Entire Section

  • 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]