Entire Section

  • CIR 15 CIR 15 Marketing of Foreign Funds

    • CIR 15.1 CIR 15.1 Access to Foreign Funds and Availability of Prospectus

      • CIR 15.1 Guidance

        1. Rules CIR 4.1.3 and CIR 4.1.4 exclude from being treated as Offers any Transactions undertaken by an Authorised Firm where such Transactions are Execution-only Transactions, or Transactions for the purposes of managing a Discretionary Portfolio for a Client, or for the purposes of redeeming a Unit of a Fund for a Client. Similarly, an offer made by an Authorised Firm to a Market Counterparty is also excluded from being an Offer. Finally, CIR Rule 4.1.5 excludes an offer of a Unit of a Passported Fund under the Fund Protocol, where the DIFC is the Host Jurisdiction, from being treated as an Offer. This is because such an offer will be subject to the requirements of the Home Jurisdiction. As a result, such excluded Transactions and offers do not attract the marketing prohibition in Article 50 of the Law and the requirements in both the Law and this module relating to the marketing of Units.
        2. Article 54(1) of the Law prohibits the Offer of Units of a Foreign Fund unless one of three specified criteria in that Article are met, i.e.
        a. the Foreign Fund meets either:
        i. the criteria for a Designated Fund in a Recognised Jurisdiction; or
        ii. other criteria prescribed in the Rules;
        b. the Authorised Firm has a reasonable basis for recommending the Unit of the Foreign Fund as suitable for the particular Client to whom the Offer is made; or
        c. the Foreign Fund is a type of Fund that:
        i. has its Units offered to persons only by way of a private placement;
        ii. has its Units offered to persons who meet the criteria to be classified as Professional Clients; and
        iii. requires an initial subscription of at least US$50,000 to be paid by a person to become a Unitholder in the Fund.
        3. Under Article 54(2) of the Law, the DFSA has the power to prescribe any additional criteria, requirements or conditions that apply to the Offer of Units of a Foreign Fund, including disclosure that must be included in a Prospectus and the legal form and structure of the Fund such as being Open-ended or Closed ended or listed or not. This section contains additional criteria and requirements prescribed pursuant to Article 54(2) of the Law.
        4. The DFSA has specified that Passported Funds under the Fund Protocol for which the DFSA is the Host Regulator, are Designated Funds for the purposes of Article 54(1)(a)(i) of the Law. The effect of that designation is that an Authorised Firm may Offer a Unit of such a Foreign Fund. CIR Rule 15.1.1 specifies which requirements in this chapter apply to an Authorised Firm marketing such a Passported Fund.
        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]

      • Clients to Whom Offers of Units of Foreign Funds can be Made

        • CIR 15.1.1A

          An Authorised Firm must not, in or from the DIFC, Offer a Unit of a Foreign Fund to a Retail Client unless the Units of the Foreign Fund can be offered, under the home jurisdiction regulation applying to that Fund, to retail investors.

          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

      • Prospectus Disclosure Relating to Foreign Funds

        • CIR 15.1.2 CIR 15.1.2

          Where an Authorised Firm Offers a Unit of a Foreign Fund to a Person, it must make available to that Person a copy of a current Prospectus relating to the Fund which complies with:

          (a) the additional requirements in CIR Rule 15.1.3 at the time of the Offer; or
          (b) for a Passported Fund, the relevant requirements of the Home Jurisdiction, including its relevant Fund Protocol rules or regulations.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM235/2019 (Made 20th February 2019). [VER24/02-19]

          • CIR 15.1.2 Guidance

            Under Article 50(3)(c) of the Law, a Prospectus includes, in the case of a Foreign 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 Foreign Fund.

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

        • CIR 15.1.3 CIR 15.1.3

          (1) The Prospectus of a Foreign Fund made available by an Authorised Firm 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 foreign jurisdiction 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.";
          (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);
          (f) in the case of an Offer of a Unit in a Money Market Fund, contains the risk warning referred to in CIR Rule 14.4.7; and
          (g) in the case of an Offer of a Unit in a Venture Capital Fund, contains the risk warning referred to in CIR Rule 14.4.11 and the additional disclosure required under CIR Rule 14.4.12.
          (3) If Units of the Fund are Security Tokens, the Prospectus must contain, or have attached to it, 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 consists of Investment Tokens, the Prospectus must contain, or have attached to it, information equivalent to that specified in MKT App 7 in respect of those Investment Tokens.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] RM158/2015 (Made 9th December 2015). [VER19/02-16]
          [Amended] DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]
          [Added] DFSA RMI314/2021 (Made 30th June 2021). [VER32/10-21]

          • CIR 15.1.3 Guidance

            Where a material part of the Fund Property of a Foreign 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 15.1.4 CIR 15.1.4

          An Authorised Firm which makes an Offer of a Unit of a Foreign Fund 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 15.1.4 Guidance

            In relation to CIR Rule 15.1.4, 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]

      • Designated Foreign Fund Criteria

        • CIR 15.1.5 CIR 15.1.5

          The criteria prescribed for the purposes of Article 54(1)(a)(i) of the Law to enable an Authorised Firm to Offer a Unit of a Foreign Fund are as follows:

          (a) the Fund is both established and operated in a Recognised Jurisdiction specified in the DFSA's Recognised Jurisdictions Notice and the Fund is a Designated Fund included in that Notice;
          (b) if it is a Property Fund, the requirements in CIR Rule 15.1.7 are satisfied;
          (c) if it is an Exchange Traded Fund, the requirements in CIR Rule 13.9.1 are satisfied;
          (d) if it is a Venture Capital Fund, it is a Closed-ended Fund; and
          (e) if it is a Credit Fund:
          (i) it is a Closed-ended Fund;
          (ii) it satisfies the conditions that would be necessary for it to be an Exempt Fund or Qualified Investor Fund if it was a Domestic Fund;
          (iii) it has in place appropriate policies and procedures for assessing, pricing, granting, managing and acquiring credit;
          (iv) it has in place an appropriate stress testing programme; and
          (v) it is subject to regulatory requirements that provide an equivalent level of protection to that provided under CIR section 13.12 and CIR Rule 14.4.13.
          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]
          [Amended] DFSA RMI 323/2022 (Made 27th April 2022). [VER33/06-22]

          • CIR 15.1.5 Guidance

            For the purposes of the Rules including this Rule, the DFSA has issued and published a Recognised Jurisdictions Notice on its website which sets out the list of Recognised Jurisdictions and which also specifies the Designated Funds.

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

      • Other Foreign Fund criteria

        • CIR 15.1.6

          (1) The criteria prescribed for the purposes of Article 54(1)(a)(ii) of the Law to enable an Authorised Firm to Offer a Unit of a Foreign Fund are as follows:
          (a) the Fund:
          (i) has both a custodian who meets one of the requirements in (2) and an investment manager who meets one of the requirements in (3); or
          (ii) has both the custody and investment management activities of the Fund being performed by a Person who meets the requirements in (4); or
          (iii) the Fund has been rated or graded as at least "investment grade" by Moody's, Fitch or Standard & Poor's or such other international rating agency acceptable to the DFSA;
          (b) if the Fund is a Property Fund, it meets the requirements in CIR Rule 15.1.7;
          (c) if it is an Exchange Traded Fund, the requirements in CIR Rule 13.9.1 are satisfied and
          (d) if it is a Credit Fund:
          (i) it is a Closed-ended Fund;
          (ii) it satisfies the conditions that would be necessary for it to be an Exempt Fund or Qualified Investor Fund if it was a Domestic Fund;
          (iii) it has in place appropriate policies and procedures for assessing, pricing, granting, managing and acquiring credit;
          (iv) it has in place an appropriate stress testing programme; and
          (v) it is subject to regulatory requirements that provide an equivalent level of protection to that provided under CIR section 13.12 and CIR Rule 14.4.13.
          (2) For the purposes of (1)(a)(i), the custodian is the Person who is responsible for providing safe custody of the Fund Property and such Person must be:
          (a) an Eligible Custodian;
          (b) a member of a Group that is subject to consolidated supervision by a Financial Services Regulator in a Recognised Jurisdiction and the activities of the custodian are included within the scope of that supervision;
          (c) appointed under an agreement by a Person who is subject to supervision by a Financial Services Regulator in a Recognised Jurisdiction and the agreement is in accordance with the requirements of that Regulator; or
          (d) a Person as to whom the Authorised Firm is satisfied has adequate custody and asset safety arrangements in respect of the Foreign Fund after performing due diligence taking into consideration each of the following factors:
          (i) whether the Person providing custody is authorised and supervised by a Financial Services Regulator for the purposes of providing custody;
          (ii) the extent of segregation of assets;
          (iii) independence and management of conflicts of interests;
          (iv) the terms of the safe custody agreement; and
          (v) periodic reporting requirements.
          (3) For the purposes of (1)(a)(i), the investment manager is a Person who makes investment decisions for or on behalf of the Fund and must be a Person who is:
          (a) authorised and supervised by the DFSA or a Financial Services Regulator located in a Recognised Jurisdiction in respect of its activities in relation to investment management;
          (b) a member of a Group that is subject to consolidated supervision by a Financial Services Regulator in a Recognised Jurisdiction and the activities of the investment manager are included within the scope of the supervision; or
          (c) appointed under an agreement by another Person who is subject to supervision by a Financial Services Regulator in a Recognised Jurisdiction and the agreement is in accordance with the requirements of the Regulator.
          (4) For the purposes of (1)(a)(ii), the Person carrying out both the custody and investment management activities of the Fund must be a Person who is:
          (a) authorised and supervised by the DFSA or a Financial Services Regulator located in a Recognised Jurisdiction in respect of both of its custody and investment management activities;
          (b) a member of a Group that is subject to consolidated supervision by a Financial Services Regulator in a Recognised Jurisdiction and its custody and investment management activities are included within the scope of that supervision; or
          (c) appointed under an agreement by another Person who is subject to supervision by a Financial Services Regulator in a Recognised Jurisdiction and the agreement is in accordance with the requirements of that Regulator.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]
          [Amended] DFSA RMI 323/2022 (Made 27th April 2022). [VER33/06-22

      • Foreign Property Funds

        • CIR 15.1.7 CIR 15.1.7

          A Foreign Fund meets the Property Fund condition referred to in Rule CIR 15.1.5(b) or CIR 15.1.6(1)(b) as is applicable where:

          (a) 60% or more of the Fund's assets comprise of Real Property, Property Related Assets or Units in another Property Fund;
          (b) the Fund is a Closed-ended Fund; and
          (c) the Units of the Fund are either:
          (i) listed and traded on an Authorised Market Institution or on an exchange regulated in a Recognised Jurisdiction; or
          (ii) Offered only by means of a Private Placement.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

          • CIR 15.1.7 Guidance

            A Closed-ended legal structure is an investment vehicle used by a Fund that does not continuously issue or redeem Units based on the net asset value of the Fund.

            Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
            [Amended] DFSA RM218/2018 (Made 22nd February 2018). [VER23/12-18]

      • Recommendation-Based Offers of Units of Foreign Funds

        • CIR 15.1.8 CIR 15.1.8

          An Authorised Firm may not make an Offer of a Unit of a Foreign Fund to a particular Client under the criteria in Article 54(1)(b) of the Law unless it has made an assessment of the suitability of the investment for that Client in accordance with COB Rule 3.4.2.

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

          • CIR 15.1.8 Guidance

            Under Article 54(1)(b) of the Law, an Authorised Firm is permitted to make an Offer of a Unit of a Foreign Fund if it has a reasonable basis for recommending that the investment in the Fund is suitable for the particular Client. To form such an opinion, the firm must undertake the assessment required under COB Rule 3.4.2.

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

      • Offer of Units of Foreign Funds under Article 54(1)(c) of the Law

        • CIR 15.1.9 CIR 15.1.9

          (1) An Authorised Firm may not make an Offer of a Unit of a Foreign Fund under the criteria in Article 54(1)(c) of the Law unless:
          (a) it has first satisfied itself on reasonable grounds that the Fund meets the criteria specified in Article 54(1)(c)(i), (ii) and (iii) of the Law; and
          (b) it makes the Offer in a manner that is in accordance with the criteria in Article 54(1)(c)(i) and (ii) of the Law.
          (2) An Authorised Firm that relies on (1) for Offering Units of a Foreign Fund must be able to demonstrate to the DFSA that it conducted adequate due diligence to ensure compliance with (1)(a).
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
          [Amended] DFSA RMI308/2021 (Made 30th June 2021). [VER31/09-21]

          • CIR 15.1.9 Guidance

            Rule 15.1.9 allows an Authorised Person to make an Offer of a Unit in a Foreign Fund where the Fund and the Offer of the Unit satisfy criteria equivalent to those applicable to an Exempt Fund or Qualified Investor Fund.

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

      • Periodic Information to DFSA

        • CIR 15.1.10

          (1) An Authorised Firm must submit to the DFSA, by the end of January each year, a report regarding any Offer or Transaction in respect of a Unit of any Domestic Fund or Foreign Fund which has been made during the preceding calendar year.
          (2) The report required under (1) must include the details of:
          (a) the name of the Fund and its Fund Manager; and
          (b) if the Fund is a Foreign Fund:
          (i) whether it is a Designated Fund and, if so, in which Recognised Jurisdiction it is authorised or approved; and
          (ii) if it is not a Designated Fund, the other criteria under which the Authorised Firm has relied when marketing the Units of the relevant Foreign Fund. .
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM168/2016 (Made 10th February 2016). [VER21/04-16]

      • Record Keeping

        • CIR 15.1.11

          (1) Without limiting any requirements under COB, an Authorised Firm must keep records that are sufficient to demonstrate due compliance with the requirements in the Rules in this chapter.
          (2) The records in (1) must be maintained for a minimum of six years.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]