Will the New UAE Regulations Treat DIFC Funds as Foreign Funds?
It seems so, going by the newly announced rules. Last month, the Securities and Commodities Authority (SCA) of the United Arab Emirates (UAE) issued new regulations for investment funds. While the regulation is a positive step that aims to enhance stability in financial markets, the fundamental definition of local and foreign funds has changed, which could have a negative impact. The new SCA rules define a local fund as an investment fund established in the UAE, excluding the free zones, and licensed by SCA. In other words, funds from the Dubai International Financial Centre (DIFC), which is located in the free zone and which since 2004 has attracted a lot of investment from local as well global entities, might be considered as a foreign fund.
The new rules will be implemented when the Official Gazette is published in early September. All the funds designated as foreign funds will have to be promoted through local promoters such as banks and investment firms licensed by the central bank.
However, the timing of the new regulations couldn’t have been worse. With Qatar bending over backwards to attract investment and cash in on the forthcoming 2022 FIFA World Cup, it could end up as the cynosure of private investment in the region.
Note: The Rules have just been translated in English and are available at Click here to Download