Tax and investment treaties between the UAE and other countries, as well as the legal treatment of land ownership, make it advantageous for foreign investors in Gulf assets – or Gulf-based investors in overseas assets – to have their funds domiciled in the Dubai International Financial Centre (DIFC).
Until 2014, the Dubai Financial Services Authority (DFSA), the regulatory body for the DIFC, permitted only two types of funds: public funds and exempt funds. Public funds serve retail investors and are highly regulated in line with International Organisation of Securities Commissions (IOSCO) standards. Exempt funds serve professional, experienced investors. Regulation is less stringent but subscriptions to exempt funds start at $50,000.
As a result of an extensive benchmarking process against established fund regimes in Luxembourg, Cayman Islands and Ireland, the DFSA implemented a new Qualified Investor Fund (QIF) regime in 2014. Specifically targeted at sophisticated investors such as high net worth individuals and family offices, the intention is to provide a less regulated, lower cost alternative to the existing Exempt Funds regime. To qualify as a QIF, a fund must have 50 or fewer unit holders who meet the Professional Client criteria and make a minimum subscription amount of US$500,000. Units may only be offered by way of private placement.
QIFs benefit from a fast track (two business days) authorisation process and a lighter regulatory treatment, including limited prospectus disclosure requirements and more flexibility with regard to appointment of fund custodians.
