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The UAE is known for having some the most favorable conditions for doing business in the entire Middle East region. However, entrepreneurs wishing to embark on financial activities in Dubai should have a sound grasp of the local legislation, and more specifically, regulation of funds in the UAE. So, let’s have a look at what it takes to set up a fund in this jurisdiction. 

UAE: Establishing PEFs

Formation of PEFs in the UAE is regulated by the SCA, which recognizes PEFs as “full & limited partnership funds”. According the SCA’s definition, general partners are management companies & must obtain a financial services license in the UAE. In their turn, investors are considered limited partners.

IMPORTANT

 

The SCA requires investment funds to have a separate legal personality. It also requires that general partners be held fully responsible for funds’ liabilities.

Those seeking to establish a fund in the UAE should keep in mind that the four main financial regulators there are:  

  • DIFC;
  • DFSA; 
  • ADGM;
  • FSRA.

DIFC and ADGM require PEFs to have one of the following structures:

  • investment companies (most common);
  • investment partnerships; 
  • investment trusts.

IMPORTANT

 

DFSA and FSRA require general partners to obtain a fund manager license in the UAE.

Under the SCA regulations, general partners (aka funds’ founders) must be licensed to be able to set up a PEF in the UAE. Applying for a license requires submitting the following documents:

  • partners’ contact info;
  • partnership agreements;
  • verification of compliance with capital requirements.

General partners may also be requested to provide additional information.

Access to Information on PEFs

On its website, the SCA keeps a register of all registered companies in the UAE which were licensed under its rules. The following information about the companies is available:

  • address;
  • BoD;
  • shareholder meetings.

DIFC-registered funds can also be found in an online public register. The following information about them is available:

  • registration number;
  • address;
  • name;
  • directors & stakeholders’ names;
  • info on partners; 
  • info on share capital.

Taxation

At the moment. the UAE has no no corporate or income taxes (trade zones are tax-free). However, those seeking to start a business in the Emirates should keep in mind there’s a VAT which is levied on organizations registered in the mainland UAE & free zones & engaged in the supply of goods or services.

Conclusion

Regulation of funds in the UAE is the first thing potential investors should keep in mind prior to setting up a fund in Dubai.  If you need more information on establishment of funds in the UAE or legal assistance with opening one, do not hesitate to get in touch with IQ Decision UK. Our legal assistants will be happy to give you a hand with any legal issues you're facing in this respect.