Introduction
Until recently, most fund managers in the Abu Dhabi Global Market (“ADGM”) operated under the same licence, whatever their size or investor base. Outside the dedicated venture capital regime, a sponsor raising a first-time fund and a manager running a large platform for institutional investors were, in most cases, subject to the same capital and governance requirements.
As the ADGM’s asset management sector has grown, so has the range of managers it attracts, from emerging sponsors to managers serving sovereign and other institutional investors.
On 16 September 2026, following Consultation Paper No. 12 of 2025, the Financial Services Regulatory Authority (“FSRA”) published amendments to its Fund Rulebook, General Rulebook, Conduct of Business Rulebook, Glossary and Prudential – Investment, Insurance Intermediation and Banking Rulebook. These introduce a graduated framework, in which a manager’s requirements depend on two factors: its size and its investor base.
This publication looks at what has changed and what existing managers need to plan for.
What is new?
The full-scope licence remains unchanged. Around it, the FSRA has created two new categories, the Sub-Threshold Fund Manager (“STFM”) and the Institutional Fund Manager (“IFM”). It has also folded the venture capital regime into the STFM category, tightened the conditions under which foreign managers may manage ADGM funds, and introduced a dedicated framework for employee co-investment vehicles.
A. The Sub-Threshold Fund Manager
Previously, a manager of a small private equity or private credit fund that did not qualify as a venture capital fund had to hold a full-scope licence, with the same capital and governance requirements as a large platform. The new STFM category changes this for managers of closed-ended funds offered only to Professional Clients, with total committed capital of up to USD 200 million across all their funds.
Its main benefits are a flat USD 50,000 base capital requirement, without any expenditure-based component, and no obligation to appoint a finance officer or set up an internal audit function. Professional indemnity insurance remains mandatory, and a manager expecting to exceed the threshold must apply for a variation of its permission beforehand.
B. Venture Capital Fund Managers
Previously, venture capital managers had their own light regime: each fund was capped at USD 100 million, but the manager sat largely outside the prudential rules and had no prescribed minimum capital. Venture capital fund managers (“VCFMs”) now form a sub-category of STFMs.
As a result, VCFMs must hold base capital of USD 50,000 for the first time, and the fund-by-fund cap gives way to the STFM limit of USD 200 million across all funds managed. This gives a single fund more room, but may leave less for a manager running several funds. VCFMs keep their reduced FSRA fees, capped at USD 10,000.
C. The Institutional Fund Manager
Previously, a manager raising exclusively from sovereign wealth funds, pension funds and other institutions faced the same full-scope requirements as any other manager. The IFM may only manage qualified investor funds and foreign funds that require each investor to commit at least USD 5 million and exclude natural persons.
In return, it receives the widest set of dispensations of any licensed manager: no limit on the size of its funds, which may also be open-ended; a capital requirement of the higher of USD 50,000 and six weeks of annual audited expenditure (compared with 13 weeks for a full-scope manager); and no obligation to appoint a finance officer, set up an internal audit function or hold professional indemnity insurance.
D. Foreign Fund Managers
Previously, a manager regulated abroad could manage an ADGM fund without an ADGM licence on relatively flexible terms, including by delegating the management of the fund to a third party.
That flexibility has gone. A foreign fund manager (“FFM”) may now manage only closed-ended qualified investor funds and may no longer delegate portfolio management or investment advice to a third party. This removes the “host” model, in which the foreign manager’s role was often more formal than real. FFMs must also appoint an FSRA-licensed administrator and have a UAE-resident director on the board of the fund or of its general partner.
E. Employee Co-Investment Vehicles
Previously, vehicles through which employees co-invested in their firm’s funds had no dedicated framework and were subject to the usual minimum subscriptions. Such vehicles are now excluded from the definition of “Fund”, and those minimums no longer apply, provided participants are directly involved in the investment strategy or advice and have acknowledged the risks in writing. Investment teams can therefore co-invest alongside institutional investors without affecting a fund’s institutional status.
Mind the calendar
Existing VCFMs and FFMs have until 31 March 2027 to comply with the new requirements. For foreign managers in particular, appointing a UAE-resident director and an FSRA-licensed administrator, and unwinding delegation arrangements, will take time.
Final thoughts
The new regime does not so much reduce regulation as calibrate it. Managers can now operate under a framework that reflects their size and investor base, and each route comes with its own conditions: a committed capital threshold to monitor, investor eligibility requirements to maintain, or local appointments to make.
Selecting a category is therefore a structuring decision as much as a regulatory one, and is best considered alongside the fund’s investor base, fundraising plan and growth ambitions.
This article is for information purposes only. It does not constitute professional advice or an opinion. For further insight on the new ADGM regime, or to assess which category fits your needs, please feel free to contact our firm.
Shahin Dehkohneh
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