Entire Section

  • GEN 3 GEN 3 Financial Promotions

    • GEN 3.1 GEN 3.1 Application

      • GEN 3.1.2 GEN 3.1.2

        Rules GEN 3.4.1 to GEN 3.6.3 do not apply to a Person who makes an Offer which is in accordance with the requirements relating to:

        (a) an Offer of Securities under the Markets Law and the MKT Rules; or
        (b) an Offer of Units under the Collective Investment Law 2010 and CIR Rules.
        Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]
        [Amended] DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]

        • GEN 3.1.2 Guidance

          The purpose of the exclusion in GEN Rule 3.1.2 is to ensure that a Person who makes an Offer referred to in that Rule is not subject to duplicative requirements under this chapter. The exclusion applies only to a communication by a Person making an Offer and 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

        The Rules in this chapter are made for the purposes of the Financial Promotions Prohibition in Article 41A of the Regulatory Law.

        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]

        • GEN 3.2.1 Guidance

          1. Article 41A(3) of the Regulatory Law defines a Financial Promotion as:

          "Any communication, however made, which invites or induces a Person to:
          (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 Guidance in this chapter is designed to help explain the scope of the Financial Promotions Prohibition.
          3. The definition of a Financial Promotion is very broad and encompasses the definitions of a "financial promotion" in Article 19(3) of the Collective Investment Law 2010. A Financial Promotion also includes "marketing material" as defined elsewhere in the Rulebook.
          4. The DFSA considers that a Financial Promotion may 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 Promotion would not, on its own, prevent a communication from being a Financial Promotion.
          5. A Person who is permitted to make a Financial Promotion in the DIFC pursuant to these Rules should ensure that in making such a Financial Promotion he does not breach the Financial Services Prohibition in Article 41 of the Regulatory Law.
          6. Depending on the nature and scale of the activities, if a Person makes Financial Promotions on 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 DFSA may consider such activities as constituting the carrying on of a Financial Service, such as Operating a Representative Office. The DFSA considers 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.
          Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
          [Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]
          [Amended] DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]

    • GEN 3.3 GEN 3.3 Definition of a Financial Product

      • GEN 3.3.1 GEN 3.3.1

        Pursuant to Article 41A(4) of the Regulatory Law, "financial product" in Article 41A(3)(b) of the Regulatory Law is hereby prescribed to mean:

        (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’.

          Derived from DFSA RMI309/2021 (Made 30th June 2021). [VER53/10-21]

    • GEN 3.4 GEN 3.4 Scope of the Financial Promotions Prohibition

      • GEN 3.4.1 GEN 3.4.1

        (1) A Person shall not, subject to (2) and (3), make a Financial Promotion in or from the DIFC unless that Person is an Authorised Person.
        (2) A Representative Office may make a Financial Promotion in or from the DIFC only 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 Person other than an Authorised Person may make a Financial Promotion in or from the DIFC if, and only to the extent that, the Person:
        (a) is licensed and supervised by a Financial Services Regulator in the UAE;
        (b) is a Recognised Body or External Fund Manager;
        (c) is a Reporting Entity and makes a Financial Promotion in or from the DIFC exclusively for the purpose of discharging its mandatory disclosure requirements; or
        (d) makes an exempt Financial Promotion as 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 Firm other than a Representative Office;
        (b) approved by a Representative Office and 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 Person who appears on reasonable grounds to be a Professional Client of the type specified in COB Rule 2.3.4;
        (d) made to a Person in 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 DIFC by a Person in 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.
        Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]
        [Amended] DFSA RM155/2015 (Made 9th December 2015) [VER35/02-16]
        [Amended] DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]

        • GEN 3.4.1 Guidance

          If a Person proposes to conduct Financial Promotions in or from the DIFC other than as permitted under (3) and (4), that Person should 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

        A Person does not breach the Financial Promotions Prohibition if:

        (a) the Person causes a Financial Promotion to be made in the course of providing a facility which is a mere conduit for the making of the Financial Promotion;
        (b) the Person is located outside the DIFC and makes a Financial Promotion which appears, on reasonable grounds, to be a communication which is not directed at or intended to be acted upon by a Person in 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 Promotion is not made for a commercial or business purpose.
        Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
        [Amended] DFSA RMI266/2020 (Made 26th February 2020). [VER48/04-20]

        • GEN 3.4.2 Guidance

          1. 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 Person who makes the Financial Promotion.
          2. In Rule GEN 3.4.2(b) the DFSA considers that the following non-exhaustive list of factors may each be indicative of whether or not a Financial Promotion is "intended to be acted upon by, or targeted at, Persons in the DIFC":
          i. whether it is expressed to be for a Person or type of Person in 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 Persons in the DIFC;
          iv. whether it takes place in the DIFC;
          v. whether it makes reference to the DIFC;
          vi. whether it appears in a DIFC publication;
          vii. whether it appears on a DIFC-based or related website or other media;
          viii. whether it is sent to the email of a Person in the DIFC; or
          ix. whether it contains a prominent and clear disclaimer on its face that it is not intended to be acted upon by Persons in the DIFC.
          3. The DFSA in 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 Promotion actually leads to the provision of any financial service. However, the DFSA considers 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 DFSA considers that a Person located outside the DIFC who makes a Financial Promotion into the DIFC, makes that communication in the DIFC. The DFSA considers that the prohibition in Article 41A(1) applies irrespective of where the communicator of the Financial Promotion is located.
          Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
          [Amended] DFSA RMI266/2020 (Made 26th February 2020). [VER48/04-20]

    • 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.

        Derived from DFSA RMI309/2021 (Made 30th June 2021). [VER53/10-21]

      • GEN 3.5.1 GEN 3.5.1

        (1) A Person in GEN Rule 3.4.1(3) (a) to (d) must, subject to (2), take reasonable care to ensure that any Financial Promotion it makes in or from the DIFC:
        (a) is clear, fair and not misleading;
        (b) includes the Person's name, address and regulatory status;
        (c) if it is intended only for Professional Clients, is not sent or directed to any Person who appears on reasonable grounds not to be a Professional Client, and contains a clear statement that only a Person meeting the criteria for a Professional Client should act upon it; and
        (d) which is provided to or directed at a Retail Client and 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 Promotion relates;
        (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 Person described 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 DIFC relating to the Passported Fund for which the DIFC is the Host Jurisdiction,
        is not required to comply with (1) provided that in making the Financial Promotion that Person complies with the requirements of the relevant Financial Services Regulator in the UAE which relate to Financial Promotions.
        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 RM234/2019 (Made 20th February 2019). [VER43/02-19]

        • GEN 3.5.1 Guidance

          1. In presenting information relating to past performance of a financial product or financial service, a Person should use a reputable independent actuarial, financial or statistical reporting service provider.
          2. The effect of GEN Rule 3.5.1(2) is that a Person who is licensed and regulated by a Financial Services Regulator in the UAE is 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 Fund where the DIFC is a Host Jurisdiction. However, when making any other Financial Promotion to 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 Person is complying with the financial promotion requirements of its Financial Services Regulator in the UAE.
          Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]
          [Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]
          [Amended] DFSA RM234/2019 (Made 20th February 2019). [VER43/02-19]

      • GEN 3.5.2

        A Person must 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.

        Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]

      • 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.
        Derived from DFSA RMI297/2021 (Made 21st April 2021). [VER52/09-21]
        Derived from DFSA RMI305/2021 (Made 30th June 2021). [VER52/09-21]

        • GEN 3.5.3 Guidance

          1. 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.
          Derived from DFSA RMI297/2021 (Made 21st April 2021). [VER52/09-21]
          Derived from DFSA RMI305/2021 (Made 30th June 2021). [VER52/09-21]

      • GEN 3.5.4

        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.

        Derived from DFSA RMI309/2021 (Made 30th June 2021). [VER53/10-21]

    • GEN 3.6 GEN 3.6 Approval of Financial Promotions by an Authorised Firm

      • GEN 3.6.1

        For the purposes of GEN Rule 3.4.1(4)(a) and (b), an Authorised Firm must not approve a Financial Promotion unless:

        (a) the Financial Promotion includes a clear and prominent statement that it has been "approved by" the relevant Authorised Firm; and
        (b) the Financial Promotion is made in accordance with the requirements in GEN Section 3.5.
        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]

      • GEN 3.6.2

        An Authorised Firm must not approve a Financial Promotion which is directed at a Person who appears on reasonable grounds to be a Retail Client unless:

        (a) it has an endorsement on its License which permits it to carry on a Financial Service with or for a Retail Client; and
        (b) the scope of its License includes the Financial Service and, if applicable, the particular financial product, to which the Financial Promotion relates.
        Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]

      • GEN 3.6.3 GEN 3.6.3

        An Authorised Firm must ensure that a Financial Promotion it has approved complies with the requirements in this chapter on an on-going basis.

        Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]

        • GEN 3.6.3 Guidance

          An Authorised Firm which proposes to approve a Financial Promotion where 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 Rules in relation to the Financial Promotion or its approval.

          Added in accordance with Notice of Amendments to Legislation April 2011 [VER27/02-11]