The definition of an Investment Fund Management Business encompasses Licensees that provide discretionary investment management services in relation to domestic or foreign “Investment Funds”. It includes making investment, divestment and risk related decisions on behalf of an Investment Fund
Core Income Generating Activities (CIGA’s)
• Taking decisions on the holding and selling of investments
• Calculating Risk and Reserves
• Taking decisions on currency or interest fluctuations and hedging positions
• Preparing reports to investors or any government authority with function related to supervision or regulations of such business
Special points to consider
ü If the UAE business is only engaged in providing fund administration, custodian, investment advisory, and other Investment Fund related services then it doesn’t come under the definition of the Investment Fund Management Businesses.
ü Where an Investment Fund is structured as a partnership and has both a corporate General Partner and an Investment Fund Manager, only the Investment Fund Manager would be subject to the ESR Regulations if the General Partner does not undertake business activities separate from its role as General Partner of the Investment Fund.
• Securities and commodities authority
• Competent Authority in Financial Free Zone
• Competent Authority in Free Zone
What licensee has to do?
• File notification with the regulatory authority before due date.
• Only Licensees that earn income from a Relevant Activity during the relevant financial period and that are not exempt from the Regulations are required to demonstrate economic substance in the UAE and file an economic substance report. Economic substance reports must be filed within 12 months from the end of the relevant financial period.
Who has to file the notification?
Every Licensee and Exempted Licensee is required to submit a Notification to their respective Regulatory Authorities
Failure to comply with regulation:
- Penalties between AED 20,000 to 400,000
- Exchange of information with foreign competent authority
- Suspension or withdrawal or cancellation of license