The Dubai Financial Services Authority (DFSA) has issued two consultation papers which detail new proposals aimed at enhancing Dubai's current collective investment funds regime.
The enhancements, outlined in Consultation Papers No 33 and 34, are primarily designed to facilitate the establishment of Real Estate Investment Trusts (REITS) and to remove unnecessary impediments to the marketing and selling of foreign funds in and from the DIFC.
Consultation Paper No. 33 deals with proposals to introduce an Investment Trust Law and specific requirements relating to how REITS can be established and operated in the DIFC. Currently, public funds in the DIFC cannot use the trust vehicle. The proposed Investment Trust Law fills this gap by offering property trusts so that operators, particularly those coming from jurisdictions that use the trust structure for collective investments, will have that option open to them when the proposed legislation is enacted.
The REITS-specific proposals are designed to ensure that liquidity and other risks inherent in real estate investments are adequately addressed, in a manner consistent with the international standards adopted for REITS.
Consultation Paper No. 34 deals with proposals to expand the categories of foreign funds that can be marketed in and from the DIFC. The DFSA’s proposals to expand the categories of foreign funds arose due to industry concerns that the current categories are too restrictive.
Following a risk-based analysis, the DFSA now proposes to expand the categories of foreign funds that can be marketed and sold in and from the DIFC, subject to certain due diligence and other obligations imposed on the firms distributing those funds.
Commenting on the proposed legislation, Mr. David Knott, DFSA CEO observed that:
“In addition to creating a regulatory framework for managed Funds in the DIFC which meets internationally acceptable industry standards, the DFSA also strives to promote the marketing of Foreign Funds to meet certain governance and structural standards, providing greater investor confidence."
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