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 theDFSA to makeRules excluding certain arrangements or types of arrangements from constituting aFund . 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 aCollective Investment Fund as defined in Article 11 of the Law does not constitute aCollective 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 aDeposit which is accepted by anAuthorised Firm authorised under itsLicence to carry on theFinancial Service ofAccepting 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 aBody Corporate in the sameGroup as thePerson 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 anAuthorised 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 orInvestments , as defined in GEN Rule A2.1 or, which would be suchInvestments 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 aFund , 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; orf. 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 aFund .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; andiv. 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 aFund 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 aCollective Investment Fund if the rights or interests of the participants in the arrangement are represented by aDebenture orWarrant :(i) where the issuer of theDebenture orWarrant is a single issuer, and if that issuer is:(A) aBody 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 aBody Corporate , the rights and interests of theDebenture orWarrant holder are guaranteed by the government of any country or territory; and(ii) which, if it is a convertibleSecurity , the underlyingSecurities to which theDebenture orWarrant holder is entitled areShares orDebentures issued, or to be issued, by the same issuer as the issuer of theDebenture orWarrant or single other issuer.(b) An arrangement that does not constitute aCollective Investment Fund by virtue of CIR Rule 2.1.11(a) does not become aFund merely because one of the participants in the arrangement is a person:(i) whose ordinary business involves him engaging in an activity that is aFinancial Services activity as defined in GEN chapter 2 or that would fall within an applicable exclusion from aFinancial 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 aContract 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 aProfit 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 aDiscretionary 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 aClose Relative . For the purposes of thisRule , 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 otherPerson 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) makesSecurities available only to:(i) anEmployee or formerEmployee of theIssuer or of another member of the sameGroup as theIssuer ; or(ii) aClose Relative of any suchEmployee ; and(b) is operated by the Issuer or by a member of the sameGroup as theIssuer or by a trustee who, in pursuance of the arrangements, holds theSecurities issued by theIssuer for the benefit of any eligiblePersons 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 aProperty Investment Crowdfunding Platform , operated by aCrowdfunding 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 areClients of theCrowdfunding 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 anInvestment 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 aLoan Crowdfunding Platform , operated by aCrowdfunding Operator ;(b) the arrangement involves multiple lenders providing a loan to a borrower for a business or project;(c) all of the lenders areClients of theCrowdfunding 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 aDomestic Fund of that specialist class or classes.(2) Pursuant to Article 18(1)(c) of the Law, aForeign 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 aForeign Fund of that specialist class or classes for the purposes of:(a) marketing of theUnits of thatFund in or from theDIFC ; or(b) determining whether aDomestic Fund investing in such aFund continues to meet any criteria or other requirements applicable to thatDomestic 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. ADomestic Fund may attract more than one definition of a specialist class ofFunds . For example, aDomestic Fund may be anIslamic Hedge Fund ,Islamic Private Equity Fund or anIslamic 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 theOffer ofUnits ofForeign Funds (i.e. marketing ofUnits ofForeign Funds ) in or from theDIFC . Article 54(1) of the Law provides the limited circumstances in which anAuthorised Firm may marketUnits of aForeign 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. AnAuthorised Firm marketingUnits of aForeign Fund should take reasonable steps to ensure that theFund meets the applicable requirements including the relevant criteria for being a specialist class ofFund .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 anIslamic 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 anIslamic 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 aFund of Funds if it restricts its investment activities to investing inUnits orDebentures of only two or more otherFunds .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 aFund 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 aFeeder Fund if it is dedicated to investing in theUnits orDebentures of a single otherFund (Master Fund ).Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]CIR 3.1.4 Guidance
1. ADomestic Feeder Fund may have as itsMaster Fund aForeign Fund .2. ASub-Fund of anUmbrella Fund is not aFeeder 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 aMaster Fund if it issues itsUnits orDebentures only to otherFunds which are dedicated to investing in thatMaster Fund .Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]CIR 3.1.5 Guidance
A
Domestic Master Fund may haveForeign Funds as itsFeeder Funds .Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]Private Equity Fund
CIR 3.1.6
A
Fund is aPrivate Equity Fund if it:(a) invests in unlisted companies, by means ofShares , 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 aProperty Fund if its main purpose is investment inReal Property and inSecurities issued byBodies Corporate whose main activities are investing in, dealing in, developing or redevelopingReal 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 aFund 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 theDFSA .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; andd. 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; orb. 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 aReal 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 ofProperty Funds . AREIT can be aPublic Fund ,Exempt Fund or aQualified Investor Fund (see Rule 13.5.1). AsREITs are a subset ofProperty Funds , they must comply with applicable Rules in section 13.4 forProperty Funds , as well as Rules in section 13.5 forREITs .[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) AFund is aHedge Fund if it is aFund which has some or all of the following characteristics:(a) it has a broad mandate giving itsFund 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 ofDerivatives for investment purposes;(iv) the use of economic or debt leverage as well as leverage embedded in financial instruments such asDerivatives ;(v) the acquisition of distressed debt with a view to its realisation at a profit; or(vi) the acquisition of "high yield" debtSecurities .(2) AFund is aFund of Hedge Funds if it is dedicated to investing in a number ofHedge Funds orSub-Funds of one or moreHedge 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 anUmbrella Fund if the contributions of theUnitholders in theFund and the profits or income out of which payments are to be made to them are pooled separately in a number ofSub-Funds constituting separate parts of theFund Property .Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]CIR 3.1.10 Guidance
1. AnUmbrella Fund may be constituted as aProtected Cell Company .2.Unitholders of anUmbrella Fund are entitled to exchange rights they have in oneSub-Fund for rights in anotherSub-Fund of the sameUmbrella Fund — see Article 11(2) of the Law.3. ASub-Fund of anUmbrella Fund is not aFeeder Fund or any other form of a discreteFund .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 aMoney Market Fund if theFund's investment objectives are to preserve the capital of theFund 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. AFund may fall within the definition of aMoney Market Fund even if it:(a) is not described or marketed as such aFund ; 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 ofUnits . 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 aMoney Market Fund being established as a SNAV Fund in theDIFC . TheDFSA 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) AFund is anExchange Traded Fund ("ETF") if it:(a) is constituted as anOpen-ended Public Fund ;(b) has itsUnits 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 "creationUnits " of theFund from theFund Manager ; and(ii) is prepared to buy and sellUnits of theFund throughout the day on the relevant exchange.(2) An exchange meets the requirement in (1)(b) if it is:(a) operated by anAuthorised Market Institution ;(b) regulated by aFinancial Services Regulator in a jurisdiction that is a signatory to the IOSCO Multilateral Memorandum of Understanding for sharing information; or(c) regulated by aFinancial Services Regulator in a jurisdiction which has entered into a bilateral memorandum of understanding with theDFSA 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 termExchange Traded Fund orETF unless aFund meets the criteria in CIR Rule 3.1.12. A similar prohibition applies toForeign Funds that offerUnits in or from theDIFC —see CIR Rules 15.1.5(c) and 15.1.6(1)(c).2. ETFs are different to other exchange tradedOpen-ended Funds .ETFs generally do not sell or redeem theirUnits to and from retail investors directly at net asset value (NAV). Instead, an Authorised Participant ("AP") (i.e. a market maker appointed by the ETFFund Manager ) buys and redeems ETFUnits , called creationUnits , directly from theETF Fund Manager . Generally, an AP that purchases a creationUnit of anETF deposits with the ETFFund Manager a 'purchase basket' of certain securities and cash and/or other assets identified by theETF Manager that day, and then receives the creationUnit in return for those assets. The basket generally reflects a pro-rata portion of the ETF's underlying holdings. After purchasing a creationUnit , the AP may hold or sell some or all of theUnit 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 theFund 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]Investment Token Funds
CIR 3.1.14
A Fund is an Investment Token Fund if its main purpose is investing in Investment Tokens.
Derived from DFSA RMI314/2021 (Made 30th June 2021). [VER32/10-21]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 theRules .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 anOffer of aUnit by offering to sell or transfer aUnit that is owned by thatPerson if the offer to sell or transfer:(a) is capable of acceptance only by thePerson 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 theProspectus disclosure obligations in CIR Part 7 of the CIR module, if thatPerson frequently sellsUnits held by him, he would be likely to be 'Dealing in Investments as Principal '. As a result, such aPerson would need to be licensed. Similarly, aPerson who obtainsUnits 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) APerson does not make anOffer of aUnit if thatPerson is anAuthorised Firm and it undertakes aTransaction in relation to aUnit of aFund if theTransaction is:(a) anExecution-Only Transaction undertaken for or on behalf of aClient ;(b) a trade executed for or on behalf of aClient in accordance with aDiscretionary Portfolio Management Agreement entered into with thatClient ; or(c) effected with theFund Manager of aFund for the purposes of redeeming aUnit of thatFund for or on behalf of aClient .Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]CIR 4.1.4
A
Person does not make anOffer of aUnit if thatPerson is anAuthorised Firm and theOffer is made only to, or directed only at, aMarket Counterparty .Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]CIR 4.1.5
A
Person does not make anOffer of aUnit if:(a) theUnit is of aPassported Fund ;(b) theDIFC is aHost Jurisdiction in relation to thePassported Fund ;(c) thePerson making theOffer is theFund Manager of theFund , itsAgent or anotherLicensed Person ; and(d) theOffer is made in accordance with the offer requirements in theHome Jurisdiction of theFund , including relevantFund Protocol rules or regulations.Derived from RM235/2019 (Made 20th February 2019). [VER24/02-19]