Dubai is well known for its futuristic architecture, glamorous and luxurious lifestyle and business-friendly economic free zones. Those dedicated business districts provide a specific industry environment to companies interested in operating in multicultural and well-regulated financial jurisdictions.
One of the free zones, the Dubai International Financial Centre (“DIFC”), offers entrepreneurs, investors and business owners a modern regulatory regime in line with international standards. The DIFC is a fully independent jurisdiction with its own civil and commercial laws and courts, separated from the Mainland UAE. This jurisdiction extends to various corporate, commercial, civil, employment, trusts, and securities law matters—additionally, this renowned world-class financial hub also benefits from the Emirate of Dubai and the UAE Federal Penal Code and immigration law.
Furthermore, entities operating from the DIFC benefit from 50 years of 0% tax on income and profit, 100% ownership and no restrictions for currency exchange and profit repatriation.
Setting up an Investment Fund in the Dubai International Financial Centre
Investors eager to set up investment funds in the DIFC must comply with the regulatory regime dictated by the Dubai Financial Services Authority (“DFSA”). The requirements include the appointment of an auditor and a Fund Administrator registered in DIFC or a foreign licensed Fund Administrator from a reputable jurisdiction stipulated in the DFSA Rule Book.
Structuring Advisory Practice Firms in Dubai, such as lecocqassociate, can assist individuals and companies navigate the regulatory requirements for operating and setting up investment funds in Dubai for their specific necessities.
The permitted structures in the DIFC for Exempt Funds and Qualified Investor Funds (“QIF”) include:
- Investment trusts;
- Limited partnerships;
- Open or close ended investment companies;
- Protected cell companies;
- Incorporated cell companies;
- Master/feeder fund structures; and
- Umbrella/sub-fund structures.
Exempt Funds require a minimum subscription of USD 50,000 and USD 500,000 for QIF.
Other jurisdictions to Set up investment funds
The Abu Dhabi Global Market (“ADGM”) is another business-friendly financial free zone whose legal framework is based on the English common law adopting selected pieces of English legislation, including matters relating to contracts, torts and trusts. The Financial Services Regulatory Authority (“FSRA”) oversees the financial services environment this jurisdiction.
The FSRA categorises the applicants based on the financial services they intend to carry out in the free zone and processes the applications. For exempt funds and QIF, the permitted structures are the same as DIFC; however, the Auditor and Fund Administrator must be registered or licensed to provide fund administration services in the ADGM.
To select the optimal jurisdiction to invest in, individuals and companies must evaluate many factors, such as knowledge of the fund life cycles, fund structure, eligibility and technical know-how on creating an optimal fund. Additionally, they have to consider fund specific reporting requirements, custodians, minimum subscription amount, authorities’ fees, and the timeline for application, incorporation and launch.
Legal Consultancy for Structuring Investments Funds in the UAE
Many firms in the United Arab Emirates provide advice for structuring investment funds. It is advised that one should go to a specialised firm who have the experience, technical knowledge and capabilities of setting up investment structures in the UAE whilst factoring in multiple jurisdictions. Nonetheless, legal consultants such as lecocqassociate can offer comprehensive financial regulation advice in the UAE and overseas, with four main offices strategically located in Geneva, Malta, Abu Dhabi and Dubai.
lecocqassociate structured and incorporated the first crypto-token investment fund in the United Arab Emirates.