Dubai Improves Investment Funds Regime

by Lorys Charalambous, Tax-News.com, Cyprus

20 July 2010

The Dubai Financial Services Authority (DFSA) has implemented a series of regulatory changes to the Dubai International Financial Centre’s (DIFC's) Collective Investment Funds regime.

The most significant changes to the Funds Regime are as follows:

• DIFC-based fund managers are now permitted to establish and manage funds in jurisdictions of their choice;
• Fund managers from recognized jurisdictions outside the DIFC can establish and manage a Domestic Fund without having to establish a place of business in the DIFC;
• The scope for marketing of foreign funds in or from the DIFC has been expanded;
• A more competitive fee structure has been implemented. Notably, the Fund Manager Application Fee has been reduced from USD40,000 to USD10,000;
• An Exempt Funds regime has been established for professional clients, replacing the Private Funds regime, which will be completely phased out within two years. Exempt Funds are subject to lighter regulatory requirements but are only accessible by professional clients who make at least a minimum investment of USD50,000 each. Such funds can only have 100 or fewer unitholders and cannot be offered to the public – distribution being only by way of private placement.

Commenting on the development, Abdulla Al Awar, CEO of the DIFC Authority, said: “The DIFC welcomes the new funds regime as it will stimulate further growth of the funds management industry within the centre. The regulatory changes bring the DIFC in line with other leading financial hubs around the world and underline the centre’s position as the region’s most competitive financial centre for fund managers.”

Jacques Visser, Managing Director of Legal & Compliance of Algebra Capital, and a member of the panel which drafted the proposals, said: “The DIFC and the DFSA have listened to the industry and have made changes to the DIFC’s funds regime based on a series of sensible and pragmatic recommendations. As a result, the DIFC is now more attractive as an investment centre for both foreign and domestic fund managers. [Through this, they have moved to] ensure the DIFC’s growth and future relevance as a key player in the global and regional fund management industry.”

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