For entrepreneurs wishing to start financial activities in the UAE, it is important to know that the SCA is the main regulator in the United Arab Emirates regarding PEFs. The regulator strictly monitors the activities of the funds and may request any information that it deems necessary in order to control or investigate any violation discovered during the audit or as a result of filing a complaint.
To establish a PEF in Dubai, you must register with the DFSA. In order for investors to receive up-to-date information on the performance and management of the fund, the regulator requires the preparation of annual financial statements. Interim reports must also be in perfect order at all times, because the regulator can make a request unexpectedly at any time.
Establishing a PEF in the UAE requires prior approval or an SCA license. The application for licensing as a PEF manager in the United Arab Emirates must be accompanied by the partnership agreement and any other documents that the regulator may require.
The fund license must be renewed annually. The decision to renew your license will depend on how scrupulously you have followed the rules and regulations prescribed by law.
Before a PEF in the UAE agrees to provide funds to any legal entity, it must:
- Study the written application, get the necessary information about the segment in which the company operates, about the level of management in it, as well as find out the individual characteristics of doing business in this particular area. Based on the information provided, investors will decide whether it is profitable for the fund to finance this firm or not.
- Discuss the terms of cooperation with the company's management, on the basis of which legal documentation will be drawn up.
- Conduct due diligence of the organization, prepare drafts of legal documentation.
- Submit all the necessary documents that are needed to make a positive decision.
Moreover, if you want to establish a PEF in the UAE, please note that the annual audited accounts of the fund must be prepared by an independent external auditor. Such reports should be prepared in accordance with International Financial Reporting Standards.
Requirements for PEF managers in the Emirates
The manager must obtain a manager's license to carry out PEF management activities in the UAE. This may be a local bank licensed to manage mutual funds. The Manager and his affiliates may not own 30% or more of the shares in the funds they control. In addition, the PEF operator needs to designate individuals who meet the IT and operational requirements of the business.
Furthermore, the fund senior management must be qualified to fulfill the mandatory roles provided by law. In assessing senior management, the regulator will take into account the qualifications and professional experience of senior officials.
There are no specific restrictions or disclosure requirements in the UAE with regard to the involvement of accommodation agents or other intermediaries in the marketing of the fund.
However, certain rules regarding marketing and promotion must be followed, as well as disclosure conditions in accordance with the rules and regulations of the competent authority and also the UAE AML and anti-bribery laws.
Banks are not prohibited from investing or sponsoring PEFs in the United Arab Emirates. However, the Central Bank has imposed certain restrictions on the purchase of shares in Arab commercial companies by banks.
The material is presented for informational purposes only and cannot serve as a comprehensive consultation.
To sign up for an individual consultation on the regulation of investment activities in the UAE, do not hesitate to contact the IQ Decision UK team by filling out the feedback form below.