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New investment funds amendment passed in UAE

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The UAE’s Securities and Commodities Authority (SCA) has passed an amendment to incorporate a sophisticated investor-type exemption into its Investment Funds Regulations, which came into force on 27 August 2012.

 
The funds regulations had caused concern among many international fund managers seeking to promote foreign funds to sophisticated institutional investors in the UAE, including the cash rich and active sovereign wealth funds. This was because of the requirement in the regulations to obtain authorisation from the SCA prior to any promotion of a foreign fund to any category of investor in the UAE, regardless of whether or not it was a private offering and whether or not the targeted investors were sophisticated institutional investors or not.
 
However, the amendment – effective officially the day after it is published in the soon to be expected UAE’s Official Gazette – will for the first time be formally exempt from authorisation by the SCA the private promotion of certain foreign investment funds. These include investors in the UAE: (i) investment funds owned by federal or local government entities in the UAE; (ii) entities whose main object or purpose or one of their objects is to invest in securities, investing for their own account, and (iii) investment managers with the authority to make and execute investment decisions.
 
Muneer Khan, a UAE-based financial markets partner at the international law firm Simmons & Simmons, says: "We have been working very closely with the SCA in this area on behalf of our international asset management client base since last year. This will be very welcome news for many of our clients in Europe and the US who focus on these types of sovereign and sophisticated institutional investors. It will also be good news for many of the investors themselves, such as the sovereign wealth funds, who want to be able to discuss new funds and strategies with good managers and do not want to restrict their potential investment universe."

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