CIR 3.1.7 CIR 3.1.7
Fundis a Property Fundif its main purpose is investment in Real Propertyand in Securitiesissued by Bodies Corporatewhose main activities are investing in, dealing in, developing or redeveloping Real Property.
CIR 3.1.7 Guidance
1. Whether an arrangement, particularly if it is a closed-ended company which invests in
Real Property, is a Fundor a commercial company is not always an easy question to answer. The following guidance is intended to help answer this question. The examples are indicative only and not exhaustive. If a property company is in doubt as to whether it is an investment company or a commercial company, it may seek further clarification from the DFSA.
2. Please also refer to the Guidance under CIR Rule 2.1.10 for the general distinction between
Collective Investment Fundsand other commercial arrangements.Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].
3. Applying the indicators under CIR Rule 2.1.10, the
DFSAconsiders the following type of closed-ended property companies to be commercial companies, rather than investment companies:a. a property developer or a property construction company which is in the business of developing and constructing (i.e. creating) the property;b. a real estate company which operates a business of selling or leasing real estate for its customers;c. a property management or maintenance company – which generates profits through fees charged for those services; andd. a property valuation service provider – which is a property related service provider.
4. In contrast, there are certain types of closed-ended companies which directly or indirectly invest in
Real Propertyand therefore are clearly investment companies. For example a company which:a. raises capital from investors to invest in real estate, on the basis that the real estate will be selected or bought and sold on the basis of specified criteria, and profits generated are distributed as specified; orb. invests in Securities (such as shares, debentures or units) of other real estate companies or property developers to generate profits through returns on such investments.Derived from DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18].