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 theDFSA to prescribe additional circumstances to those contained in the Law in relation to when aFund may be wound up. This section contains suchRules .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, theTrustee of aDomestic Fund and, if theFund is anUmbrella Fund using the form of aProtected Cell Company , in respect of each cell as though each cell is a separateFund .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.
CIR 17.1.2
Pursuant to Article 61(c) of the Law, the
DFSA prescribes in this chapter the additional circumstances in which aDomestic 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, theFund Manager and, if appointed theTrustee must cease to issue, sell, cancel or redeemUnits in theFund or to invest or borrow for theFund and proceed to wind up theFund in accordance with the Law and this section.(2) The events referred to in (1) are:(a) in response to a request made to theDFSA by theTrustee ,Fund Manager or other member of itsGoverning Body for the removal of aFund from the list of registeredFunds , theDFSA has agreed, albeit subject to there being no material change in any relevant factor, that, on the conclusion of the winding up of theFund , theDFSA will accede to that request;(b) the expiration of any period specified in theConstitution as the period at the end of which theFund is to terminate; or(c) the effective date of a duly approved transfer scheme, which is to result in theFund 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 thisRule are in addition to the grounds specified in the Law. Under Article 64(1)(a) and (b) of the Law, aFund 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 aDomestic Fund which is anExempt Fund or aQualified Investor Fund can no longer meet the relevant conditions to be classified as aFund of that type, theFund Manager of such aFund must either register it as aPublic Fund (or alternatively reconstitute it as anExempt Fund if it is aQualified 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), theFund Manager and if appointed theTrustee of theFund must wind up theFund 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) theFund manager orTrustee must, as soon as practicable after theFund falls to be wound up, realise theFund Property ;(b) after paying therefrom or retaining adequate provision for all liabilities properly so payable and for the costs of the winding up, theFund Manager must distribute the proceeds of that realisation to theUnitholders (upon production by them of such evidence as theFund Manager may reasonably require as to their entitlement thereto) proportionately to their respective interests in theFund 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 theFund Manager orTrustee after the expiration of twelve months from the date on which they became payable must be paid by theFund Manager orTrustee into court, subject to theFund Manager orTrustee having a right to retain any expenses incurred by it relating to that payment.(3) Where theFund Manager orTrustee and one or moreUnitholders agree, the requirement of (2) to realise theFund Property does not apply to that part of the property proportionate to the entitlement of suchUnitholders . TheFund Manager orTrustee may distribute that part in the form of property, after making adjustments or retaining provisions as appear to theFund Manager orTrustee appropriate for ensuring that, that or thoseUnitholders bear a proportional share of the liabilities and costs.(4) TheFund Manager orTrustee must as soon as practical after the winding up or termination has commenced:(a) if theUnitholders 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 theFund has a website, on theFund'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, theFund Manager orTrustee must notify theDFSA in writing of that fact and at the same time theFund Manager orTrustee must require theDFSA 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 aFund 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 theFund Manager , after consulting theAuditor and theDFSA , has taken reasonable care to determine that timely production of an annual or half-yearly report is not required in the interests of theUnitholders or theDFSA , theFund Manager orTrustee may direct that immediate production of the report by theAuditor 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 theFund Manager must be published and sent to eachPerson who was aUnitholder 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 theFund Manager of aFund believes on reasonable grounds that theFund is not commercially viable or the purpose of theFund cannot be accomplished, theFund Manager must notify theDFSA and include the information specified in (2).(2) The information referred to in (1) is:(a) name of theFund ;(b) size and type ofFund ;(c) number ofUnitholders ;(d) whether dealing in theFund's Units has been suspended;(e) why the request is being made;(f) what consideration has been given to theFund entering into a transfer scheme with anotherFund and the reasons why a transfer scheme is not possible;(g)i) whetherUnitholders 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 toUnitholders if it is anUmbrella Fund ;(i) details of any proposed rebate of charges to be made toUnitholders who recently purchasedUnits ;(j) where the costs of winding-up will fall;(k) a statement obtained from theTrustee orEligible Custodian or otherPersons providing the oversight function if theFund is aPublic Fund or a statement from theAuditor if theFund is anExempt Fund or aQualified Investor Fund :(i) that theFund 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 theFund not needing to wind up;(iii) confirmation that theFund Manager has carried out its function and duties in accordance with the Law andRules ; and(iv) whether theFund'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 theDFSA's consideration.(3) TheDFSA 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]