Guide to Marketing Foreign Funds in the Middle East

Transcription

1 Guide to Marketing Foreign Funds in the Midde East

2 Contents United Arab Emirates (excuding Free Zones) Abu Dhabi Goba Market Dubai Internationa Financia Centre Kingdom of Bahrain Kingdom of Saudi Arabia Kuwait Oman Qatar Our key contacts

3 Key contacts Rupert Copeman-Hi Midde East Introduction We are peased to provide this guide to marketing foreign funds in the Midde East, meaning the countries within the Guf Cooperation Counci (GCC). The guide is aimed at providing a summary of the reguations which appy to marketing the funds as of 1 September Our Chares Russe Speechys funds team - based in the GCC region, the UK and Luxembourg - monitor these reguations, and you are wecome to contact us for more detais in the context of you and your coeagues ooking to market specific funds to investors in the region. We pan to update this guide every six months. "Chares Russe Speechys LLP provides exceent service, with exceent technica knowedge." Lega 500 EMEA, 2017 The information contained in this guide is for genera purposes ony and does not purport to constitute ega or professiona advice from Chares Russe Speechys and as a consequence may not be reied upon. David Louis Avocat à a Cour Luxembourg Mevie Rodrigues United Kingdom

4 1. United Arab Emirates (UAE) The Securities and Commodities Authority of the United Arab Emirates (SCA) has issued fund reguations that set out the provisions for the promotion of foreign funds, namey: The fund must be registered with and approved by the SCA, and Promoted or distributed by an SCA SCA-icensed intermediary. No promotion, marketing or distribution of foreign funds or making introductions in the UAE is permitted unti the above conditions are satisfied. Foreign funds incude mutua funds estabished outside the UAE or funds estabished in a free zone inside the UAE incuding the Abu Dhabi Goba Market and Dubai Internationa Financia Centre. The foowing exemptions from the requirement to be registered and approved by the SCA and use an SCA SCA-- icensed intermediary may be usefu for foreign funds: Reverse soicitation. Providing the investor initiates the marketing of their own accord and not due to marketing by the foreign funds or its pacement agents, then this exemption may be appicabe. Private pacement exemption. Where there is a private pacement in the UAE by an SCA SCA--icensed intermediary to institutiona quaified investors (such as federa and oca governments, internationa organisations and entities icensed by the SCA to conduct investment business) for a minimum of AED 500,000 (or AED 1,000,000 if the foreign fund is incorporated in a free zone), then this exemption may appy. This exemption does not appy to natura persons, incuding high net worth individuas. Financia products isted in the UAE or isted in any other market. Introductions by financia advisors or anaysts and ega advisors. Promoting or introducing group and reated entities. The registration process for foreign funds with the SCA is as foows: Set up an account with SCA SCA s eservices porta. Compete appication and prepare supporting documents for submission (ie Form and deegation etter, notarisation, Arabic transation). Pay registration fees (onine payment using credit card or eectronic transfer), and 3 Guide to Marketing Foreign Funds in the Midde East Submit appication and supporting documents through eservices account. Appications for renewa for a further 12 months must be made at east one month before expiry of registration. Each renewa is vaid for 12 months. Registration appication fee per fund (or sub sub--fund) AED 35,000. Annua registration renewa fee per fund (or sub sub--fund) AED 7,500. A fees are non non--refundabe.

5 2. Abu Dhabi Goba Market (ADGM) Abu Dhabi Goba Market (ADGM) is another free zone recognised for its internationa financia centre. It adopts simiar robust reguatory regimes as other free zones and has gained popuarity from firms setting up and/or marketing their domestic or foreign funds. ADGM provides competitive advantages to investors and fund managers. The ADGM Financia Services Reguatory Authority (FSRA) reguates foreign funds wishing to promote in the ADGM and requires such funds to do so via an authorised ADGM firm that hods a icence for advising on investments and arranging investments in respect of units in a coective investment fund. Units in foreign funds can then ony be promoted in or from the ADGM provided that: It notifies the FSRA within 30 days of the commencement of the marketing activity. It does not se units of the foreign fund to a retai cient uness it is permitted to do so, and the foreign fund is permitted to be sod to retai cients in its home jurisdiction. Distribution activities must compy with the egisation in the jurisdiction the activities are being marketed in. Certain prospectus requirements for the foreign fund are met, and If sod from ADGM, a appicabe oca reguatory requirements are adhered to. The fees for foreign funds in the ADGM are as foows: Notification fee of USD 1,000. An authorisation fee for each reguated activity of USD 5,000. An annua supervision fee for each reguated activity of USD 5,000. Appointment of an approved individua USD 500. Domestic ADGM funds are funds which are estabished and domicied in ADGM. The FSRA aows the ADGM fund manager to either be ADGM ADGM--based or foreign. Simiar to the DIFC, there are three types of recognised ADGM funds: Pubic funds, Exempt funds, and Quaified investor funds. There is no expicit ban on reverse soicitation and firms are advised to contact us and the FSRA for carity and exercise caution. Guide to Marketing Foreign Funds in the Midde East 4

6 3. Dubai Internationa Financia Centre (DIFC) The reguator in the DIFC is the Dubai Financia Services Authority (DFSA) and the marketing of foreign funds is subject to discosure requirements which must be detaied in the fund fund s prospectus. Foreign funds wishing to market in, or from, the DIFC must do so via a DFSA DFSA-- icensed firm authorised to carry out the financia service activities or either: Advising on financia products or credit, or Arranging credit or deas in investment. Property funds cannot be marketed uness they meet the foowing specific criteria: 60% or more of the assets are invested in property, The fund is cosed ended, and The units are either isted or traded in a jurisdiction recognised by the DFSA or are offered ony by means of private pacement. Separatey, representative offices can aso market foreign funds in the DIFC within the imits aowed for marketing foreign funds set out in the DFSA Representative Office Modue Ruebook. These firms can then ony market the foreign fund providing: The foreign fund is a reguated fund in a jurisdiction incuded in the DFSA DFSA s recognised jurisdictions ist or meets the equivaent reguations prescribed by the DFSA, or The firm makes a suitabiity recommendation of the investment in units of the foreign fund to the particuar investor, whist considering the investor investor s investment objectives and circumstances, or The foreign fund is open to 100 or fewer investors who meet the professiona cient test. The minimum subscription for each investor is USD 50,000 and fund units are not offered to investors via a pubic offer, or The fund fund s custodian and investment manager meets the required criteria. 5 Guide to Marketing Foreign Funds in the Midde East As an aternative, the fund coud choose to be domicied in the DIFC or managed from the DIFC by a DFSA DFSA--icensed fund manager or externa fund manager. The DFSA aows reguated foreign fund managers to domicie funds in the DIFC without having to estabish a pace of business in the DIFC. For further information with regard to the process of domiciing in the DIFC pease contact us. With regard to exemptions, there is no expicit ban on reverse soicitation so foreign funds wishing to use this exemption shoud seek carity from us and the DFSA and exercise caution.

7 4. Kingdom of Bahrain The estabishment and operation of investment funds are reguated by the Centra Bank of Bahrain (CBB). Bahrain has issued robust but fexibe rues to encourage the marketing of oca and overseas domicied funds whist protecting the rights of investors. The CBB aows the promotion or distribution of foreign undertakings to investors in the Kingdom of Bahrain by way of a pacement agent ony. The pacement agent must be a reguated CBB icensee. To be cassified as an overseas domicied Coective Investment Undertaking (CIU), the CIU must be estabished and reguated by: A recognised jurisdiction isted under Chapter ARR-6 of the Modue, or Other jurisdictions acceptabe to the CBB. Where an overseas operator wishes to promote an overseas domicied CIU, then the overseas domicied CIU must be authorised by or registered or fied with the CBB, as required with the CBB (and dependent on the type of fund). Otherwise, no person may offer CIU interests to investors in Bahrain. Offering or promoting CIU interests incudes but is not imited to the foowing: soiciting investors to purchase interests through advertisements, teephone, internet, face- to-face, or other media. Cassification of overseas domicied CIUs The CBB categorises overseas domicied CIUs into three types, namey: Retai, Expert, and Exempt. Depending on the category, the CBB may impose a higher minimum investment amount than that prescribed in the offering memorandum. Overseas retai CIUs and expert CIUs domicied in a recognised jurisdiction are required to be registered with the CBB prior to being offered to investors in Bahrain. Overseas retai CIUs and expert CIUs not domicied in a recognised jurisdiction must be authorised by the CBB before they are promoted to investors in Bahrain. Authorisation/Registration of overseas domicied CIUs For overseas domicied CIUs, the appication for authorisation / registration may ony be made by a CBB icensee who wi distribute the CIU within Bahrain. The CBB wi generay acknowedge the appication within five business days of it being submitted and provide forma feedback on the appication within 15 business days of receipt of a required documents. The feedback wi discose whether further information and/or documents are required. The CBB wi take a fina decision within 10 business days of the CBB s confirmation that the appication is compete. Satisfying eigibiity of the operator The CBB expects the CBB icensee appying for authorisation or registration of an overseas domicied CIU to satisfy itsef that the CIU s operator is a icensed and/or authorised entity which is abe to carry out the operation of the CIU. The CBB can at any time, seek further information pertaining to the operator s reguatory status, incuding requesting a copy of its icence and/or authorisation. Decision to refuse authorisation, registration or fiing The CBB may refuse to authorise, register or acknowedge fiing of an overseas domicied CIU, if in its opinion: The conditions in the reevant rues (as appropriate) are not met, Fase or miseading information has been provided to the CBB or significant information which shoud have been provided to the CBB was not incuded, or The CBB beieves it necessary in order to safeguard the interests of potentia investors. Distribution requirements The pacement agent of an overseas domicied expert and exempt CIU must be abe to demonstrate that each of its investors fa within the definition of an 'expert investor' or 'accredited investor' as appicabe. The promotion of overseas domicied exempt CIUs is imited to accredited investors and no pubic offering or mass marketing is aowed. Guide to Marketing Foreign Funds in the Midde East 6

8 Reporting requirements Overseas domicied CIUs must pubish and distribute to their CIU participants in Bahrain at east one report for each financia year. They shoud aso circuate any other reports (such as vauation reports) mentioned in the prospectus and do so in the format and timescae required by the home reguator. The agent must aso notify the CBB in a timey manner of any intention to merge, transfer, wind up or suspend deaings in the CIU. Fees Each appication for authorisation must be accompanied by a non non--refundabe BHD 100 processing fee at the time of submission to the CBB. Separatey, a fees and charges payabe by CIU participants are those stipuated in the terms and conditions of the prospectus provided to the participants. Vountary de de-- registration or withdrawa of fiing Listing requirements for overseas domicied CIUs If desired to be isted, overseas domicied CIUs may ony be isted on a icensed exchange and such intention must be stated in the prospectus. Once an overseas domicied CIU receives CBB CBB s authorisation to be isted, it must then notify the CIU participants of such intention. Thereafter, the agent of the CIU must obtain the foowing: CBB CBB s non non--objection to be isted, The required approvas from the icensed exchange, and Notify the CBB of the effective date of isting. There is no expicit ban on reverse soicitation in the CBB CBB s rues and reguations or the Modue. However, investors and foreign financia institutions wishing to rey on this defence defence shoud be cautious. Firms are advised to contact us and the CBB for carification of the rues and reguations on a case case--by by--case basis. The pacement agent of an overseas domicied CIU must give at east one month month s written notice to CIU participants and to the CBB of its intention to de de-register or withdraw the fiing of the CIU. The notification must be submitted with reasons for de de--registering or withdrawing the fiing of the CIU, and incude a confirmation that there are no obigations outstanding to any CIU participants. 7 Guide to Marketing Foreign Funds in the Midde East

9 5. Kingdom of Saudi Arabia (KSA) The regime for ocay domicied investment funds in the Kingdom of Saudi Arabia (KSA) is we we--deveoped. The Capita Markets Authority (CMA) is seen as a practica reguator and is driving to open up the capita markets and fund industry in KSA to oca and foreign investors, as highighted by the reativey new investor investor--friendy Investment Funds Reguations, which took effect from November 2016 (the Reguations). The market is sti reativey sma compared to its western counterparts. However, private equity funds focused on heathcare, education or rea estate sectors have done we in recent years. One of the restrictions is the sma number of fund managers with a robust record. Aso, due to increasing scrutiny by the authorities in recent years of bind bind--poo investment funds and rea estate deveopment funds, there has been a recent shift by investors towards singe asset funds. A foreign fund manager cannot directy promote a foreign fund to KSA investors except via a distributor who is authorised by the CMA to conduct deaings as an agent. A foreign fund requires the foowing: A KSA distributor icensed by the CMA to carry out the activity of deaing as an agent, The offer to investors is by a private pacement ony, and The foreign fund manager must be authorised in a jurisdiction that empoys reguatory standards at east equivaent to the CMA. Before promoting the foreign fund, the CMA must have approved the foreign fund. Foreign funds marketed in the KSA may ony be offered to sophisticated investors or investors who subscribe a minimum investment amount per investor of not ess than SAR 1,000,000 (USD 266,620). A private fund must be marketed by way of private pacement pacement, which requires an offer of units excusivey to either: Sophisticated investors (see beow), or Subject to a minimum investment amount per investor of not ess than SAR 1,000,000 (USD 266,620). A sophisticated investor investor incudes any CMA CMA--icensed entities acting on their own account, the government of KSA, any supranationa authority recognised by the CMA and institutions with assets of not ess than SAR 50,000,000 (USD 13,331,000). Other requirements incude: The distributor must provide an undertaking to the CMA that the offering documents are true, accurate and not miseading. The distributor must submit a report to the CMA of a KSA investors that have subscribed for units in the fund. The CMA may prohibit an offer where the CMA determines that the marketing of the foreign fund may not be commensurate with the distributor distributor s capabiity. The current position with regard to reverse soicitation is uncear and it is advisabe to continue exercising caution if seeking to rey on the reverse soicitation route. Guide to Marketing Foreign Funds in the Midde East 8

10 6. Kuwait Kuwait has proven to be an attractive source of investment for GCC and foreign investors. Accordingy, there is a market opportunity open for foreign investors to market their offshore/foreign funds into Kuwait. Those interested in marketing units of funds either in or outside Kuwait shoud be cautious of the robust reguatory regime which rigorousy contros this area. The Capita Markets Authority (CMA) is the reguator overseeing and reguating a aspects and matters reating to investment funds in Kuwait, whether oca or foreign funds. This incudes the marketing of funds and the offering and seing of units. Those interested in marketing foreign funds must satisfy the foowing conditions and requirements: The fund must be icensed by a foreign reguatory body in accordance with simiar standards set by the CMA. Units of the fund shoud be privatey subscribed for in Kuwait and such private subscription must be offered to a professiona cient. Anyone wishing to market foreign funds in Kuwait wi require the prior approva of the CMA and a foreign funds must meet the requirements appicabe to domestic funds, uness the CMA provides an exception. Submit an appication for marketing a fund incorporated outside of Kuwait encosing the necessary documents and information and must be transated into Arabic when provided to the authority. Securities or promotiona materia reated to a fund incorporated outside of Kuwait shoud be advertised in accordance with Chapter 7 of Modue 8 (Conduct of Business) of the CMA CMA s byaws and it must ony be directed to persons for private subscription and advertisements avaiabe to the pubic shoud not be used. 9 Guide to Marketing Foreign Funds in the Midde East The units in a coective fund must be offered in Kuwait through a oca agent icensed by the CMA. Any other requirements the CMA sees fit. The CMA has authority to revoke permissions granted for foreign funds to market in Kuwait if they fai any of the reevant tests. The marketing fee for foreign investment funds in Kuwait is KWD 50,000, payabe upon appication and upon annua icence renewa. There is no expicit ban on reverse soicitation in the CMA aw or the byaws. However, investors and fund managers wishing to rey on this defence defence shoud be cautious. The CMA may on a case by case basis determine that soicitation was made in vioation of its reguations.

11 7. Oman Simiar to other GCC countries, Oman has utiised investment funds as an avenue to increase iquidity and this structure has proved popuar. Investment funds may exist either inside or outside Oman. A investment funds are reguated by the Omani Capita Markets Authority (OCMA). Foreign funds can aso be marketed ocay to Omani and non non--omani residents. Nevertheess, units to be paced on offer must obtain OCMA OCMA s prior approva. Those wishing to market foreign funds ocay are encouraged to contact OCMA in advance to discuss their proposa. Under Omani aw, marketing of units of foreign funds takes pace via an OCMA icensed and approved distributor duy appointed by the fund to carry out such activities it deems necessary on its behaf. Reverse soicitation is permitted but investors reying on such a route must be cautious. Such soicitation may be toerated on a case by case basis depending on the discretion of OCMA. Guide to Marketing Foreign Funds in the Midde East 10

12 8. Qatar The Qatar Financia Centre (QFC) is a financia and business centre recognised gobay for its ega and business infrastructure. The QFC aows Authorised Firms to conduct various activities in respect of Coective Investment Schemes providing investors and firms greater fexibiity in its aim to position itsef as an asset management hub. A non non--qfc scheme is a coective investment scheme that is not estabished in the QFC. The QFC permits the marketing of non non-qfc (foreign) funds from the QFC. Ony an Authorised Firm with the requisite icences from the QFCRA may seek authorisation from the QFCRA to operate non non--qfc schemes, athough this is at the discretion of the QFCRA. Operators are subject to the requirements of the jurisdiction in which they are seeking to estabish and manage the non non--qfc fund. Non Non--QFC schemes argey fa outside the scope of the COLL and PRIV rues. The QFCRA takes the same approach in considering appications from Authorised Firms to operate non non-- QFC schemes as it does in consideration of Authorised Firms to operate QFC funds. This approach is taiored to provide for two different scenarios: Operating a reguated non non--qfc scheme, whether a retai scheme or a quaified investor scheme (QIS), and Operating an exempt or unreguated non non--qfc scheme (e.g. a hedge fund). The requirements and criteria paced on an Authorised Firm under the authorisation process refect the specific risks and reguatory treatment of these two different categories of schemes. The most rigorous process is appied to the category of reguated schemes (whether retai schemes or QIS). 11 Guide to Marketing Foreign Funds in the Midde East The QFCRA wi take the foowing into account when assessing non non-qfc appications: Detais about the scheme. An assessment confirming that the activities reate to a retai scheme or a QIS in a jurisdiction with an equivaent reguatory environment to that provided by the QFC regime. Information regarding the jurisdiction where the fund is based. Detais of the firm firm s authorisation to carry out the reevant activities. Detais of the fund fund s registration / authorisation in its home jurisdiction, and Whether the prospectus has been approved by any overseas reguator. An appication to operate a non non--qfc scheme does not incude approva or vetting of the prospectus by the QFCRA. Firms are advised to contact the QFCRA for carifications of the rues and reguations in respect of reverse soicitation on a case case-by by--case basis.

13 The approachabe, knowedgeabe and pragmatic Rupert Copeman-Hi heads the practice at Chares Russe Speechys LLP, which is noted for its wide-ranging sector expertise, incuding financia services, education, teecommunications, rea estate and hospitaity. Lega 500 EMEA, 2018

14 Our key contacts Jonathan Bayiss Financia Services +44 (0) Andrew Coins Corporate +44 (0) Rupert Copeman-Hi Corporate Simon Ewing Rea Estate +44 (0) Keir Gordon Corporate +44 (0) Simon Green Rea Estate Guide to Marketing Foreign Funds in the Midde East

15 David Hicks Corporate +44 (0) David Louis Avocat à a Cour Investment Management & Funds David.Louis@crsbaw.com Mevie Rodrigues Rea Estate +44 (0) Mevie.Rodrigues@crsbaw.com Kate Troup Financia Services +44 (0) Kate.Troup@crsbaw.com Victoria Younghusband Senior Counse Corporate +44 (0) Victoria.Younghusband@crsbaw.com Jessica Arro Senior Associate Financia Services +44 (0) Jessica.Arro@crsbaw.com Vanessa Waters Senior Associate Financia Services +44 (0) Vanessa.Waters@crsbaw.com Benjamin O'Brien-McQueenie Associate Corporate Benjamin.McQueenie@crsbaw.com Jean Roin Associate Investment Management & Funds Jean.Roin@crsbaw.com Guide to Marketing Foreign Funds in the Midde East 14

16 Chares Russe Speechys works with cients in the UK and throughout the word. Our awyers are based in 11 ocations across the UK, Asia, Europe and the Midde East, and through each of these ocations, cients are abe to access the fu range of the firm s skis and expertise. We have an unusuay broad range of skis and experience across the fu spectrum of businesses and persona needs. This gives us a wider perspective, cear insight and a strongy commercia ong-term view. We use this approach to secure the growth of our cients as they move confidenty into the future. It has made us a eader in the word of dynamic growth and famiy business, and among the word s eading creators and owners of private weath and their famiies. Major corporates and institutions find our more considered and persona approach a refreshing aternative to conventiona business aw firms. Contact Rupert Copeman-Hi Midde East Rupert.Copeman-Hi@crsbaw.com David Louis Avocat à a Cour Luxembourg David.Louis@crsbaw.com Mevie Rodrigues United Kingdom +44 (0) Mevie.Rodrigues@crsbaw.com charesrussespeechys.com London Chetenham Guidford Doha Dubai Geneva Hong Kong Luxembourg Manama Paris Zurich This information has been prepared by Chares Russe Speechys LLP as a genera guide ony and does not constitute advice on any specific matter. We recommend that you seek professiona advice before taking action. No iabiity can be accepted by us for any action taken or not taken as a resut of this information. Chares Russe Speechys LLP is a imited iabiity partnership registered in Engand and Waes, registered number OC311850, and is authorised and reguated by the Soicitors Reguation Authority. Chares Russe Speechys LLP is aso icensed by the Qatar Financia Centre Authority in respect of its branch office in Doha and registered in the Dubai Internationa Financia Centre under number CL2511 and reguated by the Government of Dubai Lega Affairs Department in respect of its branch office in the DIFC. Chares Russe Speechys LLP s branch office in Hong Kong is registered as a foreign firm by The Law Society of Hong Kong. Any reference to a partner in reation to Chares Russe Speechys LLP is to a member of Chares Russe Speechys LLP or an empoyee with equivaent standing and quaifications. A ist of members and of non-members who are described as partners, is avaiabe for inspection at the registered office, 5 Feet Pace, London. EC4M 7RD.