CIR 12.1 Guidance
Past version: effective from 11/07/2010 - 20/08/2014
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1. Article 16(2) of the Law provides that a
Domestic Fund may be constituted as an Exempt Fund only if it meets the criteria in Article 16(4). The Exempt Fund criteria under Article 16(4) provide that such a Fund must:
a. have or intend to have 100 or fewer
b. have its
Units offered to persons only by way of a private placement;
c. have only
Unitholders each of whom meets the criteria to be classified as a Professional Client; and
d. have a minimum subscription of at least US$50,000 for a person to become a
Unitholder in the Fund.
2. Under Article 16(6), the
DFSA has the power to prescribe, among other things, the relevant criteria to be classified as a Professional Client and what activities constitute private placement.
3. Under Article 26(1) of the Law, an
Exempt Fund is required to have one of the permitted forms, i.e. an Investment Company, Investment Partnership or an Investment Trust. However, certain types of Exempt Funds which belong to a specialist class of Funds may be permitted to use only some and not all the permitted forms. See CIR Part 6 for those variations.
4. If an
Exempt Fund can no longer meet the relevant criteria to be classified as an Exempt Fund, the Fund Manager of that Fund is required, under Article 34(3), to apply for the winding up of that Fund. Alternatively, the Fund Manager may have that Fund moved to the classification of a Public Fund, which requires the satisfaction of the requirements and formalities specific to that type of Fund.
5. In addition to the requirements specific to
Exempt Funds, such a Fund must also meet, except where otherwise provided, the other requirements that are common to all Domestic Funds, which are set out in CIR Part 4 of this module.
6. Units of
Exempt Funds, like Units of Private Funds, can only be Offered by way of private placement and to Professional Clients, but must meet the additional criterion of a minimum subscription test of US$50,000. The definitions of these terms provided in relation to Private Funds in CIR Rule 11.2.2 apply equally to Exempt Funds.
Derived from RM72/2010 (Made 11th July 2010). [VER13/07-10]