Entire Section

  • CIR 17 CIR 17 Winding Up of Domestic Funds

    • CIR 17 Guidance

      Part 8 of the Law sets out all the provisions relating to transfer schemes and the winding up of Funds. Article 61(c) enables the DFSA to prescribe additional circumstances to those contained in the Law in relation to when a Fund may be wound up. This section contains such Rules.

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

    • CIR 17.1 CIR 17.1 Application

      • CIR 17.1.1 CIR 17.1.1

        This Chapter applies to a Fund Manager and, where appointed, the Trustee of a Domestic Fund and, if the Fund is an Umbrella Fund using the form of a Protected Cell Company, in respect of each cell as though each cell is a separate Fund.

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

        • CIR 17.1.1 Guidance

          Guidance

          Additional requirements in the ICC Regulations apply to the winding up of a Fund that is an Incorporated Cell of an Incorporated Cell Company (ICC). In particular, the ICC Regulations provide that an ICC shall not be wound up until after all of its Incorporated Cells are either transferred or converted into another Company or wound up.

          Added from DFSA RMI248/2019 (Made 18th December 2019) [VER26/12-19].

      • CIR 17.1.2

        Pursuant to Article 61(c) of the Law, the DFSA prescribes in this chapter the additional circumstances in which a Domestic Fund may be wound up.

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

      • CIR 17.1.3 CIR 17.1.3

        (1) Upon the happening of any of the events specified in (2) and not otherwise, the Fund Manager and, if appointed the Trustee must cease to issue, sell, cancel or redeem Units in the Fund or to invest or borrow for the Fund and proceed to wind up the Fund in accordance with the Law and this section.
        (2) The events referred to in (1) are:
        (a) in response to a request made to the DFSA by the Trustee, Fund Manager or other member of its Governing Body for the removal of a Fund from the list of registered Funds, the DFSA has agreed, albeit subject to there being no material change in any relevant factor, that, on the conclusion of the winding up of the Fund, the DFSA will accede to that request;
        (b) the expiration of any period specified in the Constitution as the period at the end of which the Fund is to terminate; or
        (c) the effective date of a duly approved transfer scheme, which is to result in the Fund that is subject to the transfer scheme being left with no property.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

        • CIR 17.1.3 Guidance

          The grounds for winding up of a Domestic Fund under this Rule are in addition to the grounds specified in the Law. Under Article 64(1)(a) and (b) of the Law, a Fund which is no longer commercially viable or the purpose of which is either al accomplished or cannot be accomplished can be wound up. Similarly, under Article 34(3) of the Law, if a Domestic Fund which is an Exempt Fund or a Qualified Investor Fund can no longer meet the relevant conditions to be classified as a Fund of that type, the Fund Manager of such a Fund must either register it as a Public Fund (or alternatively reconstitute it as an Exempt Fund if it is a Qualified Investor Fund) or it must be wound up.

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

      • CIR 17.1.4

        (1) In a case falling within CIR Rule 17.1.3(2)(c), the Fund Manager and if appointed the Trustee of the Fund must wind up the Fund in accordance with the approved transfer scheme.
        (2) In any other case falling within CIR Rule 17.1.4 or specified in Article 64(1) or Part 8 of the Law:
        (a) the Fund manager or Trustee must, as soon as practicable after the Fund falls to be wound up, realise the Fund Property;
        (b) after paying therefrom or retaining adequate provision for all liabilities properly so payable and for the costs of the winding up, the Fund Manager must distribute the proceeds of that realisation to the Unitholders (upon production by them of such evidence as the Fund Manager may reasonably require as to their entitlement thereto) proportionately to their respective interests in the Fund as at the date of the relevant event referred to in CIR Rule 17.1.3; and
        (c) any unclaimed net proceeds or other cash (including unclaimed distribution payments) held by the Fund Manager or Trustee after the expiration of twelve months from the date on which they became payable must be paid by the Fund Manager or Trustee into court, subject to the Fund Manager or Trustee having a right to retain any expenses incurred by it relating to that payment.
        (3) Where the Fund Manager or Trustee and one or more Unitholders agree, the requirement of (2) to realise the Fund Property does not apply to that part of the property proportionate to the entitlement of such Unitholders. The Fund Manager or Trustee may distribute that part in the form of property, after making adjustments or retaining provisions as appear to the Fund Manager or Trustee appropriate for ensuring that, that or those Unitholders bear a proportional share of the liabilities and costs.
        (4) The Fund Manager or Trustee must as soon as practical after the winding up or termination has commenced:
        (a) if the Unitholders have not initiated the winding up under Article 63 of the Law, inform the Unitholders of the winding up or termination; and
        (b) publish a notice of the winding up or termination in one English and one Arabic language national newspaper and if the Fund has a website, on the Fund's website.
        (5) On completion of the winding up in respect of the events referred to in CIR Rule 17.1.3(2)(b) or (c) or Article 64(1) of the Law, the Fund Manager or Trustee must notify the DFSA in writing of that fact and at the same time the Fund Manager or Trustee must require the DFSA to revoke the relevant registration.
        Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Accounting and Reports During Winding Up

        • CIR 17.1.5

          (1) Subject to any order of the court, and subject to (2) and (3), while a Fund is being wound up, whether under CIR Rule 17.1.3 or otherwise:
          (a) the annual and half-yearly accounting periods continue to run;
          (b) the provisions concerning annual and interim allocation of income continue to apply; and
          (c) annual and half-yearly reports continue to be required.
          (2) Where for any annual or half-yearly accounting period the Fund Manager, after consulting the Auditor and the DFSA, has taken reasonable care to determine that timely production of an annual or half-yearly report is not required in the interests of the Unitholders or the DFSA, the Fund Manager or Trustee may direct that immediate production of the report by the Auditor may be dispensed with.
          (3) The period in question in (2) must be reported on together with the following period in the next report prepared for the purposes of (1) or (4).
          (4) At the conclusion of the winding up, the accounting period then running is regarded as the final annual accounting period.
          (5) Within two calendar months after the end of the final accounting period, the annual reports of the Fund Manager must be published and sent to each Person who was a Unitholder immediately before the end of the final accounting period.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]

      • Funds that are not Commercially Viable

        • CIR 17.1.6

          (1) If the Fund Manager of a Fund believes on reasonable grounds that the Fund is not commercially viable or the purpose of the Fund cannot be accomplished, the Fund Manager must notify the DFSA and include the information specified in (2).
          (2) The information referred to in (1) is:
          (a) name of the Fund;
          (b) size and type of Fund;
          (c) number of Unitholders;
          (d) whether dealing in the Fund's Units has been suspended;
          (e) why the request is being made;
          (f) what consideration has been given to the Fund entering into a transfer scheme with another Fund and the reasons why a transfer scheme is not possible;
          (g)
          i) whether Unitholders have been informed of the intention to seek winding up or revocation; and
          (ii) if not, when they will be informed;
          (h) details of any proposed preferential switching rights offered or to be offered to Unitholders if it is an Umbrella Fund;
          (i) details of any proposed rebate of charges to be made to Unitholders who recently purchased Units;
          (j) where the costs of winding-up will fall;
          (k) a statement obtained from the Trustee or Eligible Custodian or other Persons providing the oversight function if the Fund is a Public Fund or a statement from the Auditor if the Fund is an Exempt Fund or a Qualified Investor Fund:
          (i) that the Fund Manager, having taken reasonable care in considering the matter, is certain that a transfer scheme is not practical;
          (ii) an explanation of what steps have been considered that would result in the Fund not needing to wind up;
          (iii) confirmation that the Fund Manager has carried out its function and duties in accordance with the Law and Rules; and
          (iv) whether the Fund's investment and borrowing powers have been exceeded;
          (l) the preferred date for the commencement of the winding up; and
          (m) any additional information considered relevant to the DFSA's consideration.
          (3) The DFSA may request further information after receipt of the notification.
          Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]
          [Amended] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]