ADGM

THE DESTINATION OF CHOICE FOR

INVESTMENT FUNDS

FINANCIAL SERVICES REGULATORY AUTHORITY

CONTENTS
03 A LEADING INVESTMENT FUNDS PLATFORM
04 WHY ADGM?
05 ADGM FUNDS VS FOREIGN FUNDS
06 UNDERSTANDING ADGM FUNDS
08 FUND VEHICLES & STRUCTURES
09 FUND TYPES
09 OUTSOURCING & SERVICE PROVIDERS
10 FOREIGN FUNDS
10 FUND MANAGER AUTHORISATION CRITERIA
11 FEES

ABOUT ADGM'S FINANCIAL SERVICES REGULATORY AUTHORITY

The Financial Services Regulatory Authority (FSRA) is the independent financial services regulator of ADGM and supports Abu Dhabi’s
ambition to be a progressive and vibrant international financial services centre.  The FSRA is responsible for licensing and supervising
financial intermediaries, including banks, insurance companies, exchanges and capital market intermediaries conducting financial activities in
ADGM and within the financial free zone of Abu Dhabi. The FSRA is committed to providing and operating a fair, well-regulated and robust
financial regime that is benchmarked against international standards and best governance practices. The FSRA is a recognised member of
the International Organisation of Securities Commissions (“IOSCO"), the International Association of Insurance Supervisors (IAIS) and the
Basel Consultative Group of the Basel Committee on Banking Supervision in January 2016.
ADGM - THE DESTINATION OF CHOICE FOR INVESTMENT FUNDS 3

ADGM,
A LEADING
INVESTMENT
FUNDS PLATFORM
Based on Abu Dhabi Global launch products in a private Sharia-compliant funds and
Market’s (ADGM) direct placement setting without structures. ADGM fund managers
application of Common Law, a listing requirement, and a may also establish and manage
ADGM’s funds framework Venture Capital Fund Manager funds outside of ADGM whilst
balances a business friendly (VCFM) regime that reduces any Firm with the appropriate
environment for industry the regulatory requirements regulatory permissions may also
practitioners whilst retaining applied to qualifying VCFMs promote and sell both ADGM and
appropriate levels of investor including zero regulatory capital non-ADGM Funds in and from the
protection. requirements. jurisdiction.

Innovative Global Flexible

Innovative sector-specific ADGM FSRA allows fund ADGM recognises that the ability
frameworks have been developed managers located both within for new players to enter the market
by ADGM’s Financial Services and outside of ADGM to is key to developing a thriving
Regulatory Authority (FSRA), establish funds within its funds industry. As such, ADGM has
including a Private REIT regime, jurisdiction utilising a wide range developed a framework that allows
allowing REIT managers to of corporate, limited partnership for start-up and boutique fund
and trust vehicles including managers to establish in ADGM to
manage non-retail funds.

We decided to open an office

in the Middle East in order to
further expand our business in
this important region. In terms
of potential jurisdictions we
considered a number of factors
including- proximity to existing
and potential investors, adoption
of international regulatory &
legal standards, flexibility to
adopt our global policies, ease
of set up and access to a strong
local talent pool. ADGM is the
natural choice as a result and has
exceeded our high expectations as
we’ve set up our local subsidiary.

ANDREW PAUL
Head of Group Strategy
Common law of England and Wales
*
Aberdeen Asset Management PLC
4

WHY FUND MANAGERS

• Legal certainty - direct application of the common law

ADGM? •
•
•
•
ADGM is a tax friendly environment, with 0% direct tax
Efficient and cost-effective authorisation process
Low minimum capital requirements
No remuneration restrictions
ADGM offers fund managers • Flexible arrangements for delegation of duties
an efficient business
environment operating to FUNDS
international regulatory • ADGM is a tax friendly environment, with 0% direct tax
standards. • Efficient and cost-effective establishment process
• Limited asset class and spread restrictions for public funds
ADGM’s fund framework • No maximum investor restrictions
provides class-rivalling costs • No minimum AUM requirements
and time-to-market, with • Master/Feeder Funds available
globally competitive minimum
capital requirements. There are FUND VEHICLES
no remuneration restrictions on • Wide range of vehicles available
fund managers.
FOREIGN FUND MANAGERS
• Ability for foreign fund managers to establish and manage ADGM funds

ADGM- THE FOREIGN FUNDS

AWARD WINNING
INTERNATIONAL • Ability for ADGM firms to manage, promote and distribute non-ADGM funds

FINANCIAL CENTRE
FUNDS PASSPORTING
Abu Dhabi Global Market, an An ADGM fund manager can opt to register its ADGM Domestic Funds under
the UAE Funds Passporting arrangement, allowing direct distribution across the
international financial centre
whole of the UAE
in the capital of the United
Arab Emirates, fully opened for
business on 21st October 2015.
A financial free zone, ADGM UNITED ARAB EMIRATES
is an independent jurisdiction ABU DHABI

encompassing the entire

114 hectares (1.14 sq km) of
Al Maryah Island with rules
and regulations aligned with
international best practice.
ADGM’s three independent
Authorities (Registration
Authority, Financial Services
Regulatory Authority and the
ADGM Courts) provide a holistic
environment enabling registered
companies to conduct business
and operate with confidence.

Abu Dhabi is the capital and Abu Dhabi is home to some The United Arab Emirates benefits Easily accessible and an ideal
the seat of government of the of the largest sovereign from a stable political environment hub for access to Europe,
United Arab Emirates wealth funds globally and enjoys one of the world's Asia and the Far East
highest GDP per capita
ADGM - THE DESTINATION OF CHOICE FOR INVESTMENT FUNDS 5

ADGM FUNDS
VS FOREIGN FUNDS
ADGM’s funds framework provides wide-ranging options
for carrying out fund management activities to ADGM
fund managers and foreign fund managers alike. ADGM
fund managers are permitted to manage both ADGM and
non-ADGM funds. Qualifying foreign fund managers are
permitted to manage ADGM funds. ADGM authorised
firms can promote non-ADGM funds.

DOMESTIC FUNDS FOREIGN FUNDS

• Established and domiciled in ADGM • Non-ADGM established or domiciled fund

• ADGM-based or foreign fund manager • ADGM-based or foreign fund manager
• Marketed in or from ADGM • Marketed in or from ADGM

Public Funds Managing Foreign Funds

• All client types including retail clients • An ADGM fund manager may establish and manage
• No minimum investment requirements a foreign fund
• Increased level of regulatory oversight • Similarly an ADGM asset manager may be appointed
• Investment and borrowing powers restricted as the investment manager to a foreign fund
• Registration with FSRA
Marketing Foreign Funds
Exempt Funds • An ADGM firm with the appropriate permission may
• Professional clients only promote a foreign fund in or from ADGM
• USD $50,000 minimum investment • Distribution activities must comply with the legislation
• Notification to FSRA in the jurisdiction being marketed into
• Private placement • A foreign fund may not be marketed to retail clients
• Reduced regulatory requirements for fund manager unless it is capable of being offered to retail investors
in its home jurisdiction
Qualified Investor Funds
• Market counterparties and sophisticated professional clients only
• USD $500,000 minimum investment
• Notification to FSRA
• Private placement
• Minimal regulatory requirements
6

UNDERSTANDING
ADGM FUNDS
ADGM’s funds framework allows fund managers to easily
provide funds to all investor types, whilst maintaining
proportionate levels of investor protection.

PUBLIC FUNDS EXEMPT FUNDS QUALIFIED INVESTOR FUNDS (QIF)

Intended for retail clients and made Intended for sale to professional clients by Intended only for sale to market counterparties
available by public offer, Public Funds private placement and as such attract a lower and other sophisticated professional clients by
attract a higher level of regulatory scrutiny. level of regulatory scrutiny compared to private placement, QIFs attract a comparatively
Public Funds require registration with the Public Funds. They are not registered by the lower level of regulation than Exempt Funds.
FSRA involving lodgement of a prospectus, FSRA – a fund manager needs only to notify Similar to Exempt Funds, QIFs only require
and may be subject to risk-diversification the FSRA 14 days prior to the initial offer notification to the FSRA prior to the initial
requirements regarding its investment and of units, detailing the nature of the fund’s offer of units and there are no upper limits on
borrowing powers. investment profile, its intended size, prime investor numbers. The minimum investment
broker details (if applicable) and details of any size is USD $500,000.
service providers involved.

A key differentiator for Exempt Funds

established in the ADGM compared to those
established in other jurisdictions is that there
is a relatively low minimum investment level
of USD $50,000 applicable, as well as not
being constrained by an arbitrary maximum
number of investors.
ADGM - THE DESTINATION OF CHOICE FOR INVESTMENT FUNDS 7

KEY DIFFERENCES BETWEEN

DOMESTIC FUNDS TYPES
PUBLIC EXEMPT QUALIFIED
FUNDS FUNDS INVESTOR FUNDS

ELIGIBLE
All including retail Professional only
INVESTOR TYPES

REGISTRATION OR
Registration required Notification only
NOTIFICATION

MINIMUM
No minimum USD $50,000 USD $500,000
INVESTMENT

MAX INVESTORS No maximum number of investors

OFFER BASIS Public Private

OBLIGATIONS OF THE
FUND MANAGER,
Detailed prescriptive rules Limited prescriptive rules
TRUSTEE AND
ADMINISTRATOR

INVESTMENT • Prudent spread of risk in line

AND BORROWING with objectives
POWERS • Max 20% investment in
other funds Governed by the scheme constitution and prospectus
• Derivatives to 100% NAV
• Max 20% GAV borrowing
(65% for Property Funds)
• Real Property is permitted

SAFEKEEPING Fund manager is required to appoint an Eligible Custodian

OF FUND PROPERTY to hold Fund Property except in the case of illiquid assets

OVERSIGHT Oversight Committee or

REQUIREMENTS Eligible Custodian or
Trustee responsible for No prescribed oversight requirements
oversight function

VALUATION
Prescriptive requirements Limited requirements
REQUIREMENTS

REPORTING • Annual report and fund • Annual report and fund • Annual report and fund
REQUIREMENTS manager's report manager's report manager's report*
• Interim report and fund • Interim report and fund • Annual fund auditor's report
manager's report manager's report
• Annual fund auditor's report • Annual auditor's report * An Interim report is only
• Oversight report (unless requirement is waived) required if there has been a
• Comparative table material change during the
interim period
8

FUND VEHICLES
ADGM’s funds framework is comprehensive and offers fund managers the maximum range
of options when choosing fund vehicles and structures.
OPEN OR CLOSED ENDED LIMITED INVESTMENT INVESTMENT PROTECTED CELL COMPANIES
INVESTMENT COMPANIES PARTNERSHIPS TRUSTS (PCC) & INCORPORATED CELL
COMPANIES (ICC)

Allowing for incorporation As in other leading fund Investment trusts can be used as ADGM allows the structuring of
of a fund vehicle using a jurisdictions limited partnership the basis for funds in ADGM. A funds and fund umbrellas using
corporate entity under the structures can be used as the fund manager may appoint an PCCs and ICCs. This allows fund
ADGM Companies Regulations, basis for ADGM fund structures. eligible trustee through a trust managers to legally segregate
open ended investment deed in order to establish an the assets and liabilities of each
companies allow for operation investment trust in accordance cell whilst operating under
of traditional funds with regular with provisions in the common management.
subscription and redemption Financial Services and Markets
possibilities whilst closed ended Regulations 2015.
investment companies may be
used to structure a listed fund
vehicle.

STRUCTURING OPTIONS
SPVS RESTRICTED SCOPE GENERAL PARTNER SPV
COMPANIES

ADGM SPVs be utilised by Fund To supplement the range of fund vehicles ADGM Fund Managers using Limited
Managers, for example, to structure available, ADGM allows the incorporation Partnership fund structures have the
ringfencing or asset holding vehicles. of a private limited company designated option to use a specific General Partner
as a Restricted Scope Company. These are SPV for structuring purposes.
unique ADGM special purpose vehicles
which benefit from quick and inexpensive
incorporation, and limited public
disclosure requirements.

OTHER OPTIONS
MASTER/FEEDER UMBRELLA
STRUCTURES FUNDS

ADGM funds may act as a master fund, ADGM’s framework allows for umbrella
a feeder to a foreign fund or as a structures, where a single umbrella
feeder to another ADGM fund. fund may have more than one distinct
sub-fund, each with its own investment
objective and policy.
ADGM - THE DESTINATION OF CHOICE FOR INVESTMENT FUNDS 9

FUND
TYPES
The range of options made available by ADGM to fund managers
ensures that many types of funds can be established.

POTENTIAL FUND TYPES

PRIVATE SHARIA- VENTURE

MUTUAL HEDGE PROPERTY PRIVATE PUBLIC LISTED
EQUITY COMPLIANT CAPITAL
FUNDS FUNDS FUNDS REITS REITS FUNDS
FUNDS FUNDS FUNDS

OUTSOURCING
& SERVICE PROVIDERS
Fund managers may appoint both ADGM and non-ADGM service providers,
further increasing the levels of flexibility offered.

ADGM recognises that the funds industry depends upon third-party service providers for the outsourcing of
various functions. ADGM’s regulatory framework therefore allows for the incorporation and authorisation of
such third-party providers including administrators, custodians and trustees. It also allows fund managers to
appoint both ADGM and / or foreign domiciled service providers.

This adds to the options available to fund managers establishing a fund in ADGM. It is acceptable for an
appointed fund administrator and / or eligible custodian to be located and subjected to regulation outside of
ADGM.

The trustee of an investment trust established in ADGM must be authorised for this activity by the FSRA.

ADGM's funds regime is

sophisticated, offering flexibility
for fund managers as to fund
vehicle (such as protected cell
companies, limited partnerships,
trusts and investment companies)
and level of regulatory oversight
(ranging from qualified investor
funds to retail funds), as well as
appropriate levels of transparency
and investor protection.

JOHN ADAMS
Partner (Asset Management)
Shearman & Sterling (London) LLP
10

FOREIGN
FUNDS
ADGM firms are permitted to conduct certain
activities in respect of non-ADGM funds.

ESTABLISHING AND MANAGING INVESTMENT PROMOTING

A FOREIGN FUND MANAGEMENT AND SELLING

An ADGM fund manager may establish and An ADGM investment manager may be Any ADGM firm that holds a licence for
manage funds in a third party jurisdiction appointed by a foreign fund or a foreign advising on investments and arranging
(subject to the regulatory requirements  of fund manager to provide discretionary investments in respect of units in a collective
the host jurisdiction). Should a fund manager investment management services to a investment fund may market and sell the
choose to do this, it is simply required to foreign fund (subject to any regulatory units of a foreign fund in or from ADGM,
file a regulatory notification with the FSRA, restrictions that may apply in the fund’s provided that:
including details of the Fund’s purpose and home jurisdiction). • it notifies the FSRA within 30 days of the
investment policy. commencement of the marketing activity;
• it does not sell units of the foreign fund to
a retail client unless it is permitted to deal
with retail clients, and, the foreign fund is
capable of being sold to retail clients in its
home jurisdiction;
• certain prospectus requirements for the
foreign fund are met; and,
• if sold from ADGM, all applicable local
regulatory requirements are adhered to.

FUND MANAGER
FSRA identifies three broad types
of fund managers when undertaking
the authorisation process:

AUTHORISATION START-UP FMC

CRITERIA • < 30 clients

• Professional clients only
• Net AUM <USD $250 million

RESTRICTED FMC
ADGM’s authorisation When the FSRA considers an application for
authorisation from a proposed fund manager,
process has been designed it applies a risk-based assessment to the • Professional clients only
to be risk-based and authorisation criteria which varies depending upon • No limits on AUM or number of clients
the proposed activities of the fund manager, with
streamlined, to ensure an a less rigorous and risk-proportionate approach
efficient and cost-effective applied to a fund manager’s application when
RETAIL FMC
time to market. non-retail funds are being managed (e.g. incubator
funds or venture capital funds) in comparison to
the more rigorous approach that is applied to the
application of a fund manager seeking to manage • All clients including retail clients
and sell Public Funds. • No limits on AUM or number of clients
ADGM - THE DESTINATION OF CHOICE FOR INVESTMENT FUNDS 11

FEES
ADGM offers a transparent, class-leading regulatory fee structure for Funds and Fund
Management Companies. A firm wishing solely to manage collective investment funds
would potentially only need to apply for one regulated activity at a cost of USD $5,000.

FUNDS FEES FUND MANAGEMENT

COMPANY FEES

PUBLIC AUTHORISATION
FUNDS (USD) FEES (USD)
Registration Fee: $3,000
Each Regulated Activity:
Sub-Fund Registration: $1,000
$5,000
Annual Fee: $3,000
ANNUAL
Sub Fund Annual Fee: $1,000 SUPERVISION FEE
Prospectus Amendment Fee
$3,000
Each Regulated Activity:
$5,000
EXEMPT FUNDS
& QIFs
APPOINTMENT OF
Registration Fee: Nil APPROVED INDIVIDUALS

Sub-Fund Registration: Nil

Each Approved Individual:
Annual Fee: $2,000 $500

Sub Fund Annual Fee: $1,000

FOREIGN FUND
MANAGERS
FOREIGN
FUNDS
Notification Fee:
Notification Fee: $1,000 $5,000
Funds fees may be subject to changes

FUND MANAGEMENT COMPANY: REGULATORY CAPITAL REQUIREMENT

THE HIGHER OF: MINIMUM CAPITAL EXPENDITURE BASED REQUIREMENT

REQUIREMENT (USD) OR

13/52 Annual Expenditure (if not hold-

Managers of Public Funds 150,000 ing client money)
OR
18/52 Annual Expenditure (if holding
Managers of Exempt Funds and QIFs 50,000 client money)
Venture Capital Fund Managers Nil Nil
Require more
information?
CONTACT US
The FSRA Team is available to provide more information and further
funds@adgm.com
explanation on the ADGM Funds platform and the various funds
structures and types. To apply for authorisation, please feel free to +971 2 333 8888
contact our Authorisation Team to arrange for a meeting. www.adgm.com
FEBRUARY 2020

While the Abu Dhabi Global Market Financial Services Regulatory Authority (FSRA) makes every effort to ensure the accuracy and completeness of the information in this
material, the FSRA makes no representations as to accuracy, completeness, correctness or suitability of any information and will not be liable for any error or omission.
These materials are not intended to be a comprehensive study of the subject matter discussed herein and should be read in conjunction with the relevant ADGM and
FRSA Regulations and Rules, which may change over time without notice. These materials are not to be deemed, considered or relied upon as financial and/or legal
advice and should not be treated as a substitute for specific advice concerning individual situations obtained from your own financial and/or legal advisers.