GEN 3 GEN 3 Financial Promotions
GEN 3.1 GEN 3.1 Application
This chapter applies to any
Personwho approves, makes or intends to make a Financial Promotionin or from the DIFC.
GEN 3.1.2 GEN 3.1.2
GEN 3.1.2 Guidance
The purpose of the exclusion in GEN Rule 3.1.2 is to ensure that a
Personwho makes an Offerreferred to in that Rule is not subject to duplicative requirements under this chapter. The exclusion applies only to a communication by a Personmaking an Offerand if that communication is subject to requirements specified in the relevant laws or Rules.Derived from DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]
GEN 3.2 GEN 3.2 Overview
GEN 3.2.1 GEN 3.2.1
Rulesin this chapter are made for the purposes of the Financial Promotions Prohibitionin Article 41A of the Regulatory Law.
GEN 3.2.1 Guidance1. Article 41A(3) of the Regulatory Law defines a
"Any communication, however made, which invites or induces a
Personto:(a) enter into, or offer to enter into, an agreement in relation to the provision of a financial service; or(b) exercise any rights conferred by a financial product or acquire, dispose of, underwrite or convert a financial product."2. The Guidancein this chapter is designed to help explain the scope of the Financial Promotions Prohibition.3. The definition of a Financial Promotionis very broad and encompasses the definitions of a "financial promotion" in Article 19(3) of the Collective Investment Law 2010. A Financial Promotionalso includes "marketing material" as defined elsewhere in the Rulebook.4. The DFSAconsiders that a Financial Promotionmay be made in any manner and by any form including, but not limited to, an oral, electronic or written communication and includes an advertisement, or any form of promotion or marketing. A disclaimer stating that a communication is not a Financial Promotionwould not, on its own, prevent a communication from being a Financial Promotion.5. A Personwho is permitted to make a Financial Promotionin the DIFCpursuant to these Rulesshould ensure that in making such a Financial Promotionhe does not breach the Financial Services Prohibitionin Article 41 of the Regulatory Law.6. Depending on the nature and scale of the activities, if a Personmakes Financial Promotionson a regular basis or for a prolonged period while physically located in the DIFC, for example by way of a booth, meetings or conferences, the DFSAmay consider such activities as constituting the carrying on of a Financial Service, such as Operating a Representative Office. The DFSAconsiders that in the context of Financial Promotions, "a regular basis" would be anything more than occasional and "a prolonged period" would usually be anything more than 3 consecutive days.
GEN 3.3 GEN 3.3 Definition of a Financial Product
GEN 3.3.1 GEN 3.3.1(a) an Investment;(b) a Credit Facility;(c) a Deposit;(d) a Profit Sharing Investment Account;(e) a Contract of Insurance;(f) a Crowdfunding Loan Agreement;(g) a right under an Employee Money Purchase Scheme; or(h) a right or interest in a pension, superannuation, retirement or gratuity scheme or arrangement, or a broadly similar scheme or arrangement.Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
[Amended] DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]
[Amended] DFSA RMI201/2017 (Made 14th June 2017). [VER40/08-17]
[Amended] DFSA RMI260/2019 (Made 18th December 2019). [VER47/01-20]
[Amended] DFSA RMI301/2021 (Made 30th June 2021). [VER52/09-21]
GEN 3.3.1 Guidance
Examples of other names that, when used in any marketing material or other Financial Promotion, might suggest or imply that a Token is an Investment under GEN Rule 3.3.1(b), include terms such as ‘share token’, ‘bond token’, ‘futures token’ or ‘option token’.
GEN 3.4 GEN 3.4 Scope of the Financial Promotions Prohibition
GEN 3.4.1 GEN 3.4.1(1) A
Personshall not, subject to (2) and (3), make a Financial Promotionin or from the DIFCunless that Personis an Authorised Person.(2) A Representative Officemay make a Financial Promotionin or from the DIFConly in relation to a financial service or financial product offered:(a) in a jurisdiction other than the DIFC; and(b) by a related party (as defined in GEN Rule 2.26.1(3)) of the Representative Office.(3) A Personother than an Authorised Personmay make a Financial Promotionin or from the DIFCif, and only to the extent that, the Person:(a) is licensed and supervised by a Financial Services Regulatorin the UAE;(b) is a Recognised Bodyor External Fund Manager;(c) is a Reporting Entityand makes a Financial Promotionin or from the DIFCexclusively for the purpose of discharging its mandatory disclosure requirements; or(d) makes an exempt Financial Promotionas specified in (4).(4) For the purposes of (3)(d), a communication is an "exempt Financial Promotion" if it is:(a) approved by an Authorised Firmother than a Representative Office;(b) approved by a Representative Officeand it is a communication relating to a financial service or financial product offered by a related party (as defined in GEN Rule 2.26.1(3)) of the Representative Office;(c) directed at and capable of acceptance exclusively by a Personwho appears on reasonable grounds to be a Professional Clientof the type specified in COB Rule 2.3.4;(d) made to a Personin the DIFC(the "recipient") as a result of an unsolicited request by the recipient to receive the Financial Promotion;(e) made or issued by or on behalf of a government or noncommercial government entity; or(f) made in the DIFCby a Personin the course of providing legal or accountancy services and may reasonably be regarded as incidental to and a necessary part of the provision of such services.
GEN 3.4.1 Guidance
Personproposes to conduct Financial Promotionsin or from the DIFCother than as permitted under (3) and (4), that Personshould consider obtaining an appropriate Licence.Derived from DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]
GEN 3.4.2 GEN 3.4.2
Persondoes not breach the Financial Promotions Prohibitionif:(a) the Personcauses a Financial Promotionto be made in the course of providing a facility which is a mere conduit for the making of the Financial Promotion;(b) the Personis located outside the DIFCand makes a Financial Promotionwhich appears, on reasonable grounds, to be a communication which is not directed at or intended to be acted upon by a Personin the DIFC;(c) the Person makes a Financial Promotion relating to an Employee Share Scheme and that Person or another entity in its Group is the employer to whom the scheme relates; or(d) the Financial Promotionis not made for a commercial or business purpose.
GEN 3.4.2 Guidance1. Examples of a mere conduit would include a newspaper or magazine, a website carrying third-party banner ads, a postman or courier, a person paid to hand out promotional material to the public and an event venue - unless in each case they were the originator i.e the
Personwho makes the Financial Promotion.2. In Rule GEN 3.4.2(b) the DFSAconsiders that the following non-exhaustive list of factors may each be indicative of whether or not a Financial Promotionis "intended to be acted upon by, or targeted at, Personsin the DIFC":i. whether it is expressed to be for a Personor type of Personin the DIFC;ii. whether it is sent to an address (including a P.O. Box) in the DIFC;iii. whether it is physically distributed to Personsin the DIFC;iv. whether it takes place in the DIFC;v. whether it makes reference to the DIFC;vi. whether it appears in a DIFCpublication;vii. whether it appears on a DIFC-based or related website or other media;viii. whether it is sent to the email of a Personin the DIFC; orix. whether it contains a prominent and clear disclaimer on its face that it is not intended to be acted upon by Personsin the DIFC.3. The DFSAin applying GEN Rule 3.4.2(d) will generally consider that for a communication to be made "for a commercial or business purpose" there must be a commercial element to the Financial Promotion, whether or not the Financial Promotionactually leads to the provision of any financial service. However, the DFSAconsiders that "for a commercial or business purpose" requires a commercial or business interest on the part of the communicator and the nature of the communicator's business need not be related to any specific financial service.4. The DFSAconsiders that a Personlocated outside the DIFCwho makes a Financial Promotioninto the DIFC, makes that communication in the DIFC. The DFSAconsiders that the prohibition in Article 41A(1) applies irrespective of where the communicator of the Financial Promotionis located.
GEN 3.5 GEN 3.5 Additional Rules for Financial Promotions
GEN 3.5.4 Guidance
A Person making or approving a Financial Promotion relating to a Token referred to in GEN Rule 3.5.4 will also need to ensure that other aspects of the Financial Promotion are clear, fair and not misleading.
GEN 3.5.1 GEN 3.5.1(1) A
Personin GEN Rule 3.4.1(3) (a) to (d) must, subject to (2), take reasonable care to ensure that any Financial Promotionit makes in or from the DIFC:(a) is clear, fair and not misleading;(b) includes the Person'sname, address and regulatory status;(c) if it is intended only for Professional Clients, is not sent or directed to any Personwho appears on reasonable grounds not to be a Professional Client, and contains a clear statement that only a Personmeeting the criteria for a Professional Clientshould act upon it; and(d) which is provided to or directed at a Retail Clientand contains any information or representation relating to past performance, or any forecast based on past performance or on any other assumptions:(i) presents a balanced view of the financial products or financial services to which the Financial Promotionrelates;(ii) identifies, in an easy to understand manner, the information from which the past performance or forecast is derived and how any key facts and assumptions used in that context are drawn; and(iii) contains a prominent warning that past performance is not necessarily a reliable indicator of future performance.(2) A Persondescribed in GEN Rule 3.4.1(3)(a) who makes a Financial Promotion:(a) to an existing client in the DIFC; or(b) to a prospective client in the DIFCrelating to the Passported Fundfor which the DIFCis the Host Jurisdiction,is not required to comply with (1) provided that in making the Financial Promotionthat Personcomplies with the requirements of the relevant Financial Services Regulatorin the UAEwhich relate to Financial Promotions.
GEN 3.5.1 Guidance1. In presenting information relating to past performance of a financial product or financial service, a
Personshould use a reputable independent actuarial, financial or statistical reporting service provider.2. The effect of GEN Rule 3.5.1(2) is that a Personwho is licensed and regulated by a Financial Services Regulatorin the UAEis not required to comply with GEN Rule 3.5.1(1) when communicating with an existing client or with a prospective client in relation to a Passported Fundwhere the DIFCis a Host Jurisdiction. However, when making any other Financial Promotionto a prospective client in the DIFC, GEN Rule 3.5.1(1) does apply to such Persons, as do the prohibitions on the making of offers contained in the Markets Law 2012 and Collective Investment Law 2010 respectively. The exclusion in GEN Rule 3.5.1(2) applies only if the Personis complying with the financial promotion requirements of its Financial Services Regulatorin the UAE.
Personmust not, in any Financial Promotion, attempt to limit or avoid any duty or liability it may have under any DFSA-administered laws or the Rules.
GEN 3.5.3 GEN 3.5.3
A Person must not make a Financial Promotion, in or from the DIFC, in relation to a Restricted Speculative Investment offered by a Person outside the DIFC unless the Person making the Financial Promotion is reasonably satisfied that the issuer or provider of the Restricted Speculative Investment is:(a) a Regulated Financial Institution; and(b) subject to substantially similar requirements to the requirements applicable to an Authorised Firm under COB section 6.16.
GEN 3.5.3 Guidance1. A communication that is an ‘exempt financial promotion” under GEN Rule 3.4.1(4) is still permitted.2. A Person making a Financial Promotion relating to a Restricted Speculative Investment should be able to demonstrate to the DFSA the basis upon which it was reasonably satisfied that the issuer or provider of the Restricted Speculative Investment was subject to substantially similar requirements to those applicable under COB section 6.16.
A Person must not make or approve a Financial Promotion that refers to a Token as an ‘investment token’, ‘security token’, ‘derivative token’ or uses any other name that suggests or implies it is an Investment or a particular type of Investment, unless the Person reasonably believes that it is such an Investment, or the particular type of Investment, as defined in GEN App 2.
GEN 3.6 GEN 3.6 Approval of Financial Promotions by an Authorised Firm
For the purposes of GEN Rule 3.4.1(4)(a) and (b), an
Authorised Firmmust not approve a Financial Promotionunless:(a) the Financial Promotionincludes a clear and prominent statement that it has been "approved by" the relevant Authorised Firm; and(b) the Financial Promotionis made in accordance with the requirements in GEN Section 3.5.
Authorised Firmmust not approve a Financial Promotionwhich is directed at a Personwho appears on reasonable grounds to be a Retail Clientunless:(a) it has an endorsement on its Licensewhich permits it to carry on a Financial Servicewith or for a Retail Client; and(b) the scope of its Licenseincludes the Financial Serviceand, if applicable, the particular financial product, to which the Financial Promotionrelates.
GEN 3.6.3 GEN 3.6.3
Authorised Firmmust ensure that a Financial Promotionit has approved complies with the requirements in this chapter on an on-going basis.
GEN 3.6.3 Guidance
Authorised Firmwhich proposes to approve a Financial Promotionwhere all or part of that promotion will be real time, such as a live event, will need to consider whether it is able to comply effectively with any relevant Rulesin relation to the Financial Promotionor its approval.