CIR 6 CIR 6 External Fund Managers and External Funds
CIR 6 Guidance
This chapter sets out the detailed requirements that apply to
External Fund Managersand External Funds. Article 20(5) of the Law contains the criteria to be classified as an External Fund Managerand Article 14(1) of the Law contains the criteria for an External Fund.
CIR 6.1 CIR 6.1 Requirements for External Fund Managers
This section applies to an
External Fund Manager.
Subjecting to the DIFC Jurisdiction
External Fund Managermust:(a) be subject to regulation by a Financial Services Regulatorin a Recognised Jurisdictionor a jurisdiction otherwise acceptable to the DFSAwith respect to its activity of managing Fund; and(b) subject itself to the DIFClaws and the jurisdiction of the DIFC Courtsso far as they apply to its activities relating to the Domestic Fund, and, for that purpose, sign the appropriate declaration contained in AFN.
Appointment of Fund Administrator/Trustee
CIR 6.1.3 CIR 6.1.3(1) An
External Fund Managermust:(a) appoint to the Funda Fund Administratoror a Trusteelicensed by the DFSA(hereafter referred to as the "Appointed Fund Administrator" or "Appointed Trustee") before any Unitsin that Fundare Offeredto any Person;(b) nominate, and require, the Appointed Fund Administrator or Appointed Trustee, as the case may be, to be its agent in relation to its dealings with the DFSAand Unitholdersand prospective Unitholdersof the Fund; and(c) require the Appointed Fund Administrator or Appointed Trustee to, and for this purpose grant to that Personsuch powers as are necessary to, facilitate:(i) if it is an Open-ended Fund, the issue, resale and redemption of the Unitsof the Fundand the publication of the price at which such issue, resale or redemption will occur as provided under the Law and the Rules;(ii) the sending to Unitholdersof the Fundall the reports required under the Law and the Rules;(iii) access to the Constitutionand most recent Prospectusof the Fundto Unitholdersand prospective Unitholders;(iv) access to the Unitholderregister; and(v) access to the books and records relating to the Fundas required by the DFSAand any person providing the oversight functions of the Fund,in or from a place of business in the DIFC.(2) If the Fundis structured as an Investment Trust, the Fund Managermay appoint the Trusteeas its Appointed Trustee for the purposes of (1).(3) An External Fund Managermust continue to meet the criteria in Article 20(5) of the Law.
CIR 6.1.3 Guidance
In addition to the requirements in this chapter which apply to the Appointed Fund Administrator or Appointed Trustee,
Personswho are appointed to Fundsas Fund Administratorsor Trusteeshave other obligations (see for example CIR chapter 5.1).
Use of a Fund Platform not permitted
An External Fund Manager must not use a Fund Platform.
External management of Credit Fund not permitted
An External Fund Manager must not manage a Domestic Fund that is a Credit Fund.Derived from DFSA RMI 323/2022 (Made 27th April 2022). [VER33/06-22]
CIR 6.2 CIR 6.2 Requirements for External Funds
CIR 6.2 Guidance
Article 14(1) of the Law provides that a
Fundis an External Fundif that Fund:a. is established in a jurisdiction other than the DIFC; andb. is managed by a Fund Managerwhich is an Authorised Firm.
This section applies to the
Fund Managerof an External Fund.
CIR 6.2.2 CIR 6.2.2
Fund Managerof an External Fundmust:(a) have systems and controls which are adequate to ensure compliance with the requirements that apply to the External Fundin the jurisdiction in which it is established or domiciled; and(b) inform the DFSAof the jurisdiction in which the Fundis or is to be established or domiciled and the nature of regulatory requirements applicable to the Fundin the host jurisdiction.
CIR 6.2.2 Guidance1. A
Fund Managerof an External Fundis generally not subject to the requirements that otherwise apply to other Domestic Funds(see Article 14(2) of the Law). However, some limited requirements apply to External Funds. See for example the disclosure required under Rules CIR 14.2.4–CIR 14.2.7. Should such a requirement conflict with any requirements that apply to an External Fundin the jurisdiction in which the Fundis domiciled, the Fund Managermay apply to the DFSAfor appropriate waivers or modifications of the DFSArequirements.2. The DFSAmay, upon receipt of the information referred to in CIR Rule 6.2.2(b), assess the desirability of establishing an External Fundin the particular jurisdiction chosen by the Fund Manager. Relevant considerations include:a. the Fund Manager'sneed to establish the Fundin the particular jurisdiction for reasons such as the physical location of the Fundassets or investor preference;b. any regulatory risks arising from establishing the External Fundin the relevant jurisdiction, particularly if the Fundis to be open to retail investors; andc. whether the relevant jurisdiction complies with the FATFor other relevant international standards or requirements.
Fund management of external Credit Fund not permitted
A Fund Manager must not manage an External Fund that is a Credit Fund.Derived from DFSA RMI 323/2022 (Made 27th April 2022). [VER33/06-22]