A Guide to the DFSA Fund Regime, please click here to view
Q&A - The DFSA's Collective Investment Fund Regime, please click here to view
The DFSA first introduced its Collective Investment Funds regime (the Funds regime) in 2006, which was designed to provide adequate investor protection, meeting international standards for regulation.
In 2010, the DFSA made significant changes to the Funds regime, taking account of recommendations made by a panel of market practitioners appointed by the DFSA (Panel) to make the regime more facilitative and business friendly, whilst remaining true to the International Organisation of Securities Commissions (IOSCO) principles for regulating collective investment schemes.
The DFSA regime focuses on disclosure, corporate governance, valuations and service providers. The DFSA takes into account a range of matters when licensing and supervising Firms that manage and market Funds in or from the DIFC. The DFSA also regulates the key players in the Funds management service sector, such as Fund administrators, asset managers, custody providers and trustees, to ensure adequate investor protection by promoting high industry standards that meet international best practice.
Some of the key features of the DFSA’s Funds regime are as follows:
• a Public Fund regime, which provides greater protection to retail investors through requirements such as the independent oversight and detailed disclosure in Prospectuses;
• an Exempt Fund regime, which is a type of Fund that is open only to professional investors (investors who meet the Professional Client test and make at least a USD $50,000 minimum investment). Exempt Funds enjoy a fast-track process and attract lower regulatory requirements than a Public Fund, which is open to Retail Clients;
• DFSA licensed (i.e. DIFC-based) Fund Managers being able to establish and manage Funds in the DIFC, as well as in jurisdictions outside the DIFC;
• Fund Managers coming from reputable jurisdictions (e.g. DFSA Recognised Jurisdictions) being able to establish and manage Funds in the DIFC under certain circumstances;
• DFSA licensed firms being allowed to distribute a wider range of Foreign Funds in or from the DIFC, particularly where a recommendation about the suitability of the investment is made to a Client;
• a competitive fee structure being applied to Fund Managers and Funds;
• Fund Managers of Umbrella Funds having the flexibility to use the protected cell company (PCC) structure for open-ended Umbrella Funds, thereby giving investors in each Sub-Fund of the Umbrella legal segregation from liabilities arising in other Sub-Funds and the Umbrella;
• bespoke Shari’a governance requirements applying to Islamic Funds, which promote high Shari’a governance standards with flexibility of application; and
• bespoke regulatory requirements to accommodate specialist Funds, such as Private Equity, Property and Hedge Funds.