Fund Distribution Alert 2023-06

On 16 January 2023, the Securities & Commodities Authority (SCA) updated its regulation regarding the promotion of units of foreign investment funds in the United Arab Emirates. Translation of this regulation and Q&A have been made available since then.

The following changes have been made:

In accordance with the provisions of the Chairman of the Authority’s Board of Directors Decision No. 804/R.M) 2023, the promotion of foreign investment funds is limited to the private offering to the professional investors in the United Arab Emirates.

The SCA has decided to provide a grace period from 1st January 2023 to 30 June 2023 for very special cases where the marketing to retail investors in the United Arab Emirates is still authorized. If a binding contract is established with the local promoter to promote foreign investment funds registered in the United Arab Emirates and this contract is in force at the time of the issuance of the decision, the Authority will consider the immediate cessation of the promotion as a violation of the said agreement. 

In this case, the foreign investment funds, though its local legal representative, must submit a renewal request for the extension of authorization of the foreign investment funds to continue the promotion to retail investors until the end of the contract or until 30 June 2023, whichever is earlier. This extension request is subject to the payment of renewal fees for the period from the beginning of 2023 until the end of the contract or until 30 June 2023, whichever is earlier. The fee will be determined on a pro rata basis and is based on (5,000) dirhams for the full year. The deadline to request the extension period is 31st March 2023.

For foreign investment funds which wish to convert their distribution regime to professional investors on March 31, 2023 or on June 30, 2023, the local legal representative must send the request to the authority and pay the prescribed fee of (5,000) dirhams. The deadline to request the conversion regime is 31st March 2023.

For foreign investment funds which neither request the extension period nor apply for the conversion regime before March 31, 2023, the authorization to market will be revoked and a cancelling fee will be charged. In addition, the local promoter(s) will also have to submit an application to cancel the promotion of the said foreign investment funds and pay the prescribed fee of (1,000) dirhams

After this cancellation, if foreign investment funds want to be promoted in the United Arab Emirates, a new application must be submitted.

After June 30, 2023, the promotion of foreign investment funds to retail investors in the United Arab Emirates will only be possible through local public feeder funds which can be established by foreign issuers.

Decrease of registration fee for the promotion of units of foreign funds:

Decrease of the renewal fee for the registration of foreign funds:

Please feel free to contact us if you need additional information.

Partner
+352 22 51 51 7892
said.fihri@kpmg.lu

Director
+352 22 51 51 7271
stephanie.zedda@kpmg.lu