professional Client; and
      (b) any other requirements or matters which the DFSA considers necessary to give effect to the requirements or intent of the provisions in this chapter.

    • 17. Specialist Classes of Domestic Funds

      (1) The DFSA may, by Rules, prescribe the circumstances in which any type of a Domestic Fund is to be treated as a specialist class of a Domestic Fund.
      (2) Without limiting the generality of Article 17(1), the DFSA may, by Rules, prescribe:
      (a) the circumstances in which a Domestic Fund will be treated as an Islamic Fund;
      (b) the requirements applicable to such a Fund, including the appointment where appropriate of a Shari'a Supervisory Board; and
      (c) any requirements relating to a Shari'a Supervisory Board appointed to an Islamic Fund such as its formation, membership, conduct and operation.

    • 18A. Definitions of Open-ended and Closed-ended Fund

      (1) In this Law, an Open-ended Fund and a Closed-ended Fund have the meanings given in (2) and (3).

      (2) An Open-ended Fund means a Fund where investors have a right (generally, on request, or at a specified frequency) to have their Units redeemed or repurchased at a value calculated based on the net asset value of the Fund Property.

      (3) A Closed-ended Fund means a Fund where investors have no right of redemption or repurchase of their Units.

    • 18. Additional Matters

      (1) The DFSA may, by Rules, apply additional criteria, requirements or conditions to:
      (a) a particular type of a Domestic Fund;
      (b) a specialist class of a Domestic Fund; or
      (c) a Foreign Fund.
      (2) Without limiting the generality of Article 18(1), the additional criteria, requirements or conditions relating to a Fund that the DFSA may specify include:
      (a) the type of legal structure or arrangement that must be used by a specialist class of Funds;
      (b) whether or not a Fund must be an Open-ended or Closed-ended Fund, or a listed or unlisted Fund; and
      (c) any criteria, requirements or conditions that apply to any person carrying on any function relating to a Fund and whether or not that person does so under a delegation or outsourcing arrangement entered into with the Fund Manager or if applicable the Trustee of the Fund.

    • 19. Definition of an Offer of Units

      (1) An "Offer" of a Unit of a Fund constitutes any one or more of the activities specified in Article 19(2) and such activities may also be referred to as "marketing" of Units of Funds.
      (2) A person is to be regarded as making an Offer of a Unit if he:
      (a) makes an offer to another person which, if accepted, would give rise to a contract for the issue or sale of Units by him or by another person with whom he has made arrangements for the issue or sale of the Units; or
      (b) invites another person to make an offer which, if accepted by him, would give rise to a contract for the issue or sale of Units by him or by another person with whom he has made arrangements for the issue or sale of the Units,
      whether or not the offer or invitation referred to in Article 19(2)(a) or (b) is made by way of a financial promotion of the Units.
      (3) For the purposes of Article 19(2), a "financial promotion" includes an advertisement or any other form of promotion, marketing or inducement inviting a person to:
      (a) enter into an agreement;
      (b) offer to enter into an agreement; or
      (c) exercise any rights conferred by a Unit
      to acquire, dispose of, underwrite or convert a Unit.
      (4) In Article 19(3), the financial promotion may be communicated in any manner including, but not limited to, the following:
      (a) orally;
      (b) electronically; or
      (c) in writing.
      (5) For the purposes of Article 19(2) and (3), where a Fund Manager of a Listed Fund discloses information in accordance with the requirements of the Markets Law 2012 or the Rules made for the purposes of that law, disclosure of such information is not a financial promotion provided the disclosure of the information does not:
      (a) include an express invitation or offer; or
      (b) expressly encourage a person;
      to engage in any of the activities specified in Article 19(2) (a) or (b).