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  • PIB 3.7 PIB 3.7 Expenditure Based Capital Minimum

    • PIB 3.7 Guidance

      As the Expenditure Based Capital Minimum requirements in PIB Rules 3.5.2 and 3.5.3(1) do not apply to an Authorised Firm that only Manages Venture Capital Funds, this section also does not apply to such a firm.

      Derived from DFSA RMI281/2020 (Made 28th October 2020). [VER37/11-20]

    • PIB 3.7.1 PIB 3.7.1

      This section applies to an Authorised Firm in Category 2, 3A, 3B, 3C, 3D or 4.

      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
      [Added] DFSA RMI270/2020 (Made 26th February 2020). [VER36/04-20]

      • PIB 3.7.1 Guidance

        The Expenditure Based Capital Minimum is a component of the calculation of the Capital Requirement under sections PIB 3.4 and PIB 3.5 and is a key factor in the calculation of the capital components under PIB Rule 3.2.7.

        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

    • PIB 3.7.2

      An Authorised Firm must calculate its Expenditure Based Capital Minimum as:

      (a) subject to (b), in the case of an Authorised Firm that holds Client Assets or Insurance Monies or Acts as the Administrator of an Employee Money Purchase Scheme, 18/52;
      (b) in the case of an Insurance Intermediary that holds Insurance Monies but not Client Assets, 9/52;
      (c) in the case of an Authorised Firm in Category 2, 3A, 3B or 3C (unless it holds Client Assets or Insurance Monies or Acts as the Administrator of an Employee Money Purchase Scheme), 13/52;
      (d) in the case of an Authorised Firm in Category 3D, 9/52; or
      (e) in the case of an Authorised Firm in Category 4, (unless it holds Insurance Monies or Client Assets), 6/52;

      of the Annual Audited Expenditure, calculated in accordance with PIB Rule 3.7.3.

      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
      [Amended] DFSA RM183/2016 (Made 19 June 2016). [PIB/VER25/08-16]
      [Amended] DFSA RMI263/2019 Made 18th December 2019). [VER35/01-20]
      [Amended] DFSA RMI270/2020 (Made 26th February 2020). [VER36/04-20]
      [Added] DFSA RMI312/2021 (Made 30th June 2021). [VER40/10-21]

    • Annual Audited Expenditure

      • PIB 3.7.3

        (1) Subject to PIB Rules 3.7.3A and Rule 3.7.4, Annual Audited Expenditure constitutes all expenses and losses that arise in the Authorised Firm's normal course of business in a twelve month accounting period (excluding exceptional items) which are recorded in the Authorised Firm's audited profit and loss account, less the following items (if they are included in the Authorised Firm's audited profit and loss account):
        (a) staff bonuses, except to the extent that they are non-discretionary;
        (b) employees' and directors' shares in profits, including share options, except to the extent that they are non-discretionary;
        (c) other appropriations of profits, except to the extent that they are automatic;
        (d) shared commissions and fees payable that are directly related to commissions and fees receivable, which are included with total revenue;
        (e) fees, brokerage and other charges paid to clearing houses, exchanges and intermediate brokers for the purposes of executing, registering or clearing transactions;
        (f) any expenses for which pre-payments or advances have al been made to the respective claimant (e.g. pre-paid rent, pre-paid communication charges etc.) and deducted from Capital Resources as illiquid assets;
        (g) foreign exchange losses; and
        (h) contributions to charities.
        (2) For the purposes of (1)(c), a management charge must not be treated as an appropriation of profits.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]
        [Amended] DFSA RMI250/2019 (Made 18th December 2019). [VER34/12-19]

      • PIB 3.7.3A

        If a Fund Manager uses a Fund Platform, the Annual Audited Expenditure of the Fund Manager is to be calculated as the aggregate of the expenses and losses of the Authorised Firm and the expenses and losses of the Incorporated Cell Company (the Fund Platform) calculated in accordance with Rule 3.7.4.

        Derived from DFSA RMI250/2019 (Made 18th December 2019). [VER34/12-19]

      • PIB 3.7.4

        (1) For the purposes of PIB Rule 3.7.3, an Authorised Firm must calculate its relevant Annual Audited Expenditure with reference to the Authorised Firm's most recent audited financial statements.
        (2) If the Authorised Firm's most recent audited financial statements do not represent a twelve month accounting period, it must calculate its Annual Audited Expenditure on a pro rata basis so as to produce an equivalent annual amount.
        (3) If an Authorised Firm has not completed its first twelve months of business operations, it must calculate its Annual Audited Expenditure based on forecast expenditure as reflected in the budget for the first twelve months of business operations, as submitted with its application for authorisation.
        (4)
        (a) If an Authorised Firm:
        (i) has a material change in its expenditure (either up or down); or
        (ii) has varied its authorised activities;
        it must recalculate its Annual Audited Expenditure and Expenditure Based Capital Minimum accordingly.
        (b) Where an Authorised Firm has recalculated its Annual Audited Expenditure and Expenditure Based Capital Minimum in accordance with (a), it must submit this recalculation to the DFSA within 7 days of its completion and seek agreement/approval from the DFSA. The DFSA may within 30 days of receiving the recalculation object to the recalculation and require the Authorised Firm to revise its Expenditure Based Capital Minimum.
        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]