Back Custom print Link Text Only Rich Text Print

Entire Section

  • CIR 14 CIR 14 Marketing of Domestic Funds and Prospectus Disclosure

    • CIR 14.1 CIR 14.1 Prospectus Disclosure for Domestic Funds

      • CIR 14.1 Guidance

        1. While a Person is required by virtue of Article 50(1) of the Law when making an Offer of a Unit of a Domestic Fund to another Person to make available to that other Person a Prospectus, the obligation to produce a Prospectus is imposed under Article 51(a) of the Law on the Fund Manager of a Domestic Fund.
        2. This chapter sets out the detailed requirements that apply to the Fund Manager who is obliged to produce a Prospectus, and the obligations and liabilities relating to Prospectuses, as well as the obligation relating to making available a Prospectus which applies to the activity of making an Offer of Units.
        3. Some requirements relating to Prospectus disclosure are common to all Domestic Funds. However, in other areas, particularly relating to the content of disclosure required in a Prospectus, and the manner of distribution, different requirements apply depending on whether the Fund is a Public Fund, Exempt Fund or Qualified Investor Fund. Further, specialist class of Funds attract additional disclosure requirements that are unique to their activities. This chapter sets out those requirements and where necessary by reference to the types and classes of Domestic Funds.
        4. Article 14(2) of the Law provides that the requirements relating to Domestic Funds do not apply to an External Fund (i.e. a Fund established in a jurisdiction other than the DIFC by a DFSA licensed Fund Manager), unless otherwise provided in the Law or Rules. As a result, the general Prospectus requirements set out in the Law and this module do not apply to External Funds, except that:
        a. any offer document prepared for the purposes of complying with the requirements applicable in the jurisdiction in which the External Fund is established is regarded as a Prospectus for the purposes of the requirements relating to the Offer of Units of such a Fund in or from the DIFC (see Article 50(3)(c) of the Law); and
        b. the DFSA has the power to prescribe any additional disclosure to be included in such a document (see Article 51(2) of the Law).
        Those requirements are specified in Rules CIR 14.2.4–CIR 14.2.7.
        5. If a Domestic Fund is a Passported Fund and the DIFC is the Home Jurisdiction of the Fund, certain requirements relating to the Prospectus for the Fund are specified in the Fund Protocol Rules (FPR), rather than in this chapter. These include requirements relating to the form of the disclaimer in the Prospectus, the minimum contents of the Prospectus and the need for a Key Investor Information Document (KIID) that summarises the key features of the Fund and is in both Arabic and English. This chapter cross-refers to requirements in those Rules where applicable.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
        [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

      • Application

        • CIR 14.1.1 CIR 14.1.1

          (1) This chapter applies, subject to (4), to:
          (a) a Fund Manager of a Domestic Fund;
          (b) each Director or partner of the Fund Manager;
          (c) if the Fund Manager is a Corporate Director, the individuals who are Directors of that Corporate Director; and
          (d) if the Fund has a Governing Body, each member of that body.
          (2) This chapter also applies to an Authorised Firm, and each of its Directors or partners, where such a Firm is not the Fund Manager and undertakes the marketing of Units of a Domestic Fund.
          (3) This chapter also applies to other specified Persons to the extent so specified.
          (4) Only this Rule and the following requirements in this chapter apply to, or in relation to, a Qualified Investor Fund:
          (a) CIR Rule 14.2.1;
          (b) CIR Rules 14.2.4 to 14.2.7;
          (c) CIR Rules 14.4.6, 14.4.11 and 14.4.12;
          (d) CIR Rules 14.5.1 and 14.5.2; and
          (e) Rules in section 14.6.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]
          [Amended] DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

          • CIR 14.1.1 Guidance

            1. An External Fund Manager must also comply with the requirements in this chapter, because it is managing a Domestic Fund (i.e. a Fund established or domiciled in the DIFC — See Article 13(2)(a) of the Law).
            2. A Fund that is an Incorporated Cell of an Incorporated Cell Company (i.e. a Fund on a Fund Platform) will be a Domestic Fund as the Incorporated Cell is established under the DIFC Companies Law and the ICC Regulations.
            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
            [Amended] DFSA RMI248/2019 (Made 18th December 2019) [VER26/12-19].

    • CIR 14.2 CIR 14.2 General Requirements Relating to Prospectuses

      • CIR 14.2.1 CIR 14.2.1

        (1) The Prospectus must not contain any provision which is unfairly prejudicial to the interests of Unitholders generally or to the Unitholders of any class of Units.
        (2) For the purposes of the information that must be included in a Prospectus pursuant to Article 52 of the Law:
        (a) such information must be material information; and
        (b) information is material if it is either:
        (i) within the knowledge of the Directors or partners of the Fund Manager; or
        (ii) which such Directors or partners ought reasonably have obtained by making reasonable enquiries.
        (3) The Prospectus must, except as provided in (4), be in the English language.
        (4) The Key Investor Information Document (KIID) for a Passported Fund must be in both Arabic and English.
        (5) The expiry date of a Prospectus must be no later than 12 months after the date of the Prospectus.
        (6) A reference to a Director in this Rule includes the Corporate Director of an Investment Company, and the individual directors of that Corporate Director.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
        [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

        • CIR 14.2.1 Guidance

          In conducting inquiries relating to the obligations under (2), a Fund Manager must give particular regard to the information which would be required and expected by a Retail Client in order to make an informed decision about the merits of investing and the extent and characteristics of risk.

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

      • Supplementary and Replacement Prospectuses

        • Guidance

          1. Article 52(4) of the Law requires a Fund manager to issue, if, at any time after the issue of a Prospectus there is a material change affecting any matter contained in the Prospectus or a significant new matter arises, a Supplementary or a Replacement Prospectus in the manner prescribed in the Rules.
          2. Under Article 50(3) of the Law, any reference in the Law and the Rules to a Prospectus includes an Information Memorandum of an Exempt Fund and any Supplementary or Replacement Prospectus, unless otherwise provided. Accordingly, all requirements that apply to a Prospectus apply equally to each of those documents except where stated otherwise.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.2.2

          (1) Where a Fund Manager, for the purpose of Article 52(4) of the Law, issues a Supplementary Prospectus, the Fund Manager must:
          (a) clearly identify in the Supplementary Prospectus the Prospectus that it supplements, the revisions to that Prospectus, the date of any material change or new matter giving rise to any revision, and the date of the document which must be the date of filing with the DFSA;
          (b) if it is a Public Fund, file a copy with the DFSA;
          (c) provide a copy to each Person who applied for Units under the previous Prospectus after the earliest date of any material change or new matter giving rise to the revision; and
          (d) ensure the Supplementary Prospectus is made available in the same media and through the same channels as, and together with, the previous Prospectus.
          (2) Where a Fund Manager, for the purpose of Article 52(3) of the Law, issues a Replacement Prospectus, the Fund Manager must:
          (a) clearly state that it is a Replacement Prospectus, and identify the Prospectus that it replaces, the date and nature of any material change or new matter giving rise to the replacement, the expiry date, and the date of the document which must be the date of filing with the DFSA;
          (b) if it is a Public Fund, file a copy with the DFSA; and
          (c) provide a copy to each Person who applied for Units under the previous Prospectus after the earliest date of any material change or new matter giving rise to the replacement.
          (3) The expiry date of a Supplementary Prospectus or Replacement Prospectus under (1) or (2) must be the same as that of the Prospectus it supplements or replaces.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

        • CIR 14.2.3

          When a Supplementary Prospectus or Replacement Prospectus of a Public Fund has been filed with the DFSA and made available in accordance with CIR Rule 14.2.4, the Fund Manager must:

          (a) inform any Person who applied for Units on the basis of the previous Prospectus after the earliest date of a material change or new matter giving rise to the issue of the Supplementary Prospectus or Replacement Prospectus of their right to confirm or retract any application made on the basis of that Prospectus and to obtain a refund of monies paid, and the manner in which to do so; and
          (b) allow any such Person a period of at least seven days from the date of receipt of the Supplementary Prospectus or Replacement Prospectus in which to so confirm or retract his application.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Prospectus of an External Fund

        • CIR 14.2.4

          A Fund Manager or other Authorised Firm must not Offer in or from the DIFC a Unit of an External Fund to a Retail Client unless the Units of the External Fund can be offered, under the requirements applying to that Fund in the jurisdiction in which the Fund is established, to retail investors.

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

        • CIR 14.2.5 CIR 14.2.5

          Where a Fund Manager or other Authorised Firm Offers a Unit of an External Fund to a Person, it must make available to that Person at the time of the Offer a copy of a current Prospectus relating to the Fund which contains the additional requirements in CIR Rule 14.2.6.

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

          • CIR 14.2.5 Guidance

            Under Article 50(3)(c) of the Law, a Prospectus includes, in the case of an External Fund the Units of which are marketed in or from the DIFC, any prospectus or other disclosure document prepared in accordance with the laws applicable to that Fund in the jurisdiction in which the Fund is established or domiciled.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.2.6 CIR 14.2.6

          (1) The Prospectus of an External Fund made available by the Fund Manager or other Authorised Firm making the Offer of the Units of that Fund in or from the DIFC must be in the English language.
          (2) The Prospectus must contain in a prominent position, or have attached to it, a statement that clearly:
          (a) describes the jurisdiction in which the Fund is established and the legislation in that jurisdiction that applies to the Fund;
          (b) states the name of the relevant Financial Services Regulator in that jurisdiction;
          (c) describes the regulatory status accorded to the Fund by that Regulator;
          (d) includes the following warning:
          "This Prospectus relates to a Fund which is not subject to any form of regulation or approval by the Dubai Financial Services Authority ("DFSA").
          The DFSA has no responsibility for reviewing or verifying any Prospectus or other documents in connection with this Fund. Accordingly, the DFSA has not approved this Prospectus or any other associated documents nor taken any steps to verify the information set out in this Prospectus, and has no responsibility for it.
          The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers should conduct their own due diligence on the Units.
          If you do not understand the contents of this document you should consult an authorised financial adviser.";
          and
          (e) if the Offer is not directed to Retail Clients, includes a prominent statement to that effect to be incorporated within the warning in (d).
          (3) If Units of an External Fund are Security Tokens, the Prospectus must contain information equivalent to that specified in MKT App 7 in respect of those Units.
          (4) If 10% or more of the gross asset value of the Fund Property of an External Fund consists, or will consist, of Investment Tokens, the Prospectus must include information equivalent to that specified at MKT App 7 in respect of the Investment Tokens.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Added] DFSA RMI314/2021 (Made 30th June 2021). [VER32/10-21]

          • CIR 14.2.6 Guidance

            Where a material part of the Fund Property of an External Fund consists of Tokens other than Investment Tokens, the DFSA considers that the Prospectus of that Fund should contain information relating to those Tokens that is equivalent to the information specified in MKT App 7. Such information is likely to be relevant under Article 52(2) of the Law, which requires disclosure of all the information a person and his professional advisers would reasonably require and expect to find in the Prospectus to make an informed decision to become a Unitholder of the Fund.

            Derived from DFSA RMI314/2021 (Made 30th June 2021). [VER32/10-21]

        • CIR 14.2.7 CIR 14.2.7

          A Fund manager or other Authorised Firm which makes an Offer of a Unit of an External Fund in or from the DIFC must maintain at its place of business or other designated location in the DIFC copies of the relevant Prospectus for inspection by Clients and by the DFSA during normal business hours.

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

          • CIR 14.2.7 Guidance

            In relation to CIR Rule 14.2.7, copies of the Prospectus may be stored electronically so long as Clients and the DFSA have and immediate access.

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

    • CIR 14.3 CIR 14.3 Prospectus Content

      • Public Fund Prospectus

        • CIR 14.3.1 CIR 14.3.1

          (1) Without limiting the generality of the Prospectus disclosure required under Article 52 of the Law, the Fund Manager must, in the case of a Public Fund, include in the Fund's Prospectus:
          (a) the information in CIR App 7, unless the Public Fund is a Passported Fund;
          (b) if the Public Fund is a Passported Fund, the information in CIR App 1 of FPR, including a Key Investor Information Document (KIID);
          (c) if it is a specialist class of a Public Fund, any information as is relevant to that specialist class of Fund as set out in CIR section 14.4;
          (d) a Summary Document containing:
          (i) information to clearly identify the Fund and its classification;
          (ii) a short description of the Fund's investment objectives and investment policy for achieving those objectives;
          (iii) past-performance presentation or, where relevant, performance scenarios;
          (iv) costs and associated charges; and
          (v) risk/reward profile of the investment, including appropriate guidance and warnings in relation to the risks associated with investments in the relevant Fund;
          (e) the mandatory statement required under CIR Rule 14.3.3;
          (f) if Units of the Fund are Security Tokens, information equivalent to that specified in MKT App 7 in respect of those Units;
          (g) if 10% or more of the gross asset value of the Fund Property consists of Investment Tokens, information equivalent to that specified in MKT App 7 in respect of the Investment Tokens; and
          (h) if it is an Open-ended Fund, the information relating to the powers available to the Fund Manager to address liquidity risks that may arise in the Fund, and procedures, including triggers, for the exercise of such powers, required under CIR Rule 8.6A.1(2)(d).
          (2) A Prospectus may consist of a single document, or a multi-part Prospectus containing:
          (a) a Summary;
          (b) information relating to the Fund Manager and Trustee; and
          (c) information relating to the Fund.
          (3) If a Prospectus is a multi-part Prospectus, the Fund Manager must ensure that the Prospectus as a whole is up-to-date.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM158/2015 (Made 9th December 2015). [VER19/02-16]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
          [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RMI248/2019 (Made 18th December 2019) [VER26/12-19].
          [Amended] DFSA RMI314/2021 (Made 30th June 2021). [VER32/10-21]

          • CIR 14.3.1 Guidance

            Where a material part of the Fund Property of a Public Fund consists of Tokens other than Investment Tokens, the DFSA considers that the Prospectus of that Fund should contain information relating to those Tokens that is equivalent to the information specified in MKT App 7. Such information is likely to be relevant under Article 52(2) of the Law, which requires disclosure of all the information a person and his professional advisers would reasonably require and expect to find in the Prospectus to make an informed decision to become a Unitholder of the Fund.

            Derived from DFSA RMI314/2021 (Made 30th June 2021). [VER32/10-21]

      • [Deleted]

        • CIR 14.3.2 [Deleted]

          [Deleted] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

      • CIR 14.3.2 CIR 14.3.2 Information Memorandum of an Exempt Fund or a Qualified Investor Fund

        • CIR 14.3.2 Guidance

          1. Under Article 50(3)(a) of the Law, an Information Memorandum of an Exempt Fund or a Qualified Investor Fund is a Prospectus for the purposes of the Law and the Rules unless otherwise provided. In limited circumstances, the Rules prescribe additional disclosure to be included in a Prospectus of an Exempt Fund (for example CIR Rule 13.6.3 where an Exempt Fund appoints a prime broker with certain additional powers).
          2. There is no detailed prescribed disclosure content for the Information Memorandum of an Exempt Fund or a Qualified Investor Fund. However, as an Information Memorandum is a Prospectus, it is subject to the disclosure obligation in Article 52(2) of the Law. As a result, a Fund Manager of such a Fund must include all the information which Professional Clients to whom it intends to Offer Units of the Fund would reasonably require and expect to find in such a Prospectus. This is to enable such Clients to make an informed decision relating to investing in the Fund.
          3. In the case of an Information Memorandum for an Exempt Fund or Qualified Investor Fund with Units that are Security Tokens, or where a material part of the Fund Property consists of Investment Tokens, the DFSA considers that Professional Clients would reasonably require and expect to find in such a Prospectus the information specified in MKT App 7. Where a material part of the Fund Property consists of Tokens other than Investment Tokens, the DFSA considers that Professional Clients would reasonably require and expect to find in such a Prospectus the equivalent of any information specified in MKT App 7 that is relevant to those Tokens.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Added] DFSA RMI314/2021 (Made 30th June 2021). [VER32/10-21]

      • Mandatory Statement

        • CIR 14.3.3

          (1) A Fund Manager of a Public Fund must, except as provided in (1A) and (2), include in the Fund's Prospectus, the following statement displayed prominently on its front page:
          "This Prospectus relates to a DIFC Fund in accordance with the Collective Investment Law 2010 and Rules of the Dubai Financial Services Authority ("DFSA").
          The DFSA has no responsibility for reviewing or verifying any Prospectus or other documents in connection with this Domestic Fund. Accordingly, the DFSA has not approved this Prospectus or any other associated documents nor taken any steps to verify the information set out in this Prospectus, and has no responsibility for it.
          The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Units offered should conduct their own due diligence on the Units.
          If you do not understand the contents of this document you should consult an authorised financial adviser."
          (1A) For a Public Fund that is a Passported Fund, instead of the statement referred to in (1), the Fund Manager must include the statement specified in FPR Rule 3.2.3(e).
          (2) In the case of a Public Fund which is a Listed Fund, the Fund Manager must include, instead of the statement referred to in (1), the statement required:
          (a) under MKT Rule 6.3.1(1)(b)(iii) or (4) as applicable, if it is a conventional Listed Fund; and
          (b) under IFR Rule 6.5.1(h), if it is an Islamic Fund.
          (3) If a Fund is an Exempt Fund, the Fund Manager must include, in addition to the statement referred to in (1), the following statement:
          "This Information Memorandum is intended for only Professional Clients who can make a minimum subscription of US$50,000 and must not, therefore, be delivered to, or relied on by, a Retail Client or a Professional Client not able to make that minimum subscription."
          (4) If an Exempt Fund is a Passported Fund, the Fund Manager must include, instead of the statement in (1), the statement specified in FPR Rule 3.1.3(d) and the statement referred to in (3).
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
          [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

      • [Deleted]

        • CIR 14.3.5 [Deleted]

          [Deleted] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

    • CIR 14.4 CIR 14.4 Additional Prospectus Disclosure for Specialist Funds

      • Prospectus of a Feeder Fund

        • CIR 14.4.1

          A Fund Manager of a Feeder Fund must ensure that the Fund's Prospectus discloses:

          (a) a prominent risk warning to prospective Unitholders to the fact that they will be subject to higher fees arising from the layered investment structure;
          (b) the fees arising at the level of:
          (i) the Feeder Fund itself;
          (ii) if applicable, the Master Fund of the Feeder Fund; and
          (iii) if applicable, any underlying Funds into which the Master Fund invests, to the extent known.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Prospectus of a Property Fund

        • CIR 14.4.2

          A Fund Manager of a Property Fund must ensure that the following information is disclosed in the Fund's Prospectus:

          (a) the nature of the commitment which prospective Unitholders will enter into;
          (b) the risks involved in this type of Fund;
          (c) the prominent risk warning which makes reference to circumstances in property markets which can cause difficulties in meeting redemptions;
          (d) details of the Property Fund's appointed Valuer under CIR Rule 13.4.18(1);
          (e) in a prominent position in the Prospectus, the redemption procedures;
          (f) the dividend or income distribution policy;
          (g) the insurance arrangement for the Fund;
          (h) a statement with respect to any material policy regarding real property activities;
          (i) details of transactions or agreements entered into with Related Parties;
          (j) full particulars of the nature and extent of the interest, if any, of Related Parties, in the property owned or proposed to be acquired by the Fund;
          (k) details of significant holders and the number of units held and deemed to be held by each of them;
          (l) details of principal taxes levied on the Fund's income and capital, including tax, if any, deducted on distribution to Unitholders;
          (m) a statement to explain the standards according to which the property valuations are conducted; and
          (n) if applicable, the Fund is a REIT and whether the investment vehicle is an Investment Company or an Investment Trust.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM158/2015 (Made 9th December 2015). [VER19/02-16]

        • CIR 14.4.3

          A Fund Manager of a Public Property Fund must also disclose in the Fund's Prospectus, in addition to the standard disclosure requirements, in respect of investment limits, the following information:

          (a) what percentage of the Property Fund's net assets may consist of property related assets which are not traded in or dealt on markets provided for in the Constitution;
          (b) unless the Constitution and the Prospectus state that the Fund invests in a single property, the maximum percentage of the Fund's net assets which may be invested in any single property or, if applicable, the conditions under which the Fund may derogate from this restriction;
          (c) the maximum percentage of the Property Fund's net assets which may be invested in properties which are vacant, in the process of development or requiring development; and
          (d) the maximum percentage of the Property Fund's net assets which may be invested in properties which are subject to a mortgage.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.4.4 CIR 14.4.4

          Without limiting any other disclosure obligations of the Fund Manager under these Rules, a Fund Manager of a Property Fund which is a Public Fund that invests in a single property must prominently disclose in the Prospectus of the Fund:

          (a) that the Fund invests in a single property;
          (b) details relating to the single property such as whether the property comprises individual properties or buildings, whether there are different types of uses of or businesses conducted in the property, and proportions of anticipated income to be derived from the types of uses or occupants of the property; and
          (c) any risks associated with the investment in the single property, including risks arising from or affecting income to be derived from the uses or occupants of the property.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

          • CIR 14.4.4 Guidance

            A Fund may be considered to invest in a single property if the Fund Property (apart from cash or other assets held for management purposes) comprises a single building (or a single building with ancillary or adjacent buildings) managed by or on behalf of the Operator of the Fund as a single enterprise.

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

        • CIR 14.4.4A

          Without limiting any other disclosure obligations of the Fund Manager under these Rules, if the Fund Manager of a Public Property Fund itself acts as custodian of Real Property in accordance with CIR Rule 13.4.2, it must prominently disclose in the Fund's Prospectus:

          (a) that it acts as custodian of the Real Property;
          (b) the risks that may arise as a result of it acting as custodian rather than delegating the function to an Eligible Custodian; and
          (c) the measures and safeguards it has in place to ensure the proper segregation and protection of the Real Property.
          [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]

        • CIR 14.4.4B

          Without limiting any other disclosure obligations of the Fund Manager under these Rules, if the Fund Manager of a Public Property Fund has approval to enter into Related Party Transactions in accordance with CIR Rule 13.4.11A, it must disclose that fact in the Fund's Prospectus.

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

      • Prospectus for a Private Equity Fund

        • CIR 14.4.5

          If a Fund is a Private Equity Fund, the Fund Manager must provide the following in the Fund's Prospectus:

          (a) a description of the arrangements in place for the safekeeping of monies raised from Unitholders but not yet invested in the proposed undertaking or venture; and
          (b) a description of the exit arrangements for Unitholders.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Prospectus for a Hedge Fund

        • CIR 14.4.6

          A Fund Manager of a Hedge Fund must prominently disclose to prospective Unitholders in the Prospectus and any other financial promotions relating to the Fund, the following Mandatory Hedge Fund Disclosure Statement:

          "When considering investment in a Hedge Fund you should consider the fact that some Hedge Fund products use leverage and other speculative investment practices that may increase the risk of investment loss, can be illiquid, may involve complex tax structures, often charge high fees, and in many cases the underlying investments are not transparent and are known only to the Hedge Fund Investment Manager.
          Returns from Hedge Funds can be volatile and you may lose all or part of your investment. With respect to single manager products the manager has total trading authority and this could mean a lack of diversification and higher risk. The Hedge Fund may be subject to substantial expenses that are generally offset by trading profits and other income. A portion of those fees is paid to the Hedge Fund Manager."
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Risk warning for a Money Market Fund

        • CIR 14.4.7

          A Fund Manager of a Money Market Fund that is a Public Fundmust ensure that the Fund's Prospectus includes a prominent warning:

          (a) drawing to the attention of investors the different nature of a Unit in a Money Market Fund compared to a Deposit;
          (b) that the capital of an investment in a Money Market Fund is not guaranteed; and
          (c) that the value of Units in the Money Market Fund may fluctuate.
          [Added] RM158/2015 (Made 9th December 2015). [VER19/02-16]

      • Disclosure about an Exchange Traded Fund (ETF) and associated risks

        • CIR 14.4.8 CIR 14.4.8

          A Fund Manager of an Exchange Traded Fund (ETF) must include in its Prospectus details relating to:

          (a) the type of ETF and its characteristics;
          (b) the risks associated with the type of ETF;
          (c) the investment methodology and strategies the ETF proposes to adopt to track the referenced index or benchmark;
          (d) a clear description of the relevant indices or other benchmark the ETF is designed to track, timely information about the underlying components (including their liquidity) of the relevant index or the benchmark and, if the Price Information Provider is a Related Party, that fact;
          (e) clear signposts to guide investors to relevant websites or sources of information provided by Price Information Providers, as specified in CIR A9.1.2(2)(b)(i);
          (f) information about whether iNAV is made available by the relevant exchange, and if so, how this information can be accessed by investors;
          (g) information on how the referenced index or benchmark will be tracked and the risks for investors in terms of exposure they have to the underlying index and any counterparty risk;
          (h) a description of the key elements which may affect the ETF's ability to track fully the relevant index or benchmark, including, but not limited to, transaction costs, illiquid segments, and dividend re-investment;
          (i) in the case of a synthetic ETF using Derivatives to replicate the performance of an index or other benchmark:
          (i) whether the ETF uses a funded or unfunded model to replicate the performance of the specified index or benchmark;
          (ii) if not al disclosed, information relating to the counterparties to the Derivatives transactions, and where collateral is used, details relating to such collateral; and
          (iii) a description of the risks associated with counterparty default and use of any collateral, the impact of those risks on the ETF's performance and investor returns, and how such risks are to be mitigated;
          (j) to the extent an ETF is required to have a diversified portfolio, how the ETF proposes to achieve diversification of investments through its investment strategy;
          (k) if available, information about the past performance of the ETF, measured through its realised tracking difference and annual tracking error information, on the anticipated level of tracking error during normal market conditions, and how this will be effectively minimised; and
          (l) information about the ETF's Authorised Participant and if it is also a market maker in the ETF Units in the relevant exchange, that fact.
          Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]

          • CIR 14.4.8 Guidance

            See also the Guidance under CIR Rule 13.9.6 for types of ETFs, including synthetic ETFs, funded and unfunded, and the definitions of iNAV in GLO.

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

      • Disclosure relating to ETF's cost structure

        • CIR 14.4.9

          A Fund Manager of an Exchange Traded Fund (ETF) must include in its Prospectus sufficient information to enable investors to clearly understand:

          (a) the ETF's cost structure, covering:
          (i) any performance fees of the Fund Manager, if applicable;
          (ii) its operational costs; and
          (iii) if applicable, costs of underlying transactions (such as swaps, brokerage commissions and additional costs associated with leverage or use of collateral, and the rebalancing of the portfolio costs); and
          (b) any revenue derived by the Fund Manager through the use of the ETF's portfolio assets, and how that revenue is distributed between the ETF and the Fund Manager.
          [Added] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

      • Prospectus for a Fund on a Fund Platform

        • CIR 14.4.10

          A Fund Manager of a Fund that is an Incorporated Cell of an Incorporated Cell Company (ICC) must ensure that the Fund Prospectus includes information that:

          (a) the Fund is an Incorporated Cell of an ICC;
          (b) the Fund, being an Incorporated Cell:
          (i) is a separate legal entity to the ICC and to any other Incorporated Cells of the ICC; and
          (ii) does not have a subsidiary or holding company relationship to the ICC;
          (c) the ICC, which is the Fund Platform, contains the infrastructure needed by the Fund Manager for managing the Fund; and
          (d) the Fund Manager is:
          (i) responsible for the sound and prudent operation of the Fund Platform; and
          (ii) liable for any acts or omissions of the Fund Platform in respect of the Fund.
          Added from DFSA RMI248/2019 (Made 18th December 2019) [VER26/12-19].

      • Prospectus of a Venture Capital Fund

        • CIR 14.4.11 CIR 14.4.11

          A Fund Manager of a Venture Capital Fund must ensure that the Fund’s Prospectus includes a prominent risk warning disclosing that the small to medium size businesses in which the Fund invests are highly illiquid investments, are likely to need to be held for a considerable period by the Fund, and also are likely to have a high rate of failure as they are usually new businesses.
          Derived from DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

          • CIR 14.4.11 Guidance

            1. An Information Memorandum issued by a Fund Manager of a Venture Capital Fund is a Prospectus (see Article 50(3)(a) of the Law).
            2. The obligation under Article 52(2) of the Law for a Prospectus to include “all the information which an investor would reasonably require and expect to find in a prospectus to make an informed decision to become a member of the Fund” will, among other things, require disclosure of any inherent risks in the proposed investment strategy and the types of investments proposed. If the proposed investment strategy or the types of investment instruments of the Fund are complex, we expect the Prospectus to potential investors for the need to seek professional advice.
            Derived from DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

        • CIR 14.4.12 CIR 14.4.12

          (1) A Fund Manager of a Venture Capital Fund must ensure that the Fund’s Prospectus sets out clearly any legal requirements that ordinarily apply to Fund Managers and their Funds, but which are, by DFSA Rules, disapplied to the Fund Manager in relation to the Venture Capital Fund.
          (2) A Fund Manager is not required under (1) to disclose that a requirement is disapplied if it voluntarily complies in full with the disapplied provision.
          Derived from DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

          • CIR 14.4.12 Guidance

            Examples of legal requirements that do not apply in relation to a Venture Capital Fund and therefore should be clearly set out in the Prospectus under CIR Rule 14.4.12 include not having to appoint an Eligible Custodian, not having an internal audit function and not having a Finance Officer.
            Derived from DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

    • CIR 14.5 CIR 14.5 Obligation Relating to Making a Prospectus Available

      • CIR 14.5.1 CIR 14.5.1

        (1) A Fund Manager of a Domestic Fund must make the Fund's most recent Prospectus available free of charge to any Unitholder and to any Person who is eligible to invest in the Fund when making an Offer to issue or sell a Unit of the Fund to such a Person, and, in any case, must not enter into a Transaction relating to the issue or sale of a Unit of the Fund with a Person unless that Transaction results from an Excluded Offer as defined in CIR section 4.1 of this module.
        (2) A Fund Manager of a Domestic Fund which is an Exempt Fund or a Qualified Investor Fund must not, and must not cause any other Person to, make an Offer of Units of such a Fund in a manner that would result in a breach of the requirements in Article 16(4) or (5) of the Law as is applicable to that Fund.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

        • CIR 14.5.1 Guidance

          1. CIR Section 4.1 of this module contains the definitions of Excluded Offers, such as Execution-only Transactions and Transactions with market Counterparties.
          2. A Fund Manager should note the requirements in Article 50(1) of the Law. Accordingly, a Prospectus drawn up pursuant to CIR Rule 14.1.3 should be made available to prospective Unitholders for as long as the Offer is open and once the Offer is closed, the Fund Manager's obligation to make the Prospectus available would cease.
          3. Articles 16(4) and (5) of the Law set out the conditions that must be satisfied for Exempt Funds and Qualified Investor Funds. In particular, these articles require that Units in an Exempt Fund or a Qualified Investor Fund may only be Offered for issue or sale by means of a Private Placement with Professional Clients.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

      • CIR 14.5.2

        (1) Where an Authorised Firm Offers a Unit of a Domestic Fund to a Person it must make available to that Person a copy of the most recent Prospectus at the time of the Offer or before effecting the Transaction in relation to the Units, unless that Transaction results from an Excluded Offer as defined in CIR section 4.1 of this module.
        (2) An Authorised Firm must not make an Offer of Units of an Exempt Fund or a Qualified Investor Fund in a manner that would result in a breach of the requirements in Articles 16(4) or (5) of the Law as is applicable to that Fund.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
        [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]

      • CIR 14.5.3 CIR 14.5.3

        A Fund Manager and an Authorised Firm making an Offer of a Unit of a Fund meet the requirement in CIR Rule 14.5.1(1) or CIR Rule 14.5.2(1) as is relevant by:

        (a) maintaining at its place of business in the DIFC copies of the relevant Prospectus for inspection by Clients and by the DFSA during normal business hours; or
        (b) being able to advise readily of a location in the DIFC where copies of the Prospectus are available.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 14.5.3 Guidance

          Copies of the Prospectus may be stored electronically so long as Clients and the DFSA have and immediate access.

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

    • CIR 14.6 CIR 14.6 Responsibility for Prospectus

      • Prescribed Persons

        • CIR 14.6.1

          (1) For the purposes of Article 58(1) of the Law, the following Persons are prescribed as being responsible for a Prospectus:
          (a) the Fund Manager;
          (b) where the Fund is a Body Corporate which does not have a sole Corporate Director acting as its Fund Manager, each Person who is a Director of that Body Corporate at the time when the Prospectus is filed;
          (c) where the Fund is an Investment Undertaking, each Person who is authorised to be named, and is named, in the Prospectus as a Director, General Partner or member of the Governing Body or as having agreed to become such a Person of that Fund either immediately or at a future time;
          (d) each Person who accepts, and is stated in the Prospectus as accepting, responsibility for, or for any part of, the Prospectus;
          (e) each Person who is deemed to accept responsibility for any part of a Prospectus under these Rules; and
          (f) each Person not falling within any of the foregoing paragraphs who has authorised the contents of, or of any part of, the Prospectus.
          (2) A Person who has accepted responsibility for, or authorised, only part of the contents of any Prospectus, is responsible only for that part and only if it is included in, or substantially in, the form and context to which he has agreed.
          (3) Nothing in (1) makes a Person responsible for any part of a Prospectus by reason only of giving advice as to its contents in a professional capacity to a Person specified in (1)(a) to (f).
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

      • Exceptions from Liability

        • CIR 14.6.2

          The circumstances set out in the Rules in this section are prescribed for the purposes of Article 58(2) of the Law.

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

        • CIR 14.6.3

          (1) A Person, with the exception of the Fund Manager, will not incur any liability under Article 58(1) of the Law for any loss in respect of Units caused by any such statement or omission if, at the time when the Prospectus was filed for registration or the notification to the DFSA, pursuant to Articles 28 or 34 as is relevant, was made or given he believed on reasonable grounds, having made any enquiries as were reasonable, that the statement was true and not misleading or that the matter whose omission caused the loss was properly omitted and:
          (a) he continued in that belief until the time when the Units were acquired;
          (b) they were acquired before it was reasonably practicable to bring a correction to the attention of Persons likely to acquire the Units in question;
          (c) before the Units were acquired he had taken all such steps as it was reasonable for him to have taken to ensure that a correction was promptly brought to the attention of Persons likely to acquire the Units in question; or
          (d) the Units were acquired after such a lapse of time that he ought in the circumstances to be reasonably excused.
          (2) A Person will not incur any liability under Article 58(1) of the Law for any loss in respect of Units caused by a statement purporting to be made by or on the authority of another Person as an expert which is, and is stated to be, included in the Prospectus with that other Person's consent at the time when the Prospectus was filed for registration or the notification to the DFSA pursuant to Article 56 was given, if he believed on reasonable grounds that the other Person was competent to make or authorise the statement and had consented to its inclusion in the form and context in which it was included and:
          (a) he continued in that belief until the time when the Units were acquired;
          (b) they were acquired before it was reasonably practicable to bring the fact that the expert was not competent or had not consented to the attention of Persons likely to acquire the Units in question;
          (c) before the Units were acquired he had taken all such steps as it was reasonable for him to have taken to secure that that fact was promptly brought to the attention of Persons likely to acquire the Units in question; or
          (d) the Units were acquired after such a lapse of time that, in the circumstances, he ought reasonably to be excused.
          (3) Without prejudice to (1) and (2), a Person will not incur any liability under Article 58(1) of the Law for any loss in respect of any Units caused by any such statement or omission as is there mentioned if:
          (a) before the Units were acquired a correction or, where the statement was such as is mentioned in (2), the fact that the expert was not competent or had not consented had been published in a manner calculated to bring it to the attention of Persons likely to acquire the Units in question; or
          (b) he took all such steps as it was reasonable for him to take to secure such publication and believed on reasonable grounds that such publication had taken place before the Units were acquired.
          (4) A Person will not incur any liability under Article 58(1) of the Law for any loss resulting from a statement made by an official Person or contained in a public official document which is included in the Prospectus if the statement is accurately and fairly reproduced.
          (5) A Person will not incur any liability under Article 58(1) of the Law if the Person suffering the loss acquired the Units in question with knowledge:
          (a) that the statement was false or misleading;
          (b) of the omitted matter or of the change; or
          (c) of the new matter or inaccuracy.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Experts

        • CIR 14.6.4

          For the purposes of Article 58 of the Law, an expert is prescribed as a Person accepting responsibility for any statement or report reproduced (in whole or in part) in a Prospectus with that Person's written consent.

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

        • CIR 14.6.5

          A Fund Manager must:

          (a) keep a record of any consent received under CIR Rule 14.5.4; and
          (b) include a statement in the Prospectus that the expert has consented to the reproduction of his statement or report.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]