Entire Section

  • 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 Managers and External Funds. Article 20(5) of the Law contains the criteria to be classified as an External Fund Manager and Article 14(1) of the Law contains the criteria for an External Fund.

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

    • CIR 6.1 CIR 6.1 Requirements for External Fund Managers

      • Application

        • CIR 6.1.1

          This section applies to an External Fund Manager.

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

      • Subjecting to the DIFC Jurisdiction

        • CIR 6.1.2

          An External Fund Manager must:

          (a) be subject to regulation by a Financial Services Regulator in a Recognised Jurisdiction or a jurisdiction otherwise acceptable to the DFSA with respect to its activity of managing Fund; and
          (b) subject itself to the DIFC laws and the jurisdiction of the DIFC Courts so far as they apply to its activities relating to the Domestic Fund, and, for that purpose, sign the appropriate declaration contained in AFN.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Appointment of Fund Administrator/Trustee

        • CIR 6.1.3 CIR 6.1.3

          (1) An External Fund Manager must:
          (a) appoint to the Fund a Fund Administrator or a Trustee licensed by the DFSA (hereafter referred to as the "Appointed Fund Administrator" or "Appointed Trustee") before any Units in that Fund are Offered to 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 DFSA and Unitholders and prospective Unitholders of the Fund; and
          (c) require the Appointed Fund Administrator or Appointed Trustee to, and for this purpose grant to that Person such powers as are necessary to, facilitate:
          (i) if it is an Open-ended Fund, the issue, resale and redemption of the Units of the Fund and 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 Unitholders of the Fund all the reports required under the Law and the Rules;
          (iii) access to the Constitution and most recent Prospectus of the Fund to Unitholders and prospective Unitholders;
          (iv) access to the Unitholder register; and
          (v) access to the books and records relating to the Fund as required by the DFSA and any person providing the oversight functions of the Fund,
          in or from a place of business in the DIFC.
          (2) If the Fund is structured as an Investment Trust, the Fund Manager may appoint the Trustee as its Appointed Trustee for the purposes of (1).
          (3) An External Fund Manager must continue to meet the criteria in Article 20(5) of the Law.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

          • CIR 6.1.3 Guidance

            In addition to the requirements in this chapter which apply to the Appointed Fund Administrator or Appointed Trustee, Persons who are appointed to Funds as Fund Administrators or Trustees have other obligations (see for example CIR chapter 5.1).

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

      • Use of a Fund Platform not permitted

        • CIR 6.1.4

          An External Fund Manager must not use a Fund Platform.

      • External management of Credit Fund not permitted

        • CIR 6.1.5

          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 Fund is an External Fund if that Fund:

        a. is established in a jurisdiction other than the DIFC; and
        b. is managed by a Fund Manager which is an Authorised Firm.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Application

        • CIR 6.2.1

          This section applies to the Fund Manager of an External Fund.

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

        • CIR 6.2.2 CIR 6.2.2

          The Fund Manager of an External Fund must:

          (a) have systems and controls which are adequate to ensure compliance with the requirements that apply to the External Fund in the jurisdiction in which it is established or domiciled; and
          (b) inform the DFSA of the jurisdiction in which the Fund is or is to be established or domiciled and the nature of regulatory requirements applicable to the Fund in the host jurisdiction.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

          • CIR 6.2.2 Guidance

            1. A Fund Manager of an External Fund is 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 14.2.4CIR 14.2.7. Should such a requirement conflict with any requirements that apply to an External Fund in the jurisdiction in which the Fund is domiciled, the Fund Manager may apply to the DFSA for appropriate waivers or modifications of the DFSA requirements.
            2. The DFSA may, upon receipt of the information referred to in CIR Rule 6.2.2(b), assess the desirability of establishing an External Fund in the particular jurisdiction chosen by the Fund Manager. Relevant considerations include:
            a. the Fund Manager's need to establish the Fund in the particular jurisdiction for reasons such as the physical location of the Fund assets or investor preference;
            b. any regulatory risks arising from establishing the External Fund in the relevant jurisdiction, particularly if the Fund is to be open to retail investors; and
            c. whether the relevant jurisdiction complies with the FATF or other relevant international standards or requirements.
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Fund management of external Credit Fund not permitted

        • CIR 6.2.3

          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]