Valsen Fiduciaries Funds

Dubai Exempt Fund

The Dubai Financial Services Authority (DFSA) regulates Collective Investment Law of 2010. This Act sets out the guidelines pertaining to the application and licensing of domestic funds and other collective investment entities in Dubai.

About a Dubai Exempt Fund

Exempt Funds are a category introduced to the Dubai Financial Service Authority (DFSA) funds regime and replaces the existing Private Funds regime. Exempt Funds are less regulated than public funds and do not require the prior approval of the DFSA. However, the fund manager of an exempt fund must notify the DFSA at least 14 days prior to the offer of interests in the fund.

A Domestic Fund is an Exempt Fund, if:

  • Its units are offered to persons only by way of a private placement
  • All its unitholders are persons who meet the criteria to be classified as professional clients

Dubai Exempt Fund Legal Requirements

Requirements

Description

  1. Applicable legislation

DIFC Collective Investment Rules and Law

Collective Investment Law of 2010

  1. Supervising Authority

Dubai Financial Services Authority (DFSA)

  1. Corporate vehicle permitted

Investment Companies

Investment Partnership

Investment Trust

Protected Cell Company

  1. Share capital or equivalent

    • Minimum subscription

USD 50,000

    • Minimum investors

None

  1. Directors / Partners / Trustees

    • Minimum number

2

    • Corporate Directors / Partners / Trustees allowed

Yes

    • Local Directors / Partners / Trustees required

No

  1. Fund functionaries required

    • Custodian

      • Custodian required

Yes

      • Local custodian required

No

      • Eligible custodian

an authorized firm whose license authorises it to provide custody services;

an authorised firm that is a bank

an authorised market institution

a legal entity that is authorised and supervised by a financial services regulator in a recognized jurisdiction for providing custody services in respect of a fund and is subject to a minimum capital requirement of $4 million or its equivalent in any other currency at the relevant time and has had surplus revenue over expenditure for the last two financial years

      • Fund manager / Investment manager

      • Fund manager required

Yes

      • Local fund manager required

No

      • Fund manager requires to be licensed

Yes

      • Eligible fund manager

An authorized firm whose license authorizes it to act as the fund manager of an exempt fund and meets any additional criteria, requirements or conditions that may be prescribed in the rules.

    • Fund administrator

      • Fund administrator required

Yes

      • Local fund administrator required

Yes

      • Eligible fund administrator

An authorized firm whose license authorizes it to act as the fund administrator of an exempt fund and meets any additional criteria, requirements or conditions that may be prescribed in the rules.

    • External auditor

      • External auditor required

Yes

      • Local external auditor required

Yes

      • Eligible external auditor

The auditor must be registered by the DFSA and appointed in accordance with the regulatory Law 2004.

  1. Asset Requirements

    • Restriction on type of asset class invested

None

    • Asset diversification requirements

None

    • Limitation on size of the fund or total assets under management

None

  1. Local physical office required

No

  1. Prospectus / Offering Memorandum required to be filed

No

  1. Eligible for listing

No

  1. License fees

    • License application fee

USD 1,000

    • Annual license fee

USD 4,000

  1. Estimated license processing duration

1 month

Ongoing Obligations

Requirements Description
Monthly obligations
None
Quarterly obligations
None
Annual obligations
Publish its annual audited financial statements within four months of the year end and an interim report within two months of the period end.
Other obligations
None
Tax Obligations and Other Exemptions
Requirements Description
Business Tax
None
Withholding Tax
No withholding tax is payable on dividends and/or interest payable.
Value Added Tax (VAT)
Not applicable to funds in its entirety.
Stamp duty Act
None
Trades Tax Act
None
Immovable Property Transfer Restriction Act
None
Immigration Decree
None
Exchange Control Act
The provisions of the exchange control act do not apply to mutual funds.
Foreign Earnings Act
The foreign earnings act is not applicable to mutual funds in its entirety.

Benefits of a Dubai Exempt Fund:

  • A broad range of corporate vehicles permitted for the fund
  • Enjoy tax free benefits for both the exempt fund and the fund manager
  • Quick and efficient licensing duration for the fund
  • No approval required to set up the fund from the DFSA
  • Less stringent regulations by the DFSA