Back Custom print Link Text Only Rich Text Print

Entire Section

  • Part 2 Part 2 Definitional Provisions

    • Guidance

      A Collective Investment Fund is defined in Article 11 of the Law. The definition under Article 11 is very wide, however, Article 12 enables the DFSA to make Rules excluding certain arrangements or types of arrangements from constituting a Fund. These excluded arrangements are set out below in CIR section 2.1.

      Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

    • CIR 2 CIR 2 Arrangements not Constituting a Collective Investment Fund

      • CIR 2.1 CIR 2.1 Exclusions

        • CIR 2.1.1

          Pursuant to Article 12 of the Law, the DFSA prescribes that an arrangement which otherwise amounts to a Collective Investment Fund as defined in Article 11 of the Law does not constitute a Collective Investment Fund if it falls within one or more of the exclusions specified in this chapter.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Deposits

          • CIR 2.1.2

            An arrangement does not constitute a Collective Investment Fund if the whole amount of each participant's contribution is a Deposit which is accepted by an Authorised Firm authorised under its Licence to carry on the Financial Service of Accepting Deposits.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Common Accounts

          • CIR 2.1.3

            An arrangement does not constitute a Collective Investment Fund if:

            (a) the rights or interests of each participant in the arrangement are rights or interests in money held in a common account; and
            (b) the money is held in the account on the understanding that an amount representing the contribution of each participant is to be applied in making payments to him or in satisfaction of sums owed by him or in the acquisition of property for him or the provision of services to him.
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Commercial Activities Unrelated to Financial Services

          • CIR 2.1.4

            An arrangement does not constitute a Collective Investment Fund if each of the participants in the arrangement:

            (a) carries on a business which does not involve the carrying on of any of the activities specified under GEN Rule 2.2.2(d) to (k) or (n) to (q) or an activity which would be such an activity were it not for any applicable exclusion; and
            (b) enters into the arrangement for commercial purposes related to that business where that participant carries on that business by virtue of being a participant in the arrangement.
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Group Arrangements

          • CIR 2.1.5

            An arrangement does not constitute a Collective Investment Fund if each of the participants is a Body Corporate in the same Group as the Person undertaking the fund management function in relation to the arrangement.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Franchise Arrangements

          • CIR 2.1.6

            An arrangement does not constitute a Collective Investment Fund if the arrangement is a franchise arrangement.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Clearing Services

          • CIR 2.1.7

            An arrangement does not constitute a Collective Investment Fund if the purpose of the arrangement is the provision of clearing services and the services are operated by an Authorised Market Institution.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Certificates or Options

          • CIR 2.1.8

            An arrangement does not constitute a Collective Investment Fund if the rights or interests of the participants in the arrangement are Investments of the kind specified under Rule GEN A2.2.1(d) or GEN A2.3.1(a).

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Time-Share and Other 'Property-Enjoyment' Related Arrangements

          • CIR 2.1.9

            An arrangement does not constitute a Collective Investment Fund:

            (a) if the rights or interests of each of the participants in the arrangement are time share rights; or
            (b) if:
            (i) the predominant purpose of the arrangement is to enable the participants to share in the use or enjoyment of property or to make its use or enjoyment available gratuitously to others; and
            (ii) the property to which the arrangement relates does not consist of or include the currency of any country or territory or Investments, as defined in GEN Rule A2.1 or, which would be such Investments if not for any applicable exclusion.
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • [Deleted]

          [Deleted] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

          • CIR 2.1.10 [Deleted]

            [Deleted] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

        • Commercial arrangements

          • CIR 2.1.10 CIR 2.1.10 Commercial arrangements

            An arrangement that consists of a company, partnership or trust does not constitute a Collective Investment Fund if the main purpose and effect of the arrangement is the carrying on of a commercial or other business unrelated to financial or investment activities.

            Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

            • CIR 2.1.10 Guidance Common indicators and examples

              1. The DFSA would generally not expect an ordinary company, partnership or trust (an undertaking) that carries on a general commercial business to be a Fund, and therefore regulated. An undertaking would be regarded as carrying on a general commercial business where it pursues a business strategy that involves activities such as:

              a. running a business involving the purchase, sale or exchange of goods and commodities;
              b. supplying services – such as maintenance, cleaning, electrical or plumbing, servicing appliances;
              c. providing non-financial professional services – such as legal or accounting;
              d. conducting media activities/business;
              e. operating an industrial activity, such as the production of goods or construction of property; or
              f. carrying on a combination of the above or similar activities.
              Similarly, an arrangement that pursues a charitable purpose (such as a charitable trust) would not be regarded as a Fund.

              2. Further indicators which can be used to identify if an undertaking is a commercial business include:

              a. the particular structure of the undertaking – i.e. if it is open-ended, then the structure is generally regarded as more suited for collective investment, rather than a commercial operation (because a commercial business does not lend itself to having parts of it sold off to meet redemption rights of investors and, also, investors in commercial businesses do not expect the business to do so);
              b. the distribution mechanism used by the undertaking – if it is closed-ended and has a specified period at the end of which it will be wound up and proceeds from realising assets will be distributed to investors, then generally such an undertaking is an investment vehicle, rather than a commercial undertaking;
              c. how it conducts its business – for example:
              i. if the business has a large number of employees engaging in its business activities, this is a possible indicator it is a commercial business. This is because many investment companies delegate or outsource their investment and administration activities to third party service providers, and have limited staff;
              ii. if the undertaking merely holds the property to take advantage of changing market prices or the income stream, it is an indicator of conducting collective investment business, rather than undertaking any construction or development activities, which are commercial activities;
              iii. if the business is designed to expand any existing commercial business of investors, this is a pointer that it is a commercial business, as opposed to an undertaking which would achieve gains or benefits by realisation of the underlying assets – which is a pointer that it is an investment business; and
              iv. if the business itself creates the property or assets it manages (e.g. by constructing a building), it indicates that such a business is more likely to be a property development business, which is a commercial business, rather than an investment vehicle.
              d. How the undertaking promotes its business to potential investors. For example, if the business promotes itself based on its investment mandate and the investment skills of the person carrying out the investment and risk management function in the business, it is likely to be a Fund rather than a commercial business.

              3. See further Guidance under CIR Rule 3.1.7 about property companies that are not Funds.

              Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

        • Debentures and Warrants of a Single Issuer

          • CIR 2.1.11

            (a) An arrangement does not constitute a Collective Investment Fund if the rights or interests of the participants in the arrangement are represented by a Debenture or Warrant:
            (i) where the issuer of the Debenture or Warrant is a single issuer, and if that issuer is:
            (A) a Body Corporate, it is neither an Open-ended investment company nor a Closed-ended company the intent or purpose of which is investment management as specified in CIR Rule 2.1.10; or
            (B) not a Body Corporate, the rights and interests of the Debenture or Warrant holder are guaranteed by the government of any country or territory; and
            (ii) which, if it is a convertible Security, the underlying Securities to which the Debenture or Warrant holder is entitled are Shares or Debentures issued, or to be issued, by the same issuer as the issuer of the Debenture or Warrant or single other issuer.
            (b) An arrangement that does not constitute a Collective Investment Fund by virtue of CIR Rule 2.1.11(a) does not become a Fund merely because one of the participants in the arrangement is a person:
            (i) whose ordinary business involves him engaging in an activity that is a Financial Services activity as defined in GEN chapter 2 or that would fall within an applicable exclusion from a Financial Services activity; and
            (ii) whose rights or interests in the arrangement are, or include, rights or interests in a swap arrangement under which he facilitates the making of payments to participants whether in a particular amount or currency or at a particular time or rate of interest or all or any combination of those things in settlement of the rights and interests of the other participants in the arrangement.
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

        • Insurance

          • CIR 2.1.12

            An arrangement does not constitute a Collective Investment Fund if it is a Contract of Insurance.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Profit Sharing Investment Accounts

          • CIR 2.1.13

            An arrangement does not constitute a Collective Investment Fund if it is an account or portfolio which is a Profit Sharing Investment Account.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Discretionary Portfolio Accounts

          • CIR 2.1.14

            An arrangement does not constitute a Collective Investment Fund if it is a portfolio or account managed under a Discretionary Portfolio Management Agreement.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Close Relative Accounts

          • CIR 2.1.15

            An arrangement does not constitute a Collective Investment Fund if every participant in the arrangement is a Close Relative. For the purposes of this Rule, the defined term "Close Relative" includes grandchildren.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Sukuks

          • CIR 2.1.16

            An arrangement does not constitute a Collective Investment Fund if the rights or interests of the participants are evidenced by sukuk certificates where the holders of the certificates are entitled to rely on the credit worthiness of:

            (a) the issuer of the sukuk certificates; or
            (b) any other Person who has assumed obligations under the sukuk certificates,

            for obtaining their rights and benefits arising under the certificates.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Employee Reward Schemes

          • CIR 2.1.17

            An arrangement does not constitute a Collective Investment Fund if the arrangement is for the purposes of enabling or facilitating the operation of an employee compensation or reward scheme where the arrangement:

            (a) makes Securities available only to:
            (i) an Employee or former Employee of the Issuer or of another member of the same Group as the Issuer; or
            (ii) a Close Relative of any such Employee; and
            (b) is operated by the Issuer or by a member of the same Group as the Issuer or by a trustee who, in pursuance of the arrangements, holds the Securities issued by the Issuer for the benefit of any eligible Persons referred to in CIR Rule 2.1.17(a)(i) or (ii).
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Crowdfunding

          • CIR 2.1.18

            An arrangement does not constitute a Collective Investment Fund if all of the following conditions are met:

            (a) the arrangement is entered into using a Property Investment Crowdfunding Platform, operated by a Crowdfunding Operator;
            (b) the arrangement involves multiple investors investing in an individual apartment, house or building that has a single discrete title deed;
            (c) all of the investors are Clients of the Crowdfunding Operator; and
            (d) the total consideration paid by all investors in the apartment, house or building is not more than $5 million or an equivalent amount in another currency.
            Derived from RM255/2019 (Made 26th July 2019). [VER25/07-19]

            • CIR 2.1.18 Guidance

              An Investment made through an Investment Crowdfunding Platform (i.e. a platform that facilitates an investment in a business or a project rather than a property) is likely to fall within the exclusion in CIR Rule 2.1.10.

              Derived from RM255/2019 (Made 26th July 2019). [VER25/07-19]

          • CIR 2.1.19

            An arrangement does not constitute a Collective Investment Fund if all of the following conditions are met:

            (a) the arrangement is entered into using a Loan Crowdfunding Platform, operated by a Crowdfunding Operator;
            (b) the arrangement involves multiple lenders providing a loan to a borrower for a business or project;
            (c) all of the lenders are Clients of the Crowdfunding Operator;
            (d) the amount of the loan, the rate of return and the repayment period are fixed when the loan agreement is entered into; and
            (e) the total funding provided by all lenders to the borrower is not more than $5 million or an equivalent amount in another currency.
            Derived from RM255/2019 (Made 26th July 2019). [VER25/07-19]

        • Employee Money Purchase Scheme

          • CIR 2.1.20

            An arrangement does not constitute a Collective Investment Fund if all of the following conditions are met:

            (a) the arrangement is an Employee Money Purchase Scheme and the DFSA has approved that Scheme under COB Rule 12.2.2;
            (b) the Scheme is operated by an Authorised Firm that is authorised to Operate an Employee Money Purchase Scheme; and
            (c) the Scheme is administered by an Authorised Firm that is authorised to Act as the Administrator of an Employee Money Purchase Scheme.
            Added from RM265/2019 (Made 18th December 2019). [VER27/01-20]

    • CIR 3 CIR 3 Specialist Classes of Funds

      • CIR 3.1 CIR 3.1 Specialist Funds

        • CIR 3.1.1 CIR 3.1.1

          (1) Pursuant to Article 17 of the Law, a Domestic Fund that falls within one or more of the criteria specified in Rules CIR 3.1.2 to CIR 3.1.13 is hereby prescribed to be a Domestic Fund of that specialist class or classes.
          (2) Pursuant to Article 18(1)(c) of the Law, a Foreign Fund that falls within one or more of the criteria specified in Rules CIR 3.1.2–CIR 3.1.13 is hereby prescribed to be a Foreign Fund of that specialist class or classes for the purposes of:
          (a) marketing of the Units of that Fund in or from the DIFC; or
          (b) determining whether a Domestic Fund investing in such a Fund continues to meet any criteria or other requirements applicable to that Domestic Fund.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].
          [Amended] DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

          • CIR 3.1.1 Guidance

            1. A Domestic Fund may attract more than one definition of a specialist class of Funds. For example, a Domestic Fund may be an Islamic Hedge Fund, Islamic Private Equity Fund or an Islamic REIT. However, due to the definition of Private Equity Fund, a Fund cannot be both a Private Equity Fund and a Venture Capital Fund.
            2. Article 50(1) of the Law contains the prohibition against the Offer of Units of Foreign Funds (i.e. marketing of Units of Foreign Funds) in or from the DIFC. Article 54(1) of the Law provides the limited circumstances in which an Authorised Firm may market Units of a Foreign Fund. An Authorised Firm may, under Article 54(1)(a), (b) or (c) of the Law, offer Units of a Foreign Fund if the conditions of the relevant paragraph are met. For example, under Article 54 (1)(c), the offer is required to be by private placement to Professional Clients who invest at least US$ 50,000. Such marketing activities are also subject to additional requirements that are prescribed in this module — see CIR chapter 15. An Authorised Firm marketing Units of a Foreign Fund should take reasonable steps to ensure that the Fund meets the applicable requirements including the relevant criteria for being a specialist class of Fund.
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

        • Islamic Fund

          • CIR 3.1.2 CIR 3.1.2

            A Fund is an Islamic Fund if its entire operations are conducted, or held out as being conducted, in accordance with Shari'a.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

            • CIR 3.1.2 Guidance

              IFR module contains the additional requirements that apply to a Domestic Fund by virtue of it being an Islamic Fund.

              Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Fund of Funds

          • CIR 3.1.3 CIR 3.1.3

            A Fund is a Fund of Funds if it restricts its investment activities to investing in Units or Debentures of only two or more other Funds.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

            • CIR 3.1.3 Guidance

              A Fund of Funds does not cease to be a Fund of Funds merely because it holds some investments in cash or transferable securities to meet its on-going obligations such as for redemption purposes.

              Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Feeder Fund

          • CIR 3.1.4 CIR 3.1.4

            A Fund is a Feeder Fund if it is dedicated to investing in the Units or Debentures of a single other Fund (Master Fund).

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

            • CIR 3.1.4 Guidance

              1. A Domestic Feeder Fund may have as its Master Fund a Foreign Fund.
              2. A Sub-Fund of an Umbrella Fund is not a Feeder Fund.
              Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Master Fund

          • CIR 3.1.5 CIR 3.1.5

            A Fund is a Master Fund if it issues its Units or Debentures only to other Funds which are dedicated to investing in that Master Fund.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

            • CIR 3.1.5 Guidance

              A Domestic Master Fund may have Foreign Funds as its Feeder Funds.

              Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Private Equity Fund

          • CIR 3.1.6

            A Fund is a Private Equity Fund if it:

            (a) invests in unlisted companies, by means of Shares, convertible debt or other instruments carrying equity participation rights or reward; or
            (b) participates in management buy-outs or buy-ins,

            and does not meet the criteria in CIR Rule 3.1.13 to be a Venture Capital Fund.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

        • Property Fund

          • CIR 3.1.7 CIR 3.1.7

            A Fund is a Property Fund if its main purpose is investment in Real Property and in Securities issued by Bodies Corporate whose main activities are investing in, dealing in, developing or redeveloping Real Property.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

            • CIR 3.1.7 Guidance

              1. Whether an arrangement, particularly if it is a closed-ended company which invests in Real Property, is a Fund or a commercial company is not always an easy question to answer. The following guidance is intended to help answer this question. The examples are indicative only and not exhaustive. If a property company is in doubt as to whether it is an investment company or a commercial company, it may seek further clarification from the DFSA.

              2. Please also refer to the Guidance under CIR Rule 2.1.10 for the general distinction between Collective Investment Funds and other commercial arrangements.

              Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

            • Practical examples

              3. Applying the indicators under CIR Rule 2.1.10, the DFSA considers the following type of closed-ended property companies to be commercial companies, rather than investment companies:

              a. a property developer or a property construction company which is in the business of developing and constructing (i.e. creating) the property;
              b. a real estate company which operates a business of selling or leasing real estate for its customers;
              c. a property management or maintenance company – which generates profits through fees charged for those services; and
              d. a property valuation service provider – which is a property related service provider.

              4. In contrast, there are certain types of closed-ended companies which directly or indirectly invest in Real Property and therefore are clearly investment companies. For example a company which:

              a. raises capital from investors to invest in real estate, on the basis that the real estate will be selected or bought and sold on the basis of specified criteria, and profits generated are distributed as specified; or
              b. invests in Securities (such as shares, debentures or units) of other real estate companies or property developers to generate profits through returns on such investments.
              Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].

        • Real Estate Investment Trust (REIT)

          • CIR 3.1.8 CIR 3.1.8

            A Fund is a Real Estate Investment Trust (REIT) only if it meets the criteria in CIR Rule 13.5.1(2).

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

            • CIR 3.1.8 Guidance

              REITs are a subset of Property Funds. A REIT can be a Public Fund, Exempt Fund or a Qualified Investor Fund (see Rule 13.5.1). As REITs are a subset of Property Funds, they must comply with applicable Rules in section 13.4 for Property Funds, as well as Rules in section 13.5 for REITs.

              [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]
              [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

        • Hedge Fund

          • CIR 3.1.9

            (1) A Fund is a Hedge Fund if it is a Fund which has some or all of the following characteristics:
            (a) it has a broad mandate giving its Fund Manager flexibility to shift strategy;
            (b) it is aimed at achieving absolute returns rather than returns relative to the market;
            (c) it employs some or all of the following techniques:
            (i) the pursuit of absolute returns or "alpha" rather than measuring their investment performance relative to the market;
            (ii) the use of short selling;
            (iii) the use of Derivatives for investment purposes;
            (iv) the use of economic or debt leverage as well as leverage embedded in financial instruments such as Derivatives;
            (v) the acquisition of distressed debt with a view to its realisation at a profit; or
            (vi) the acquisition of "high yield" debt Securities.
            (2) A Fund is a Fund of Hedge Funds if it is dedicated to investing in a number of Hedge Funds or Sub-Funds of one or more Hedge Funds that meet the criteria in (1).
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Umbrella Fund

          • CIR 3.1.10 CIR 3.1.10

            A Fund is an Umbrella Fund if the contributions of the Unitholders in the Fund and the profits or income out of which payments are to be made to them are pooled separately in a number of Sub-Funds constituting separate parts of the Fund Property.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

            • CIR 3.1.10 Guidance

              1. An Umbrella Fund may be constituted as a Protected Cell Company.
              2. Unitholders of an Umbrella Fund are entitled to exchange rights they have in one Sub-Fund for rights in another Sub-Fund of the same Umbrella Fund — see Article 11(2) of the Law.
              3. A Sub-Fund of an Umbrella Fund is not a Feeder Fund or any other form of a discrete Fund.
              Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • Money Market Fund

          • CIR 3.1.11 CIR 3.1.11

            A Fund is a Money Market Fund if the Fund's investment objectives are to preserve the capital of the Fund and provide daily liquidity, while achieving returns that are in line with money market rates.

            [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]

            • CIR 3.1.11 Guidance

              1. Money market rates are interest rates on instruments that are normally traded on the money market, such as treasury bills, certificates of deposit and commercial paper.
              2. A Fund may fall within the definition of a Money Market Fund even if it:
              (a) is not described or marketed as such a Fund; or
              (b) has objectives additional to those specified in the definition, provided that they are not inconsistent with the investment objectives in the definition.
              3. Money market funds in other jurisdictions are structured as either variable net asset value Funds (VNAV Funds) or stable net asset value Funds (SNAV Funds). A VNAV Fund values its assets on a mark to market basis, allowing for changes in the value of Units. A SNAV Fund aims to maintain an unchanged face value (e.g. $1 per Unit).
              4. The combined practical effect of the valuation requirements in Rule 8.4.1 and the requirements for pricing of Units in Rule 8.5.1 prevents a Money Market Fund being established as a SNAV Fund in the DIFC. The DFSA would generally not waive those requirements to allow such a Fund to be established due to the additional systemic risks and risks to investors that a SNAV Fund can present.
              [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]

        • Exchange Traded Fund ("ETF")

          • CIR 3.1.12 CIR 3.1.12

            (1) A Fund is an Exchange Traded Fund ("ETF") if it:
            (a) is constituted as an Open-ended Public Fund;
            (b) has its Units available for trading throughout the day on an exchange that meets the criteria in (2); and
            (c) has at least one market maker (Authorised Participant) who:
            (i) purchases and redeems "creation Units" of the Fund from the Fund Manager; and
            (ii) is prepared to buy and sell Units of the Fund throughout the day on the relevant exchange.
            (2) An exchange meets the requirement in (1)(b) if it is:
            (a) operated by an Authorised Market Institution;
            (b) regulated by a Financial Services Regulator in a jurisdiction that is a signatory to the IOSCO Multilateral Memorandum of Understanding for sharing information; or
            (c) regulated by a Financial Services Regulator in a jurisdiction which has entered into a bilateral memorandum of understanding with the DFSA for sharing information.
            Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

            • CIR 3.1.12 Guidance

              1. CIR Rule 13.9.1 prohibits the use of the term Exchange Traded Fund or ETF unless a Fund meets the criteria in CIR Rule 3.1.12. A similar prohibition applies to Foreign Funds that offer Units in or from the DIFC—see CIR Rules 15.1.5(c) and 15.1.6(1)(c).
              2. ETFs are different to other exchange traded Open-ended Funds. ETFs generally do not sell or redeem their Units to and from retail investors directly at net asset value (NAV). Instead, an Authorised Participant ("AP") (i.e. a market maker appointed by the ETF Fund Manager) buys and redeems ETF Units, called creation Units, directly from the ETF Fund Manager. Generally, an AP that purchases a creation Unit of an ETF deposits with the ETF Fund Manager a 'purchase basket' of certain securities and cash and/or other assets identified by the ETF Manager that day, and then receives the creation Unit in return for those assets. The basket generally reflects a pro-rata portion of the ETF's underlying holdings. After purchasing a creation Unit, the AP may hold or sell some or all of the Unit in the basket on the relevant exchange.
              3. The redemption process is the reverse of the purchase process. The AP redeems the creation Unit from the ETF, in exchange for a 'redemption basket' of securities and/or cash and other assets (or all cash) received from the Fund Manager. The AP also offers to buy and sell ETF Units on the relevant exchange, where retail investors can buy and sell ETF Units at a price close to NAV.
              4. See further Guidance about ETFs under CIR Rule 13.9.6.
              Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

        • Venture Capital Fund

          • CIR 3.1.13 CIR 3.1.13

            A Fund is a Venture Capital Fund if it is an Exempt Fund or a Qualified Investor Fund and its investment objective is to invest:
            (a) at least 90% of its committed capital in unlisted business ventures that have been incorporated for no more than ten years at the time of the Fund’s initial investment in each business; and
            (b) by means of Shares, convertible debt or other instruments carrying equity participation rights or reward that are directly issued by the unlisted business ventures.
            Derived from DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

            • CIR 3.1.13 Guidance

              1. A Venture Capital Fund is expected to finance small to medium sized businesses which are in the early stages of business development and growth. Some business ventures would be using innovative technologies or new ways of doing business. However, where an established large-scale business spins off subsidiaries to expand existing businesses and operations, this would not be considered to be a start-up or small to medium sized business in which a Venture Capital Fund should invest.
              2. The term “committed capital” refers to the total amount that Unitholders have agreed to contribute to the Venture Capital Fund.
              3. A business venture is “unlisted” if it does not have securities admitted to an official list of securities of an exchange, or admitted to trading on a MTF or an OTF.
              4. The type of investments referred to in CIR Rule 3.1.13(b) include Warrants which confer rights to acquire unissued Shares or Units in an unlisted business venture. However, Warrants over unissued Debentures do not confer equity participation rights and are not included. Structured Products can also be used if the contractual rights confer on the Venture Capital Fund the right to participate in profits and assets of the business venture, in which the Fund invests.
              5. A Venture Capital Fund may also invest in a business venture using tokens that give the Fund rights attaching or analogous to holding Shares or Units, i.e. equity participation rights in the profits and assets of the venture, with or without governance rights. However, a right to receive utility tokens or payment tokens issued by a business venture, for example, operating in the distributed ledger or similar technology sector, which does not provide such rights, will not be an equity participation right referred to in CIR Rule 3.1.13(b). The DFSA may consider, on a case-by-case basis, any new arrangements relating to tokens as a means of investing in a venture operating in distributed ledger or similar technology sector, to assess whether those tokens meet the criteria in CIR Rule 3.1.13(b).
              Derived from DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

    • CIR 4 CIR 4 Excluded Offers

      • CIR 4.1 CIR 4.1 Excluded Transactions and Offers

        • CIR 4.1.1

          Pursuant to Article 50(2) of the Law, the activities specified in Rules CIR 4.1.2, CIR 4.1.3, CIR 4.1.4 and CIR 4.1.5 are hereby prescribed as not constituting an Offer for the purposes of the Law and the Rules.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

        • CIR 4.1.2 CIR 4.1.2

          A Person does not make an Offer of a Unit by offering to sell or transfer a Unit that is owned by that Person if the offer to sell or transfer:

          (a) is capable of acceptance only by the Person to whom that offer is made; and
          (b) is not made by way of a financial promotion as defined in Article 19(3) of the Law.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

          • CIR 4.1.2 Guidance

            While a Person who makes personal offers of the kind referred to in CIR Rule 4.1.2 does not attract the Prospectus disclosure obligations in CIR Part 7 of the CIR module, if that Person frequently sells Units held by him, he would be likely to be 'Dealing in Investments as Principal'. As a result, such a Person would need to be licensed. Similarly, a Person who obtains Units for the purposes of secondary sales would be likely to be regarded as making those sales "by way of business" and would thus trigger the need to be licensed.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 4.1.3

          (1) A Person does not make an Offer of a Unit if that Person is an Authorised Firm and it undertakes a Transaction in relation to a Unit of a Fund if the Transaction is:
          (a) an Execution-Only Transaction undertaken for or on behalf of a Client;
          (b) a trade executed for or on behalf of a Client in accordance with a Discretionary Portfolio Management Agreement entered into with that Client; or
          (c) effected with the Fund Manager of a Fund for the purposes of redeeming a Unit of that Fund for or on behalf of a Client.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 4.1.4

          A Person does not make an Offer of a Unit if that Person is an Authorised Firm and the Offer is made only to, or directed only at, a Market Counterparty.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 4.1.5

          A Person does not make an Offer of a Unit if:

          (a) the Unit is of a Passported Fund;
          (b) the DIFC is a Host Jurisdiction in relation to the Passported Fund;
          (c) the Person making the Offer is the Fund Manager of the Fund, its Agent or another Licensed Person; and
          (d) the Offer is made in accordance with the offer requirements in the Home Jurisdiction of the Fund, including relevant Fund Protocol rules or regulations.
          Derived from RM235/2019 (Made 20th February 2019). [VER24/02-19]