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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Prudential — Investment, Insurance Intermediation and Banking Module (PIB) [VER33/02-19]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases
Notices
Financial Markets Tribunal
Archive

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  • PIB 3.7 Expenditure Based Capital Minimum

    • PIB 3.7.1

      This section applies to an Authorised FirmG in CategoryG 2, 3A, 3B, 3C or 4.

      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 3.7.1 Guidance

        The Expenditure Based Capital MinimumG is a component of the calculation of the Capital RequirementG under sections PIB 3.4 and PIB 3.5 and is a key factor in the calculation of the capital components under PIB Rule 3.2.7.

        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

    • PIB 3.7.2

      An Authorised FirmG must calculate its Expenditure Based Capital MinimumG as:

      (a) subject to (b), in the case of an Authorised FirmG which holds Client AssetsG or Insurance MoniesG , 18/52;
      (b) in the case of an Insurance IntermediaryG which holds Insurance MoniesG but not Client AssetsG , 9/52;
      (c) in the case of an Authorised FirmG in CategoryG 2, 3A, 3B or 3C which does not hold Client AssetsG or Insurance MoniesG , 13/52; or
      (d) in the case of an Authorised FirmG in CategoryG 4, which does not hold Insurance MoniesG , 6/52;

      of the Annual Audited ExpenditureG , calculated in accordance with PIB Rule 3.7.3.

      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
      [Amended] DFSA RM183/2016 (Made 19 June 2016). [PIB/VER25/08-16]

    • Annual Audited Expenditure

      • PIB 3.7.3

        (1) Subject to PIB Rule 3.7.4, Annual Audited ExpenditureG constitutes all expenses and losses that arise in the Authorised Firm'sG normal course of business in a twelve month accounting period (excluding exceptional items) which are recorded in the Authorised Firm'sG audited profit and loss account, less the following items (if they are included in the Authorised Firm'sG audited profit and loss account):
        (a) staff bonuses, except to the extent that they are non-discretionary;
        (b) employees' and directors' shares in profits, including share options, except to the extent that they are non-discretionary;
        (c) other appropriations of profits, except to the extent that they are automatic;
        (d) shared commissions and fees payable that are directly related to commissions and fees receivable, which are included with total revenue;
        (e) fees, brokerage and other charges paid to clearing houses, exchanges and intermediate brokers for the purposes of executing, registering or clearing transactions;
        (f) any expenses for which pre-payments or advances have already been made to the respective claimant (e.g. pre-paid rent, pre-paid communication charges etc.) and deducted from Capital ResourcesG as illiquid assets;
        (g) foreign exchange losses; and
        (h) contributions to charities.
        (2) For the purposes of (1)(c), a management charge must not be treated as an appropriation of profits.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 3.7.4

        (1) For the purposes of PIB Rule 3.7.3, an Authorised FirmG must calculate its relevant Annual Audited ExpenditureG with reference to the Authorised Firm'sG most recent audited financial statements.
        (2) If the Authorised Firm'sG most recent audited financial statements do not represent a twelve month accounting period, it must calculate its Annual Audited ExpenditureG on a pro rata basis so as to produce an equivalent annual amount.
        (3) If an Authorised FirmG has not completed its first twelve months of business operations, it must calculate its Annual Audited ExpenditureG based on forecast expenditure as reflected in the budget for the first twelve months of business operations, as submitted with its application for authorisation.
        (4)
        (a) If an Authorised FirmG :
        (i) has a material change in its expenditure (either up or down); or
        (ii) has varied its authorised activities;
        it must recalculate its Annual Audited ExpenditureG and Expenditure Based Capital MinimumG accordingly.
        (b) Where an Authorised FirmG has recalculated its Annual Audited ExpenditureG and Expenditure Based Capital MinimumG in accordance with (a), it must submit this recalculation to the DFSAG within 7 days of its completion and seek agreement/approval from the DFSAG . The DFSAG may within 30 days of receiving the recalculation object to the recalculation and require the Authorised FirmG to revise its Expenditure Based Capital MinimumG .
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]