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What is an Investment Fund

An Investment fund is basically pooled capital (funds) from numerous investors which is then used to purchase various assets.  The investor keeps ownership of the amount of capital he or she invested in.  By investing into an investment fund, investors benefit from a diversified portfolio leading to more investment opportunities whilst enjoying better investment management expertise at a lower fee. For example, investing USD 1,000 into the FTSE 100 tracker fund may be better(most of the time) than investing the same amount into a single stock.  

Setting Up an Investment Fund in the United Arab Emirates

The United Arab Emirates (“UAE”) Is known for its business friendly economic environment is the Gulf region’s second largest economy. Back in 2018, the country received roughly USD 10.3 billion in Foreign Direct Investment (“FDI”) in the finance, manufacturing, insurance, real estate and general trading sectors.  There are two financial free zones in the UAE in which investment funds are incorporated: the Dubai International Financial Centre (“DIFC”) and the Abu Dhabi Global Market (“ADGM”). This article will focus on the incorporation of an Exempt Fund and a Qualifying Investor Fund (“QIF”) of which can be structured as:

  • Open or close ended investment companies;
  • Investment trusts;
  • Limited partnerships;
  • Protected cell companies (“PCC”) and incorporated cell companies (“ICC”);
  • Restricted scope companies; master/feeder structures; and
  • Umbrella funds

Set Up an Investment Fund in Dubai

The DIFC is one of the leading financial free zones and an attractive jurisdiction for those looking to set up investment funds in the GCC region.  The DIFC is regulated by the Dubai Financial Services Authority (“DFSA”).  When setting up an Exempt of QIF in the DIFC, the DFSA will require incorporators to submit:

  • Application form;
  • Prospectus;
  • Draft Memorandum and Articles of Association;
  • Consent letter from Auditors; and
  • Registration Fee

After the submission of the documents it will take roughly thirty (30) working days to incorporate an Exempt Fund and two (2) working days for a QIF.  Both Funds have a minimum capital share of USD 50,000.  As for the investors, both Funds can only be offered to Professional Clients however the number of investors allowed for an Exempt Fund is one hundred (100) and fifty(50) for a QIF.

Set Up an Investment Fund in ADGM

The ADGM has been gaining traction over the years and it is becoming the jurisdiction of choice for matters surrounding funds because of its international standards and framework derived from the English Common Law.  The ADGM is regulated by the Financial Services Regulatory Authority (“FSRA”).  When setting up a fund in the financial free zone of Abu Dhabi, the Fund Manager of the Exempt Fund must first notify the regulators within 14 days prior to the Initial offer of units and must include:

  • The Application Form;
  • General description of the fund including nature of its investments and the intended size of the fund in monetary terms;
  • Details of prime broker, if appointed; and
  • If it is a foreign fund manager, the name of the jurisdiction in which that foreign fund manager is domiciled.

If the Fund being incorporated is a Qualifying Investor Fund, the Fund Manager must notify the FSRA in advance prior to the initial offer of the units and must include:

  • The Application Form;
  • General description of the fund including nature of its investments and the intended size of the fund in monetary terms;
  • Details of prime broker, if appointed; and
  • If it is a foreign fund manager, the name of the jurisdiction in which that foreign fund manager is domiciled.

To get the full information on the requirements and process on setting up an investment fund in the DIFC and the ADGM, please kindly click the download link found at the top 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 us at info@lecocqassociate.com for any questions.

Hooriya Qazal Rajput
Hooriya Qazal Rajput
Managing Partner