CIR 15.1 Guidance
1. Rules CIR 4.1.3 and CIR 4.1.4 exclude from being treated as
Offers any Transactions undertaken by an Authorised Firm where such Transactions are Execution-only Transactions, or Transactions for the purposes of managing a Discretionary Portfolio for a Client, or for the purposes of redeeming a Unit of a Fund for a Client. Similarly, an offer made by an Authorised Firm to a Market Counterparty is also excluded from being an Offer. Finally, CIR Rule 4.1.5 excludes an offer of a Unit of a Passported Fund under the Fund Protocol, where the DIFC is the Host Jurisdiction, from being treated as an Offer. This is because such an offer will be subject to the requirements of the Home Jurisdiction. As a result, such excluded Transactions and offers do not attract the marketing prohibition in Article 50 of the Law and the requirements in both the Law and this module relating to the marketing of Units.
2. Article 54(1) of the Law prohibits the
Offer of Units of a Foreign Fund unless one of three specified criteria in that Article are met, i.e.
Foreign Fund meets either:
i. the criteria for a
Designated Fund in a Recognised Jurisdiction; or
ii. other criteria prescribed in the
Authorised Firm has a reasonable basis for recommending the Unit of the Foreign Fund as suitable for the particular Client to whom the Offer is made; or
Foreign Fund is a type of Fund that:
i. has its
Units offered to persons only by way of a private placement;
ii. has its
Units offered to persons who meet the criteria to be classified as Professional Clients; and
iii. requires an initial subscription of at least US$50,000 to be paid by a person to become a
Unitholder in the Fund.
3. Under Article 54(2) of the Law, the
DFSA has the power to prescribe any additional criteria, requirements or conditions that apply to the Offer of Units of a Foreign Fund, including disclosure that must be included in a Prospectus and the legal form and structure of the Fund such as being Open-ended or Closed ended or listed or not. This section contains additional criteria and requirements prescribed pursuant to Article 54(2) of the Law.
DFSA has specified that Passported Funds under the Fund Protocol for which the DFSA is the Host Regulator, are Designated Funds for the purposes of Article 54(1)(a)(i) of the Law. The effect of that designation is that an Authorised Firm may Offer a Unit of such a Foreign Fund. CIR Rule 15.1.1 specifies which requirements in this chapter apply to an Authorised Firm marketing such a Passported Fund.