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Dubai Financial Services Authority (DFSA): Contents

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  • FPR 1 Introduction

    • FPR 1.1 Application

      • FPR 1.1.1

        The Rules in this module (FPR) apply to a Fund Manager of a Domestic Fund if:

        (a) the Fund Manager has notified the DFSA of its intention to Register the Domestic Fund as a Passported Fund under these Rules; or
        (b) the Fund Manager and Domestic Fund are included on the DFSA's Register of Passported Funds.
        Derived from RMI233/2019 (Made 20th February 2019). [VER1/02-19]

      • FPR 1.1.2

        This module also applies to an Agent and any other Licensed Person who Promotes a Passported Fund in or from the DIFC.

        Derived from RMI233/2019 (Made 20th February 2019). [VER1/02-19]

      • FPR 1.1.3

        Nothing in this module prevents a Fund Manager, its Agent or any other Licensed Person from Promoting a Domestic Fund in a Host Jurisdiction in accordance with the legislation applicable in that other Jurisdiction.

        Derived from RMI233/2019 (Made 20th February 2019). [VER1/02-19]

    • FPR 1.2 Overview and purpose of this module

      • FPR 1.2 Guidance

        1. The three UAE securities regulators: the SCA, the DFSA and the FSRA have agreed a "Protocol" regarding co-ordinated supervision of the marketing and selling of units of domestic funds within the UAE (State). The "Protocol" introduces a notification and registration process to enhance the monitoring and supervision of the financial services associated with the marketing and sale of units in domestic funds. The Protocol sets out a common regulatory framework which is to be implemented by each of the regulators. The Protocol is implemented in the DFSA Rulebook primarily through this module (FPR).
        2. FPR specifies procedures and requirements that apply in relation to a Passported Fund where the DFSA is either the Home Regulator or the Host Regulator of the Fund.
        3. FPR is applicable to Fund Managers of Domestic Funds (as that term is defined in FPR Rule 1.3.1) but also to other Authorised Firms that propose to carry on, or are carrying on, the marketing and selling of the Units of such Funds from the DIFC to potential investors and Clients situated in the ADGM or the State, outside the DIFC. It will also be relevant to Fund Managers, their Agents and any other Licensed Persons domiciled outside the DIFC that propose to carry on the marketing and selling of the Units of Domestic Funds to potential investors and Clients situated in the DIFC. However, where a Fund Manager or any other Authorised Firm only carries on Financial Services involving the Units of Domestic Funds with or for potential investors and Clients situated within the DIFC, then the Rules in FPR will not be relevant.
        4. Provided the Fund Manager has notified the DFSA and complies with other requirements of the Fund Protocol Rules, the manager may market and sell the Units in their Domestic Funds, or continue to do so, to potential investors and Clients situated in the DIFC or in the State outside the DIFC without the need for further authorisation or approval by any authority. Authorised firms other than the Fund Manager may also carry out such activities if the Fund has been registered under the Fund Protocol Rules.
        Derived from RMI233/2019 (Made 20th February 2019). [VER1/02-19]

    • FPR 1.3 Glossary for FPR

      • FPR 1.3 Guidance

        1. Some of the defined terms and abbreviations in this module may also be found in the DFSA's Glossary module (GLO). Where a defined term in this module does not appear in FPR Rule 1.3.1, a Person to whom these Rules apply should refer to GLO to find the meaning.
        2. A reference to legislation includes a reference to the legislation as amended or reenacted from time to time.
        3. Note that some terms, such as Fund and Domestic Fund, are defined differently in this module than elsewhere the Rulebook.
        Derived from RMI233/2019 (Made 20th February 2019). [VER1/02-19]

      • FPR 1.3.1

        In this module the terms and abbreviations listed in the table below have the following meanings:

        Agent A Licensed Person appointed by the Fund Manager of a Passported Fund to Promote the Units of that Fund.
        Authority The Securities and Commodities Authority (SCA), the Financial Services Regulatory Authority (FSRA) or the Dubai Financial Services Authority (DFSA).
        Domestic Fund or Fund Any arrangement that:
        (a) is established or domiciled in the UAE; and
        (b) is a "collective investment fund" as defined under the legislation administered by the DFSA or the FSRA or an "investment fund" as defined under the legislation administered by the SCA.
        Fund Manager The Person licensed by a Home Regulator to manage or operate a Domestic Fund.
        Home Regulator
        (a) In relation to a Fund, the Authority that is responsible for regulating the Fund in the Jurisdiction where the Fund is established or domiciled; and
        (b) In relation to the Fund Manager of a Fund, the Authority that is responsible for regulating the Fund Manager in the Jurisdiction where the Fund is established or domiciled.
        Home Jurisdiction In relation to a Fund, the Jurisdiction in which the Fund is established or domiciled.
        Host Jurisdiction In relation to a Passported Fund, a Jurisdiction into which the Passported Fund may be Promoted under these Rules.
        Host Regulator In relation to a Passported Fund, the Authority in the Jurisdiction into which the Fund may be Promoted (Host Jurisdiction) under these Rules
        Jurisdiction The UAE (excluding the Financial Free Zones), the Dubai International Financial Centre or the Abu Dhabi Global Market.
        Licensed Person A Person who is licensed or otherwise authorised by an Authority to Promote Funds.
        Passported Fund A Domestic Fund that is registered on its Home Jurisdiction's Register of Passported Funds.
        Person Any natural person, body corporate or body unincorporated, including a company, partnership, unincorporated association, government or state.
        Promote

        Promoted

        Promotion

        Promoting
        The marketing and sale of units of a Passported Fund to investors domiciled in the UAE by means of any form of communication including a direct or indirect public offering or private placement performed by:
        (a) the Fund Manager;
        (b) an Agent; or
        (c) any other Licensed Person.
        In this definition "sale" includes any arranging, dealing and advising activities in relation to the units.
        Private Fund A Domestic Fund where:
        (a) the initial subscription paid by a Person to become a Unitholder of the Fund is no less than $50,000; and
        (b) participation in the Fund is restricted to Unitholders who are Qualified Investors.
        Public Fund A Domestic Fund where:
        (a) Units of the Fund are offered to Persons in any of the Jurisdictions by way of a public offer; or
        (b) any Unitholder of the Fund is a Retail Client.
        Qualified Investor Any Person who is either a:
        (a) "Deemed" Qualified Investor;
        (b) "Service-based" Qualified Investor; or
        (c) "Assessed" Qualified Investor.
        "Deemed" Qualified Investor

        A Person is a "deemed" Qualified Investor if the Person falls within any of the following paragraphs and has not opted to be classified as a Retail Client:

        (a) a supranational organisation whose members are either countries, central banks or national monetary authorities;
        (b) a properly constituted government, government agency, central bank or other national monetary authority of any country or jurisdiction;
        (c) a public authority or state investment body;
        (d) an investment exchange or a clearing house that is authorised by an Authority or a financial services regulator outside the UAE;
        (e) a Person who is authorised to carry on a financial service by an Authority or by a financial services regulator;
        (f) the management company of a regulated pension fund;
        (g) a Person which, as at the date of its most recent financial statements, met at least two of the following requirements:
        (i) a balance sheet total of US$20 million;
        (ii) a net annual turnover of US$40 million; or
        (iii) own funds or called up capital of at least US$2 million,
        or, in each case, equivalent amounts in another currency;
        (h) a Collective Investment Fund or a regulated pension fund;
        (i) a body corporate whose shares are listed or admitted to trading on any exchange of an IOSCO member country;
        (j) any other institutional investor whose main activity is to invest in financial instruments, including an entity dedicated to the securitisation of assets or other financial transactions;
        (k) a trustee of a trust which has, or had during the previous twelve months, assets of at least US$10,000,000, or an equivalent amount in another currency. An individual trustee on the board of such a trust is only a "deemed" Qualified Investor in relation to that particular trust;
        (l) a single family office with respect to its activities carried on exclusively for the purposes of, and only in so far as it is, carrying out its duties as a single family office; or
        (m) a subsidiary or a parent of any of the Persons described in 1(a)–(l).
        "Service-based" Qualified Investor

        A Person is a "Service-based" Qualified Investor if:

        (a) the financial service provided to that Person is "Advising on Investments" or "Arranging Credit";
        (b) the service is provided for the purposes of corporate structuring and financing; and
        (c) the Person has not opted to be classified as a Retail Client.
        "Assessed" Qualified Investor

        A Person is an "assessed" Qualified Investor if the Person falls within any of the following paragraphs and has not opted to be classified as a Retail Client:

        Individuals

        (1) An individual is an "assessed" Qualified Investor if:

        (a) the individual has net assets of at least US$1,000,000 (or an equivalent amount in another currency), the calculation of which must:
        (i) exclude the value of that person's primary residence; and
        (ii) include any assets held directly or indirectly by that Person; and
        (b) either:
        (i) the individual is, or has been, in the previous two years, an employee in a professional position in a Person authorised to carry on a financial service by an Authority or by a financial services regulator outside the UAE; or
        (ii) the individual appears, on reasonable grounds, to have sufficient experience and understanding of relevant financial markets, products or transactions and any associated risks.
        (2) Any legal structure or vehicle, such as an undertaking, trust or foundation, is an "assessed" Qualified Investor if it is set up solely for the purpose of facilitating the management of an investment portfolio of an individual assessed as meeting the requirements in (1).

        (3) An individual who has a joint account (a "joint account holder") with an individual assessed as meeting the requirements in (1) (the "primary account holder") is an "assessed" Qualified Investor if:

        (a) the joint account holder is a family member of the primary account holder;
        (b) the account is used for the purposes of managing investments for the primary account holder and the joint account holder; and
        (c) the joint account holder has confirmed in writing that investment decisions relating to the joint account are generally made for, or on behalf of, him by the primary account holder.
        (4) An individual classified as a Qualified Investor may operate a joint account with more than one family member. Provided that each such family member meets the requirements set out in (3) above, they may all be classified as Qualified Investors.

        (5) A legal structure or vehicle of a Qualified Investor which is itself classified as a Qualified Investor may not opt to be treated as a Retail Client, as that right belongs to the Qualified Investor for whose purposes the vehicle is set up.

        (6) A family member of a Qualified Investor classified as a Qualified Investor under (3) above does not per se have a right to opt to be classified as a Retail Client with regard to the operation of the joint account.

        (7) A family member of a Qualified Investor classified as a Qualified Investor under (3) may withdraw his confirmation given to have decisions on behalf of him made by the Qualified Investor who is the primary account holder of the joint account. An Authorised Person must ensure that once such a withdrawal is made, the withdrawing individual is no longer classified as a Qualified Investor.

        Undertakings

        (8) An undertaking is an "assessed" Qualified Investor if the undertaking:

        (a) has own funds or called up capital of at least US$1,000,000 (or an equivalent amount in another currency); and
        (b) appears, on reasonable grounds, to have sufficient experience and understanding of relevant financial markets, products or transactions and any associated risks.
        (9) An undertaking is an "assessed" Qualified Investor if the undertaking has a controller, holding company, a subsidiary or a joint venture partner which meets the requirement to be an "assessed" Qualified Investor under (1), (2) or (4), or a "deemed" Qualified Investor.
        Register of Passported Funds
        (a) In relation to the DFSA, the register of Passported Funds maintained by the DFSA; and
        (b) In relation to another Authority, the register of Passported Funds maintained by that Authority.
        Retail Investor A Person who is not classified as a Qualified Investor
        Unit A unit in or a share representing the rights or interests of a Unitholder in a Fund.
        Unitholder In relation to a Fund, any holder of a Unit in the Fund or of any right or interest in such a Unit, and whose name is entered on the Fund's register in relation to that Unit.
        Derived from RMI233/2019 (Made 20th February 2019). [VER1/02-19]