Why Start-up Fund Managers Should Consider the DIFC (Qualified Investor Funds)

The Dubai Financial Services Authority (DFSA) first introduced its Collective Investment Funds regime in 2006. The regime was designed to meet international standards for regulation and, where required, to provide adequate investor protection. It therefore provided a facilitative, business-friendly regulatory framework, while remaining compliant with the International Organisation of Securities Commission’s (IOSCO) principles for regulating collective investment schemes.

 

Types of Funds

The DFSA Funds regime includes the following types of funds:

Type of Fund	Public Funds	Exempt Funds	Qualified Investor Funds
Level of regulation	Detailed regulation in line with IOSCO standards	Somewhat less stringent than for Public Funds	Less stringent than for Exempt Funds
Investors and Offer	-  Unitholders include Retail Clients; or -  Has, or intends to have, more than 100 unitholders; or -  Some or all of its units are offered to investors by way of public offer.	-  Only Professional Clients; -  100 or fewer unitholders; and -  Units are offered to persons only by way of a Private Placement.	-  Only Professional Clients; -  50 or fewer unitholders; and -  Units are offered to persons only by way of a Private Placement.
Minimum subscription	N/A	USD 50,000	USD 500,000
Application process time	N/A	5 business days	2 business days

Regulatory changes

Recent changes have been made to the Funds Regime, with a view to making the DIFC a viable alternative to other established jurisdictions and as a fund domicile of choice for start-up Fund Managers.

As a result of this initiative, the DFSA adopted new regulations which came into force on 01 February 2017 and which resulted in a decrease in the Base Capital Requirements (‘BCR’) for Prudential Category 3C Authorised Firms who manage Collective Investment Funds, as follows:

DFSA Licence Category	Old BCR	Revised BCR
Managing a Collective Investment Fund - Qualified Investor Funds (‘QIF’) and Exempt Funds	USD 500,000	USD 70,000
Managing Collective Investment Fund - Public Funds	USD 500,000	USD 140,000

DFSA Licence Application Process

The DFSA applies a thorough but simplified fast-track application process for Fund Managers seeking a licence only in relation to QIFs. The DFSA aims to process a licence application within a 4-6 week timetable, after which an In-Principle Licence will be issued, setting out specific conditions which need to be met (office space in the DIFC, bank account etc.) before a licence is issued and the Fund Manager can commence business. This is expected to allow Fund Managers to start operations as soon as 3 to 4 months from project initiation.

Fund Incorporation and Registration   

The DIFC and DFSA have streamlined procedures in relation to the incorporation and registration of Collective Investment Funds. In relation to a QIF, both the DIFC Registrar of Companies and the DFSA aim to process the incorporation and respectively the Fund registration process within 2 working days.

DIFC Authority (‘DIFCA’) Fees

DIFCA has also proposed to reduce its fees for start-up fund managers who are setting up funds in the DIFC as follows:

Fee Type	Reduction
Registrar of Companies Application Fee	100% reduction (USD 8,000)
Commercial License Fee	100% reduction for 2 years (USD 12,000/year)
Leasing of DIFCA owned real estate (e.g. The Gate, Gate Village)	50% reduction for 2 years

How HOLT consultancy can assist

HOLT consultancy is a company incorporated in the DIFC and has a strong track record and reputation in the market. We have assisted a number of high profile financial groups as well as start-ups from the GCC, US, EU and Asia with obtaining their DFSA licence.

Please contact us if you wish to know more about the DFSA Licence application process and how HOLT consultancy can assist you. Please email us at info@holtconsultancy.com or call us on +971 4 386 6360.

5 reasons to love your Compliance Officer

1. A qualified expert who understands the laws, rules and policies administered by the Dubai Financial Services Authority (DFSA).
2. Helps to protect your reputation by providing compliance support on an ongoing basis.
3. Ensures employees and senior management understand their responsibilities through regulatory training and regular updates.
4. Establishes and maintains effective monitoring, systems and controls to mitigate risk.
5. Keeps senior management informed about regulatory changes, the operating environment and hot issues.

If you would like to discuss our Compliance Officer / Money Laundering Reporting Officer outsourced service please contact us using info@holtconsultancy.com or call +971 4 386 6360.

We are based in the Dubai International Financial Centre, United Arab Emirates.

Corporate Social Responsibility: Realising Your Potential

Ben Holt, CEO of HOLT consultancy, based in the DIFC, spoke at a special event on Thursday 9th February at the Kings’ School Al Barsha focused on ‘Realising Your Potential’.

Ben was invited as a guest speaker to share his insight and own experience of running a business and share his story to success. The aim was to broaden students' horizons and get them thinking about their future.

Corporate Social Responsibility is important to HOLT consultancy and we welcome your ideas to help us give back to the community.

The HOLT consultancy team can be contacted by email using info@holtconsultancy.com or by phone on +971 4 386 6360. Please visit HOLT consultancy's website www.holtconsultancy.com for more information about our compliance services.

Who is the Dubai Financial Services Authority?

The Dubai Financial Services Authority (DFSA) is the independent regulator of financial and ancillary service provider firms based in the Dubai International Financial Centre (DIFC) in the United Arab Emirates.

Financial services include the following:

• Asset management
• Banking
• Credit services
• Advisory services
• Managing collective investment funds
• Custody and trust services
• Trading
• Insurance related activities; and
• Operating an exchange.

The DFSA carries out the following activities:

• Authorises firms who wish to provide financial or ancillary services in or from the DIFC and issues a license specific to those activities.
• Authorises individuals who carry out Licensed Functions such as Senior Executive Officer, Finance Officer, Compliance Officer and Money Laundering Reporting Officer.
• Authorises Recognised bodies or members (operators of an exchange, clearing house or alternative trading system outside the DIFC and is on the list of recognised bodies maintained by the DFSA).
• Supervises regulated firms and monitors compliance with the laws, rules and regulations.
• Investigates suspected breaches of legislation that it administers; and
• Enforces legislation.  

The DFSA has a Chairman, a Chief Executive, and a Board of Directors. The following are Committees constituted at the Board level: Audit Committee, Governance and Nominations Committee, Legislative Committee, Remuneration Committee and Risk Committee. In addition, the DFSA has also established the Regulatory Appeals Committee and Financial Markets Tribunal.

If you would like to understand more about complying with laws, rules and policies administered by the DFSA please contact the team at HOLT consultancy by email using info@holtconsultancy.com or by phone on +971 4 386 6360. More information can be found on our website http://www.holtconsultancy.com.