UCITS passporting in United Arab Emirates

The UAE is not subject to any EU UCITS requirements and has its own respective rules.

Pursuant to SCA’s Decision of the Chairman of the Authority’s Board of Directors Decision No. 13/RM/2021 on the Rules Handbook of Financial Activities and Mechanisms of Status Regularisation (the “SCA Rulebook”), no entity may conduct any regulated investment services including the promotion of Financial Products (which includes fund units) without first obtaining a licence from the SCA (the “General Prohibition”).  The SCA Rulebook contains a number of exemptions to the General Prohibition. 

In relation to the marketing of funds, specifically foreign funds, pursuant to the SCA Board of Directors’ Chairman Decision No. (01/RM) and Decision No. (04/RM) of 2023 (together the “Funds Regulations”), any promotion of foreign fund units to UAE retail investors is prohibited and the promotion to Professional Investors is limited to private placement only.  Foreign funds are defined within the Funds Regulations as units in a fund incorporated outside of the United Arab Emirates and therefore would capture the Luxembourg fund which EMMA Capital is seeking to market.  In order to promote foreign funds to Professional Investors within the UAE: (1) the fund must be registered with the SCA, (2) the promotion must be conducted by an SCA-licensed promoter and (3) is on the basis of private-placement. 

The SCA has recently clarified in market commentary that there are two exemptions to this requirement.  First, where the promotion is limited to UAE government entities (this includes federal or local governments, government institutions and agencies, or companies wholly owned by any of them) (the “Government Entity Exemption”) or second, where the promotion is as a result of a genuine reverse enquiry from a Professional Investor (“Reverse Enquiry Exemption”).   In relation to the Reverse Enquiry Exemption, this is only available where the reverse enquiry is made on a cross-border basis – i.e. to a promoter or fund manager located outside the UAE. As such, it cannot be relied upon during a visit to the UAE.  It is important that the fund manager or promoter retains documentary evidence of any reverse solicitation. 

As such, in order to promote any foreign funds within the UAE, a fund manager will either need to register the fund with the SCA and appoint an SCA-licensed promoter to carry out the promotion or alternatively, ensure one of the exemptions is met. 

In relation to registering the Fund with the SCA, this is done through the SCA online portal.  The fund manager or a legal representative of the fund will be required to set-up an account to make the submission.  Once the form has been completed, the promoter will be notified and is required to give an undertaking to the SCA that the promotion will be limited to Professional Investors, and that they will comply with the ongoing requirements under the SCA Rulebook in relation to the promotion. 

The initial registration fee of the fund is AED 2,000 and upon approval of the fund by the SCA, the remaining balance of AED 10,000 will be due and payable.  The SCA ordinarily approves funds within 10 business days of registration. 

Please note, the minimum subscription amount is AED 500,000 or any higher amount as set out in the fund’s prospectus.