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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
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  • CIR 14 Marketing of Domestic Funds and Prospectus Disclosure

    • CIR 14.1 Prospectus Disclosure for Domestic Funds

      • CIR 14.1 Guidance

        1. While a PersonG is required by virtue of Article 50(1) of the Law when making an OfferG of a UnitG of a Domestic FundG to another PersonG to make available to that other PersonG a ProspectusG , the obligation to produce a ProspectusG is imposed under Article 51(a) of the Law on the Fund ManagerG of a Domestic FundG .
        2. This chapter sets out the detailed requirements that apply to the Fund ManagerG who is obliged to produce a ProspectusG , and the obligations and liabilities relating to ProspectusesG , as well as the obligation relating to making available a ProspectusG which applies to the activity of making an OfferG of UnitsG .
        3. Some requirements relating to ProspectusG disclosure are common to all Domestic FundsG . However, in other areas, particularly relating to the content of disclosure required in a ProspectusG , and the manner of distribution, different requirements apply depending on whether the FundG is a Public FundG , Exempt FundG or Qualified Investor FundG . Further, specialist class of FundsG attract additional disclosure requirements that are unique to their activities. This chapter sets out those requirements and where necessary by reference to the types and classes of Domestic FundsG .
        4. Article 14(2) of the Law provides that the requirements relating to Domestic FundsG do not apply to an External FundG (i.e. a FundG established in a jurisdiction other than the DIFCG by a DFSAG licensed Fund ManagerG ), unless otherwise provided in the Law or RulesG . As a result, the general ProspectusG requirements set out in the Law and this module do not apply to External FundsG , except that:
        a. any offer document prepared for the purposes of complying with the requirements applicable in the jurisdiction in which the External FundG is established is regarded as a ProspectusG for the purposes of the requirements relating to the OfferG of UnitsG of such a FundG in or from the DIFCG (see Article 50(3)(c) of the Law); and
        b. the DFSAG has the power to prescribe any additional disclosure to be included in such a document (see Article 51(2) of the Law).
        Those requirements are specified in Rules CIR 14.2.4CIR 14.2.7.
        5. If a Domestic FundG is a Passported FundG and the DIFCG is the Home JurisdictionG of the FundG , certain requirements relating to the ProspectusG for the FundG are specified in the Fund Protocol Rules (FPR), rather than in this chapter. These include requirements relating to the form of the disclaimer in the ProspectusG , the minimum contents of the ProspectusG and the need for a Key Investor Information Document (KIID) that summarises the key features of the FundG and is in both Arabic and English. This chapter cross-refers to requirements in those RulesG where applicable.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
        [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

      • Application

        • CIR 14.1.1

          (1) This chapter applies, subject to (4), to:
          (a) a Fund ManagerG of a Domestic FundG ;
          (b) each DirectorG or partner of the Fund ManagerG ;
          (c) if the Fund ManagerG is a Corporate DirectorG , the individuals who are DirectorsG of that Corporate DirectorG ; and
          (d) if the FundG has a Governing BodyG , each member of that body.
          (2) This chapter also applies to an Authorised FirmG , and each of its DirectorsG or partners, where such a FirmG is not the Fund ManagerG and undertakes the marketing of UnitsG of a Domestic FundG .
          (3) This chapter also applies to other specified PersonsG to the extent so specified.
          (4) Only this Rule and the following requirements in this chapter apply to, or in relation to, a Qualified Investor FundG :
          (b) Rules 14.2.4 to 14.2.7;
          (d) Rules 14.5.1 and 14.5.2; and
          (e) Rules in section 14.6.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

          • CIR 14.1.1 Guidance

            An External Fund ManagerG must also comply with the requirements in this chapter, because it is managing a Domestic FundG (i.e. a FundG established or domiciled in the DIFCG — See Article 13(2)(a) of the Law).

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

    • CIR 14.2 General Requirements Relating to Prospectuses

      • CIR 14.2.1

        (1) The ProspectusG must not contain any provision which is unfairly prejudicial to the interests of UnitholdersG generally or to the UnitholdersG of any class of UnitsG .
        (2) For the purposes of the information that must be included in a ProspectusG pursuant to Article 52 of the Law:
        (a) such information must be material information; and
        (b) information is material if it is either:
        (i) within the knowledge of the DirectorsG or partners of the Fund ManagerG ; or
        (ii) which such DirectorsG or partners ought reasonably have obtained by making reasonable enquiries.
        (3) The ProspectusG must, except as provided in (4), be in the English language.
        (4) The Key Investor Information Document (KIID) for a Passported FundG must be in both Arabic and English.
        (5) The expiry date of a ProspectusG must be no later than 12 months after the date of the ProspectusG .
        (6) A reference to a DirectorG in this RuleG includes the Corporate DirectorG of an Investment CompanyG , and the individual directors of that Corporate DirectorG .
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
        [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

        • CIR 14.2.1 Guidance

          In conducting inquiries relating to the obligations under (2), a Fund ManagerG must give particular regard to the information which would be required and expected by a Retail ClientG in order to make an informed decision about the merits of investing and the extent and characteristics of risk.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Supplementary and Replacement Prospectuses

        • Guidance

          1. Article 52(4) of the Law requires a FundG manager to issue, if, at any time after the issue of a ProspectusG there is a material change affecting any matter contained in the ProspectusG or a significant new matter arises, a Supplementary or a Replacement ProspectusG in the manner prescribed in the RulesG .
          2. Under Article 50(3) of the Law, any reference in the Law and the RulesG to a ProspectusG includes an Information MemorandumG of an Exempt FundG and any Supplementary or Replacement ProspectusG , unless otherwise provided. Accordingly, all requirements that apply to a ProspectusG apply equally to each of those documents except where stated otherwise.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.2.2

          (1) Where a Fund ManagerG , for the purpose of Article 52(4) of the Law, issues a Supplementary ProspectusG , the Fund ManagerG must:
          (a) clearly identify in the Supplementary ProspectusG the ProspectusG that it supplements, the revisions to that ProspectusG , the date of any material change or new matter giving rise to any revision, and the date of the document which must be the date of filing with the DFSAG ;
          (b) if it is a Public FundG , file a copy with the DFSAG ;
          (c) provide a copy to each PersonG who applied for UnitsG under the previous ProspectusG after the earliest date of any material change or new matter giving rise to the revision; and
          (d) ensure the Supplementary ProspectusG is made available in the same media and through the same channels as, and together with, the previous ProspectusG .
          (2) Where a Fund ManagerG , for the purpose of Article 52(3) of the Law, issues a Replacement ProspectusG , the Fund ManagerG must:
          (a) clearly state that it is a Replacement ProspectusG , and identify the ProspectusG that it replaces, the date and nature of any material change or new matter giving rise to the replacement, the expiry date, and the date of the document which must be the date of filing with the DFSAG ;
          (b) if it is a Public FundG , file a copy with the DFSAG ; and
          (c) provide a copy to each PersonG who applied for UnitsG under the previous ProspectusG after the earliest date of any material change or new matter giving rise to the replacement.
          (3) The expiry date of a Supplementary ProspectusG or Replacement ProspectusG under (1) or (2) must be the same as that of the ProspectusG it supplements or replaces.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

        • CIR 14.2.3

          When a Supplementary ProspectusG or Replacement ProspectusG of a Public FundG has been filed with the DFSAG and made available in accordance with CIR Rule 14.2.4, the Fund ManagerG must:

          (a) inform any PersonG who applied for UnitsG on the basis of the previous ProspectusG after the earliest date of a material change or new matter giving rise to the issue of the Supplementary ProspectusG or Replacement ProspectusG of their right to confirm or retract any application made on the basis of that ProspectusG and to obtain a refund of monies paid, and the manner in which to do so; and
          (b) allow any such PersonG a period of at least seven days from the date of receipt of the Supplementary ProspectusG or Replacement ProspectusG in which to so confirm or retract his application.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Prospectus of an External Fund

        • CIR 14.2.4

          A Fund ManagerG or other Authorised FirmG must not OfferG in or from the DIFCG a UnitG of an External FundG to a Retail ClientG unless the UnitsG of the External FundG can be offered, under the requirements applying to that FundG in the jurisdiction in which the FundG is established, to retail investors.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 14.2.5

          Where a Fund ManagerG or other Authorised FirmG OffersG a UnitG of an External FundG to a PersonG , it must make available to that PersonG at the time of the OfferG a copy of a current ProspectusG relating to the FundG which contains the additional requirements in CIR Rule 14.2.6.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

          • CIR 14.2.5 Guidance

            Under Article 50(3)(c) of the Law, a ProspectusG includes, in the case of an External FundG the UnitsG of which are marketed in or from the DIFCG , any prospectus or other disclosure document prepared in accordance with the laws applicable to that FundG in the jurisdiction in which the FundG is established or domiciled.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.2.6

          (1) The ProspectusG of an External FundG made available by the Fund ManagerG or other Authorised FirmG making the OfferG of the UnitsG of that FundG in or from the DIFCG must be in the English language.
          (2) The ProspectusG must contain in a prominent position, or have attached to it, a statement that clearly:
          (a) describes the jurisdiction in which the FundG is established and the legislation in that jurisdiction that applies to the FundG ;
          (b) states the name of the relevant Financial Services RegulatorG in that jurisdiction;
          (c) describes the regulatory status accorded to the FundG by that RegulatorG ;
          (d) includes the following warning:
          "This Prospectus relates to a Fund which is not subject to any form of regulation or approval by the Dubai Financial Services Authority ("DFSA").
          The DFSA has no responsibility for reviewing or verifying any Prospectus or other documents in connection with this Fund. Accordingly, the DFSA has not approved this Prospectus or any other associated documents nor taken any steps to verify the information set out in this Prospectus, and has no responsibility for it.
          The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers should conduct their own due diligence on the Units.
          If you do not understand the contents of this document you should consult an authorised financial adviser.";
          and
          (e) if the OfferG is not directed to Retail ClientsG , includes a prominent statement to that effect to be incorporated within the warning in (d).
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 14.2.7

          A FundG manager or other Authorised FirmG which makes an OfferG of a UnitG of an External FundG in or from the DIFCG must maintain at its place of business or other designated location in the DIFCG copies of the relevant ProspectusG for inspection by ClientsG and by the DFSAG during normal business hours.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

          • CIR 14.2.7 Guidance

            In relation to CIR Rule 14.2.7, copies of the ProspectusG may be stored electronically so long as ClientsG and the DFSAG have ready and immediate access.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

    • CIR 14.3 Prospectus Content

      • Public Fund Prospectus

        • CIR 14.3.1

          Without limiting the generality of the ProspectusG disclosure required under Article 52 of the Law, the Fund ManagerG must, in the case of a Public FundG , include in the Fund'sG ProspectusG :

          (a) the information in CIR App 7, unless the Public FundG is a Passported FundG ;
          (b) if the Public FundG is a Passported FundG , the information in App 1 of FPRG , including a Key Investor Information Document (KIID);
          (c) if it is a specialist class of a Public FundG , any information as is relevant to that specialist class of FundG as set out in CIR section 14.4;
          (d) a Summary DocumentG containing:
          (i) information to clearly identify the FundG and its classification;
          (ii) a short description of the FundG 's investment objectives and investment policy for achieving those objectives;
          (iii) past-performance presentation or, where relevant, performance scenarios;
          (iv) costs and associated charges; and
          (v) risk/reward profile of the investment, including appropriate guidance and warnings in relation to the risks associated with investments in the relevant FundG ; and
          (e) the mandatory statement required under CIR Rule 14.3.3; and
          (f) if it is an Open-ended Fund, the information relating to the powers available to the Fund ManagerG to address liquidity risks that may arise in the FundG , and procedures, including triggers, for the exercise of such powers, required under CIR Rule 8.6A.1(2)(d).
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM158/2015 (Made 9th December 2015). [VER19/02-16]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
          [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

      • [Deleted]

        • CIR 14.3.2 [Deleted]

          [Deleted] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

      • CIR 14.3.2 Information Memorandum of an Exempt Fund or a Qualified Investor Fund

        • CIR 14.3.2 Guidance

          1. Under Article 50(3)(a) of the Law, an Information MemorandumG of an Exempt FundG or a Qualified Investor FundG is a ProspectusG for the purposes of the Law and the RulesG unless otherwise provided. In limited circumstances, the RulesG prescribe additional disclosure to be included in a ProspectusG of an Exempt FundG (for example CIR Rule 13.6.3 where an Exempt FundG appoints a prime broker with certain additional powers).
          2. There is no detailed prescribed disclosure content for the Information MemorandumG of an Exempt FundG or a Qualified Investor FundG . However, as an Information MemorandumG is a ProspectusG , it is subject to the disclosure obligation in Article 50(2) of the Law. As a result, a Fund ManagerG of such a FundG must include all the information which Professional ClientsG to whom it intends to OfferG UnitsG of the FundG would reasonably require and expect to find in such a ProspectusG . This is to enable such ClientsG to make an informed decision relating to investing in the FundG .
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

      • Mandatory Statement

        • CIR 14.3.3

          (1) A Fund ManagerG of a Public FundG must, except as provided in (1A) and (2), include in the Fund'sG ProspectusG , the following statement displayed prominently on its front page:
          "This Prospectus relates to a DIFC Fund in accordance with the Collective Investment Law 2010 and Rules of the Dubai Financial Services Authority ("DFSA").
          The DFSA has no responsibility for reviewing or verifying any Prospectus or other documents in connection with this Domestic Fund. Accordingly, the DFSA has not approved this Prospectus or any other associated documents nor taken any steps to verify the information set out in this Prospectus, and has no responsibility for it.
          The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Units offered should conduct their own due diligence on the Units.
          If you do not understand the contents of this document you should consult an authorised financial adviser."
          (1A) For a Public FundG that is a Passported FundG , instead of the statement referred to in (1), the Fund ManagerG must include the statement specified in FPR Rule 3.2.3(e).
          (2) In the case of a Public FundG which is a Listed FundG , the Fund ManagerG must include, instead of the statement referred to in (1), the statement required:
          (a) under MKT Rule 6.3.1(1)(b)(iii) or (4) as applicable, if it is a conventional Listed FundG ; and
          (b) under IFR Rule 6.5.1(h), if it is an Islamic FundG .
          (3) If a FundG is an Exempt FundG , the Fund ManagerG must include, in addition to the statement referred to in (1), the following statement:
          "This Information Memorandum is intended for only Professional Clients who can make a minimum subscription of US$50,000 and must not, therefore, be delivered to, or relied on by, a Retail Client or a Professional Client not able to make that minimum subscription."
          (4) If an Exempt FundG is a Passported FundG , the Fund ManagerG must include, instead of the statement in (1), the statement specified in FPR Rule 3.1.3(d) and the statement referred to in (3).
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
          [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

      • [Deleted]

        • CIR 14.3.5 [Deleted]

          [Deleted] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

    • CIR 14.4 Additional Prospectus Disclosure for Specialist Funds

      • Prospectus of a Feeder Fund

        • CIR 14.4.1

          A Fund ManagerG of a Feeder FundG must ensure that the Fund'sG ProspectusG discloses:

          (a) a prominent risk warning to alert prospective UnitholdersG to the fact that they will be subject to higher fees arising from the layered investment structure;
          (b) the fees arising at the level of:
          (i) the Feeder FundG itself;
          (ii) if applicable, the Master FundG of the Feeder FundG ; and
          (iii) if applicable, any underlying FundsG into which the Master FundG invests, to the extent known.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Prospectus of a Property Fund

        • CIR 14.4.2

          A Fund ManagerG of a Property FundG must ensure that the following information is disclosed in the Fund'sG ProspectusG :

          (a) the nature of the commitment which prospective UnitholdersG will enter into;
          (b) the risks involved in this type of FundG ;
          (c) the prominent risk warning which makes reference to circumstances in property markets which can cause difficulties in meeting redemptions;
          (d) details of the Property Fund'sG appointed ValuerG under CIR Rule 13.4.18(1);
          (e) in a prominent position in the ProspectusG , the redemption procedures;
          (f) the dividend or income distribution policy;
          (g) the insurance arrangement for the FundG ;
          (h) a statement with respect to any material policy regarding real property activities;
          (i) details of transactions or agreements entered into with Related PartiesG ;
          (j) full particulars of the nature and extent of the interest, if any, of Related PartiesG , in the property owned or proposed to be acquired by the FundG ;
          (k) details of significant holders and the number of units held and deemed to be held by each of them;
          (l) details of principal taxes levied on the Fund'sG income and capital, including tax, if any, deducted on distribution to UnitholdersG ;
          (m) a statement to explain the standards according to which the property valuations are conducted; and
          (n) if applicable, the FundG is a REITG and whether the investment vehicle is an Investment CompanyG or an Investment TrustG .
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM158/2015 (Made 9th December 2015). [VER19/02-16]

        • CIR 14.4.3

          A Fund ManagerG of a Public Property FundG must also disclose in the Fund'sG ProspectusG , in addition to the standard disclosure requirements, in respect of investment limits, the following information:

          (a) what percentage of the Property Fund'sG net assets may consist of property related assets which are not traded in or dealt on markets provided for in the ConstitutionG ;
          (b) unless the ConstitutionG and the ProspectusG state that the FundG invests in a single property, the maximum percentage of the Fund'sG net assets which may be invested in any single property or, if applicable, the conditions under which the FundG may derogate from this restriction;
          (c) the maximum percentage of the Property Fund'sG net assets which may be invested in properties which are vacant, in the process of development or requiring development; and
          (d) the maximum percentage of the Property Fund'sG net assets which may be invested in properties which are subject to a mortgage.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.4.4

          Without limiting any other disclosure obligations of the Fund ManagerG under these RulesG , a Fund ManagerG of a Property FundG which is a Public FundG that invests in a single property must prominently disclose in the ProspectusG of the FundG :

          (a) that the FundG invests in a single property;
          (b) details relating to the single property such as whether the property comprises individual properties or buildings, whether there are different types of uses of or businesses conducted in the property, and proportions of anticipated income to be derived from the types of uses or occupants of the property; and
          (c) any risks associated with the investment in the single property, including risks arising from or affecting income to be derived from the uses or occupants of the property.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

          • CIR 14.4.4 Guidance

            A FundG may be considered to invest in a single property if the Fund PropertyG (apart from cash or other assets held for management purposes) comprises a single building (or a single building with ancillary or adjacent buildings) managed by or on behalf of the OperatorG of the FundG as a single enterprise.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 14.4.4A

          Without limiting any other disclosure obligations of the Fund ManagerG under these Rules, if the Fund ManagerG of a Public Property FundG itself acts as custodian of Real PropertyG in accordance with CIR Rule 13.4.2, it must prominently disclose in the Fund'sG ProspectusG :

          (a) that it acts as custodian of the Real PropertyG ;
          (b) the risks that may arise as a result of it acting as custodian rather than delegating the function to an Eligible CustodianG ; and
          (c) the measures and safeguards it has in place to ensure the proper segregation and protection of the Real PropertyG .
          [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]

        • CIR 14.4.4B

          Without limiting any other disclosure obligations of the Fund ManagerG under these Rules, if the Fund ManagerG of a Public Property FundG has approval to enter into Related Party TransactionsG in accordance with CIR Rule 13.4.11A, it must disclose that fact in the Fund'sG ProspectusG .

          [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]

      • Prospectus for a Private Equity Fund

        • CIR 14.4.5

          If a FundG is a Private Equity FundG , the Fund ManagerG must provide the following in the Fund'sG ProspectusG :

          (a) a description of the arrangements in place for the safekeeping of monies raised from UnitholdersG but not yet invested in the proposed undertaking or venture; and
          (b) a description of the exit arrangements for UnitholdersG .
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Prospectus for a Hedge Fund

        • CIR 14.4.6

          A Fund ManagerG of a Hedge FundG must prominently disclose to prospective UnitholdersG in the ProspectusG and any other financial promotions relating to the FundG , the following Mandatory Hedge Fund Disclosure Statement:

          "When considering investment in a Hedge Fund you should consider the fact that some Hedge Fund products use leverage and other speculative investment practices that may increase the risk of investment loss, can be illiquid, may involve complex tax structures, often charge high fees, and in many cases the underlying investments are not transparent and are known only to the Hedge Fund Investment Manager.
          Returns from Hedge Funds can be volatile and you may lose all or part of your investment. With respect to single manager products the manager has total trading authority and this could mean a lack of diversification and higher risk. The Hedge Fund may be subject to substantial expenses that are generally offset by trading profits and other income. A portion of those fees is paid to the Hedge Fund Manager."
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Risk warning for a Money Market Fund

        • CIR 14.4.7

          A Fund ManagerG of a Money Market FundG that is a Public FundG must ensure that the Fund'sG ProspectusG includes a prominent warning:

          (a) drawing to the attention of investors the different nature of a UnitG in a Money Market FundG compared to a DepositG ;
          (b) that the capital of an investment in a Money Market FundG is not guaranteed; and
          (c) that the value of UnitsG in the Money Market FundG may fluctuate.
          [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]

      • Disclosure about an Exchange Traded Fund (ETF) and associated risks

        • CIR 14.4.8

          A Fund ManagerG of an Exchange Traded FundG (ETF) must include in its ProspectusG details relating to:

          (a) the type of ETFG and its characteristics;
          (b) the risks associated with the type of ETFG ;
          (c) the investment methodology and strategies the ETFG proposes to adopt to track the referenced index or benchmark;
          (d) a clear description of the relevant indices or other benchmark the ETF is designed to track, timely information about the underlying components (including their liquidity) of the relevant index or the benchmark and, if the Price Information ProviderG is a Related PartyG , that fact;
          (e) clear signposts to guide investors to relevant websites or sources of information provided by Price Information ProvidersG , as specified in CIR A9.1.2(2)(b)(i);
          (f) information about whether iNAV is made available by the relevant exchange, and if so, how this information can be accessed by investors;
          (g) information on how the referenced index or benchmark will be tracked and the risks for investors in terms of exposure they have to the underlying index and any counterparty risk;
          (h) a description of the key elements which may affect the ETF's ability to track fully the relevant index or benchmark, including, but not limited to, transaction costs, illiquid segments, and dividend re-investment;
          (i) in the case of a synthetic ETF using DerivativesG to replicate the performance of an index or other benchmark:
          (i) whether the ETFG uses a funded or unfunded model to replicate the performance of the specified index or benchmark;
          (ii) if not already disclosed, information relating to the counterparties to the Derivatives transactions, and where collateral is used, details relating to such collateral; and
          (iii) a description of the risks associated with counterparty default and use of any collateral, the impact of those risks on the ETF's performance and investor returns, and how such risks are to be mitigated;
          (j) to the extent an ETF is required to have a diversified portfolio, how the ETF proposes to achieve diversification of investments through its investment strategy;
          (k) if available, information about the past performance of the ETF, measured through its realised tracking difference and annual tracking error information, on the anticipated level of tracking error during normal market conditions, and how this will be effectively minimised; and
          (l) information about the ETF's Authorised Participant and if it is also a market maker in the ETF UnitsG in the relevant exchange, that fact.
          Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

          • CIR 14.4.8 Guidance

            See also the GuidanceG under CIR Rule 13.9.6 for types of ETFs, including synthetic ETFs, funded and unfunded, and the definitions of iNAV in GLOG .

            Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

      • Disclosure relating to ETF's cost structure

        • CIR 14.4.9

          A Fund ManagerG of an Exchange Traded FundG (ETF) must include in its ProspectusG sufficient information to enable investors to clearly understand:

          (a) the ETF's cost structure, covering:
          (i) any performance fees of the Fund ManagerG , if applicable;
          (ii) its operational costs; and
          (iii) if applicable, costs of underlying transactionsG (such as swaps, brokerage commissions and additional costs associated with leverage or use of collateral, and the rebalancing of the portfolio costs); and
          (b) any revenue derived by the Fund ManagerG through the use of the ETF's portfolio assets, and how that revenue is distributed between the ETFG and the Fund ManagerG .
          [Added] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

    • CIR 14.5 Obligation Relating to Making a Prospectus Available

      • CIR 14.5.1

        (1) A Fund ManagerG of a Domestic FundG must make the Fund'sG most recent ProspectusG available free of charge to any UnitholderG and to any PersonG who is eligible to invest in the FundG when making an OfferG to issue or sell a UnitG of the FundG to such a PersonG , and, in any case, must not enter into a TransactionG relating to the issue or sale of a UnitG of the FundG with a PersonG unless that TransactionG results from an Excluded OfferG as defined in CIR section 4.1 of this module.
        (2) A Fund ManagerG of a Domestic FundG which is an Exempt FundG or a Qualified Investor FundG must not, and must not cause any other PersonG to, make an OfferG of UnitsG of such a FundG in a manner that would result in a breach of the requirements in Article 16(4) or (5) of the Law as is applicable to that FundG .
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.5.1 Guidance

          1. CIR Section 4.1 of this module contains the definitions of Excluded OffersG , such as Execution-only TransactionsG and TransactionsG with market CounterpartiesG .
          2. A Fund ManagerG should note the requirements in Article 50(1) of the Law. Accordingly, a ProspectusG drawn up pursuant to CIR Rule 14.1.3 should be made available to prospective UnitholdersG for as long as the OfferG is open and once the OfferG is closed, the Fund Manager'sG obligation to make the ProspectusG available would cease.
          3. Articles 16(4) and (5) of the Law set out the conditions that must be satisfied for Exempt FundsG and Qualified Investor FundsG . In particular, these articles require that UnitsG in an Exempt FundG or a Qualified Investor FundG may only be OfferedG for issue or sale by means of a Private PlacementG with Professional ClientsG .
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

      • CIR 14.5.2

        (1) Where an Authorised FirmG OffersG a UnitG of a Domestic FundG to a PersonG it must make available to that PersonG a copy of the most recent ProspectusG at the time of the OfferG or before effecting the TransactionG in relation to the UnitsG , unless that TransactionG results from an Excluded OfferG as defined in CIR section 4.1 of this module.
        (2) An Authorised FirmG must not make an OfferG of UnitsG of an Exempt FundG or a Qualified Investor FundG in a manner that would result in a breach of the requirements in Articles 16(4) or (5) of the Law as is applicable to that FundG .
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

      • CIR 14.5.3

        A Fund ManagerG and an Authorised FirmG making an OfferG of a UnitG of a FundG meet the requirement in CIR Rule 14.5.1(1) or CIR Rule 14.5.2(1) as is relevant by:

        (a) maintaining at its place of business in the DIFCG copies of the relevant ProspectusG for inspection by ClientsG and by the DFSAG during normal business hours; or
        (b) being able to advise readily of a location in the DIFCG where copies of the ProspectusG are available.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 14.5.3 Guidance

          Copies of the ProspectusG may be stored electronically so long as ClientsG and the DFSAG have ready and immediate access.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

    • CIR 14.6 Responsibility for Prospectus

      • Prescribed Persons

        • CIR 14.6.1

          (1) For the purposes of Article 58(1) of the Law, the following PersonsG are prescribed as being responsible for a ProspectusG :
          (a) the Fund ManagerG ;
          (b) where the FundG is a Body CorporateG which does not have a sole Corporate DirectorG acting as its Fund ManagerG , each PersonG who is a DirectorG of that Body CorporateG at the time when the ProspectusG is filed;
          (c) where the FundG is an Investment UndertakingG , each PersonG who is authorised to be named, and is named, in the ProspectusG as a DirectorG , General PartnerG or member of the Governing BodyG or as having agreed to become such a PersonG of that FundG either immediately or at a future time;
          (d) each PersonG who accepts, and is stated in the ProspectusG as accepting, responsibility for, or for any part of, the ProspectusG ;
          (e) each PersonG who is deemed to accept responsibility for any part of a ProspectusG under these RulesG ; and
          (f) each PersonG not falling within any of the foregoing paragraphs who has authorised the contents of, or of any part of, the ProspectusG .
          (2) A PersonG who has accepted responsibility for, or authorised, only part of the contents of any ProspectusG , is responsible only for that part and only if it is included in, or substantially in, the form and context to which he has agreed.
          (3) Nothing in (1) makes a PersonG responsible for any part of a ProspectusG by reason only of giving advice as to its contents in a professional capacity to a PersonG specified in (1)(a) to (f).
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

      • Exceptions from Liability

        • CIR 14.6.2

          The circumstances set out in the Rules in this section are prescribed for the purposes of Article 58(2) of the Law.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 14.6.3

          (1) A PersonG , with the exception of the Fund ManagerG , will not incur any liability under Article 58(1) of the Law for any loss in respect of UnitsG caused by any such statement or omission if, at the time when the ProspectusG was filed for registration or the notification to the DFSAG , pursuant to Articles 28 or 34 as is relevant, was made or given he believed on reasonable grounds, having made any enquiries as were reasonable, that the statement was true and not misleading or that the matter whose omission caused the loss was properly omitted and:
          (a) he continued in that belief until the time when the UnitsG were acquired;
          (b) they were acquired before it was reasonably practicable to bring a correction to the attention of PersonsG likely to acquire the UnitsG in question;
          (c) before the UnitsG were acquired he had taken all such steps as it was reasonable for him to have taken to ensure that a correction was promptly brought to the attention of PersonsG likely to acquire the UnitsG in question; or
          (d) the UnitsG were acquired after such a lapse of time that he ought in the circumstances to be reasonably excused.
          (2) A PersonG will not incur any liability under Article 58(1) of the Law for any loss in respect of UnitsG caused by a statement purporting to be made by or on the authority of another PersonG as an expert which is, and is stated to be, included in the ProspectusG with that other Person'sG consent at the time when the ProspectusG was filed for registration or the notification to the DFSAG pursuant to Article 56 was given, if he believed on reasonable grounds that the other PersonG was competent to make or authorise the statement and had consented to its inclusion in the form and context in which it was included and:
          (a) he continued in that belief until the time when the UnitsG were acquired;
          (b) they were acquired before it was reasonably practicable to bring the fact that the expert was not competent or had not consented to the attention of PersonsG likely to acquire the UnitsG in question;
          (c) before the UnitsG were acquired he had taken all such steps as it was reasonable for him to have taken to secure that that fact was promptly brought to the attention of PersonsG likely to acquire the UnitsG in question; or
          (d) the UnitsG were acquired after such a lapse of time that, in the circumstances, he ought reasonably to be excused.
          (3) Without prejudice to (1) and (2), a PersonG will not incur any liability under Article 58(1) of the Law for any loss in respect of any UnitsG caused by any such statement or omission as is there mentioned if:
          (a) before the UnitsG were acquired a correction or, where the statement was such as is mentioned in (2), the fact that the expert was not competent or had not consented had been published in a manner calculated to bring it to the attention of PersonsG likely to acquire the UnitsG in question; or
          (b) he took all such steps as it was reasonable for him to take to secure such publication and believed on reasonable grounds that such publication had taken place before the UnitsG were acquired.
          (4) A PersonG will not incur any liability under Article 58(1) of the Law for any loss resulting from a statement made by an official PersonG or contained in a public official document which is included in the ProspectusG if the statement is accurately and fairly reproduced.
          (5) A PersonG will not incur any liability under Article 58(1) of the Law if the PersonG suffering the loss acquired the UnitsG in question with knowledge:
          (a) that the statement was false or misleading;
          (b) of the omitted matter or of the change; or
          (c) of the new matter or inaccuracy.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Experts

        • CIR 14.6.4

          For the purposes of Article 58 of the Law, an expert is prescribed as a PersonG accepting responsibility for any statement or report reproduced (in whole or in part) in a ProspectusG with that Person'sG written consent.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 14.6.5

          A Fund ManagerG must:

          (a) keep a record of any consent received under CIR Rule 14.5.4; and
          (b) include a statement in the ProspectusG that the expert has consented to the reproduction of his statement or report.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]