Part 2: Part 2: Collective Investment Funds
17. Operating prohibitions(1) A person shall not:(a) operate a Foreign Fund from the DIFC; or(b) operate a Domestic Fund from outside the DIFC.(2) A person shall not, establish or otherwise operate a Domestic Fund in the DIFC unless that person is:(a) a body corporate; and(b) an Authorised Firm whose Licence authorises it to operate a Fund of that specific type or class.(3) For the purposes of this Law, a person "operates" a Fund if he:(a) is responsible for the management of the property held for or within a Fund under the Fund's Constitution whether or not, he delegates any activity which is prescribed in rules made for the purposes of Article 41(2) of the Regulatory Law 2004 as a Financial Service in respect of such property; and(b) establishes, operates or winds up the Fund.(4) For the purpose of Article 17(3), a person is not operating a Fund merely because:(a) he is acting as an agent or employee of an Operator; or(b) he is winding up or taking steps to wind up or dissolve the Fund or remedy a defect that led to the Fund being deregistered.
18. Marketing prohibitions(1) A person shall not, in or from the DIFC, offer or sell a Unit in a Domestic or Foreign Fund unless that person is an Authorised Firm whose Licence authorises it to do so.(2) A person shall not, in or from the DIFC, offer or sell a Unit in a Foreign Fund unless:(a) the Fund is a Designated Fund; or(b) the Foreign Fund has appointed an investment manager and eligible custodian both of whom are authorised and supervised by a Regulator in a Recognised Jurisdiction.(3) A person shall not, in or from the DIFC, offer, issue or sell a Unit in a Domestic Fund which is a Public Fund unless the Fund has been registered by the DFSA.(4) A person shall not, in or from the DIFC, offer, issue or sell a Unit in a Domestic Fund which is a Private Fund unless it is by means only of private placement.(5) The DFSA shall make Rules prescribing the criteria to be an investment manager and for a custodian to be an eligible custodian.(6) The DFSA may make Rules adding further requirements, limitations or making different provision for different cases in relation to the offering and selling of Units in Foreign Funds.(7) Such Rules, in relation to specified types or classes of Foreign Funds, may require such Funds to be listed on an exchange or to be closed-ended structures.
19. Marketing Rules(1) The DFSA may make Rules prescribing requirements relating to the offering, issuing or selling, in or from the DIFC, of a Unit in a Fund including prescribing the contents of any communication which is an invitation to participate in a Fund and the manner in which such communication may be made and to whom.(2) Such Rules may, in relation to specified types or classes of Foreign Funds, prescribe contents requirements and may specify criteria that an offer document produced in accordance with the legislation applicable in a jurisdiction other than the DIFC to be taken to comply with the requirements of this Law and any Rules made hereunder.(3) The DFSA may also make Rules providing the circumstances in which certain persons or categories of person may market a Fund by promoting the Islamic quality of the Fund by using the words Shari'a compliant or Islamic in the name of the Fund or otherwise holding out that the Fund is in any way Islamic or Shari'a compliant.
20. Recognition and designation(1) The DFSA may recognise any country or territory and designate any type of Fund constituted and domiciled in such a country or territory for the purposes of this Law.(2) The DFSA may not recognise any country or territory nor designate any Fund in that country or territory for the purposes of this Article unless it is satisfied:(a) that the law and practice under which the relevant Foreign Funds are authorised or approved and supervised in that country or territory is broadly equivalent to the DFSA's regulatory regime as it applies to Domestic Funds;(b) that the law and practice under which investment managers and eligible custodians are authorised or licenced and supervised in that country or territory is broadly equivalent to the DFSA's regulatory regime as it applies to such persons; and(c) that adequate arrangements exist, or will exist, for co-operation between the Regulator in that country or territory, responsible for such authorisation, licensing, approval and supervision and the DFSA.(3) Any country or territory recognised under this Article shall be a "Recognised Jurisdiction" and the DFSA shall publish a list of such jurisdictions by means of a written notice. The DFSA may remove from that list any jurisdiction or Fund where the DFSA is no longer satisfied that the jurisdiction or Fund meets the criteria in Article 20(2)(4) Any Foreign Fund designated under this Article shall be a "Designated Fund" and a description of such a Fund shall be included in the list referred to in Article 20(3).(5) Any notice issued under this Article may contain such limitations or restrictions as the DFSA considers appropriate and make different provisions for different cases.
21. General requirements(1) Every Domestic Fund shall have a written Constitution which complies with the Rules made for the purposes of this Law.(2) Any provision in the Constitution of a Domestic Fund is void in so far as it would have the effect of exempting the Fund, the Trustee or the Operator from liability for any failure to discharge its obligations under this Law, the Regulatory Law 2004, the Law Regulating Islamic Financial Business 2004, the Investment Trust Law 2006 or any rules made under any of these laws.(3) Every Domestic Fund shall employ single pricing in relation to the price of its Units and Unitholders shall be entitled to have their Units redeemed by the Operator of the Fund at a price related to the net asset value of the property to which the Units relate calculated in accordance with the Rules made under this Law.(4) The purpose of a Fund must be reasonably capable of being successfully carried into effect.(5) The Operator of a Domestic Fund shall appoint an auditor in accordance with Part 5 and, except in respect of a Fund which is an Investment Trust, appoint an eligible person with whom the legal title of the Fund's property is registered.(6) The DFSA shall, for the purposes of Article 21(5), make Rules prescribing criteria that a person must meet to be considered "eligible" and such Rules may permit the Operator to be considered "eligible" for the purposes of specified types of Fund.(7) If in the opinion of the DFSA, the name of a Fund or of a sub-fund of a Fund conflicts with the name of another Fund or is undesirable or misleading it may direct the Operator to change the name of the Fund.(8) The DFSA may make Rules requiring specified types, or classes of Domestic Funds to be open-ended or closed-ended or listed on an Authorised Market Institution. Such Rules may also prohibit specified types or classes of Domestic Funds from listing on an exchange.
22. Misconduct in relation to Funds(1) A person shall not make an offer of Units if there is:(a) a misleading or deceptive statement in:(i) the relevant Prospectus;(ii) any application form that accompanies the relevant Prospectus; or(iii) any other document that relates to the offer, or the application form;(b) an omission from any document specified in (a) of information that is required to be stated or that is necessary to make the statement not misleading or deceptive; or(c) a new circumstance that under the Law or the Rules requires a supplementary Prospectus to be published or issued and this has not been published or issued.(2) A person shall not, in or from the DIFC, make a misleading or deceptive statement in relation to a Fund or in connection with an offer of Units, whether in the DIFC or elsewhere.(3) This Article does not apply to conduct which occurs outside the DIFC unless the conduct affects the DIFC markets or users of the DIFC markets.
23. Defences to misconduct(1) A person does not commit a contravention of Article 22, if that person proves that he:(a) made all inquiries that were reasonable in the circumstances; and(b) after doing so, believed on reasonable grounds that the statement or omission was not misleading or deceptive.(2) A person does not commit a contravention of Article 22, if the person proves that he placed reasonable reliance on information given to him by:(a) if the person is not a natural person, someone other than the Operator or any other member of the Governing Body, employee or agent of the person; or(b) if the person is a natural person, someone other than an employee or agent of the individual.(3) For the purposes of Article 23(2), a person does not become an agent of another person simply because he performs a particular professional or advisory function for the person.