An Asset Management Firm traditionally pools and invests funds from High Net Worth Individuals ("HNWI") and/or rich families through various types of assets which include equities, real estate, bonds and other classes of assets depending on the type of Asset Management Firm. Other than big individual portfolios, asset management firms also manage pension plans, hedge funds, and other pooled structures like mutual funds or exchange-traded funds.
In the UAE there are mainly 2 jurisdictions we recommend when setting up an asset management firm.
Setting up an Asset Management Firm in the ADGM
The Abu Dhabi Global Market (“ADGM”), a financial free zone located in the capital city, Abu Dhabi. The ADGM is regulated by the Financial Services Regulatory Authority (“FSRA”)and the regulatory status of a financial advisory would fall under the Prudential Category 3C firm and its Permitted or Authorised Activity include:
- Managing assets;
- Arranging deals in investments; and
- Advising on financial products.
The Prudential Category 3C will also allow you to market funds and club deals in the ADGM however it is subjected to attaining approval from the FSRA on the types of funds and club deals the company wish to market. The category will also allow the company to conduct investment research and distribute it to Professional Clients or Investors.
When structuring, a financial advisory can be structured as either a Private Company Limited by Shares or as a Foreign Recognised Company(also known as a Branch). Within the structure, the FSRA requires financial advisories to appoint a Money Laundering and Reporting Officer who must be a UAE resident, a UAE resident Compliance Officer, a UAE resident Senior Executive Officer and a Finance Officer who does not need to be a UAE resident. The capital requirement is either USD 25,000 or 18/52 of the annual audited expenditure, which ever one is higher. Funds that can be marketed will be subject to review and approval from the FSRA. These funds can only target Professional Clients through private placement and there are no particular requirements on minimum subscription, but the FSRA may impose a minimum. The incorporation time for an ADGM asset management firm takes roughly between ten (10) to eleven (11)weeks.
Setting up an Asset Management Firm in the DIFC
The Dubai International Financial Centre (“DIFC”) is a financial free zone located in Dubai. It is regulated by the Dubai Financial Services Authority. In terms of the regulatory status, structure, and mandatory appointments, it is the same as the ADGM. The differences are seen in the Permitted or Authorised activity, capital requirement, minimum subscription requirement and incorporation time. Authorised activities of an asset management firm in the DIFC is:
- Managing assets;
- Arranging deals in investments; and
- Advising on investments or credit.
Required capital is twice the amount of the ADGM, which is at USD 500,000 or 18/52 of the annual audited expenditure, whichever one is higher. Types of fund that can be marketed in the DIFC are either Designated Funds or funds that have a regulated custodian and investment manager. Similar to the ADGM, these funds can only target Professional Clients through private placement but, there is a minimum subscription requirement of USD 50,000. DIFC Asset management firms take roughly between nineteen (19) to twenty-one (21)weeks to incorporate.
For detailed information on the Marketing rules, approval process and requirements, regulator’s and registry’s fees, and estimates of certain running costs please download our detailed comparison chart in the link at the beginning of this article.
Our Experience
lecocqassociate provides a full range of financial regulatory, corporate and commercial advice in relation to the structuring and incorporation of entities.
This newsletter is for information purposes only. It does not constitute professional advice or an opinion. Please contact Ms. Hooriya Qazal Rajput on info@lecocqassocate.com for any questions.
Hooriya Qazal Rajput
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