Book an appointment with us, or search the directory to find the right lawyer for you directly through the app.Find out more
Welcome to the latest edition of Law Update titled “Rise of Generative AI.”
In this edition, we dive into the dynamic world of Technology, Media, and Telecommunications (TMT) across the Middle East and North Africa (MENA) region. TMT continues to play a vital role in positioning the region as an international business and social hub, driving significant growth and innovation.
Our focus in this Law Update is on the sector’s ongoing potential to advance and propel the region toward a more digital economy. We explore the benefits of embracing a digital transformation and how local authorities have responded by enhancing regulations to accommodate the evolving TMT landscape.
This edition covers a range of topics, including – the new Telecommunications & Information Technology Law in Saudi Arabia, the intricacies of trademarks in the Metaverse, and the legal challenges faced by the video game industry. Additionally, we take a regional perspective, discussing jurisdictions such as Kuwait, Saudi Arabia, UAE, Oman, and Bahrain to provide a comprehensive understanding of the TMT landscape.
We hope you thoroughly enjoy this packed issue of Law Update, filled with captivating articles that address key legal issues within a vital sector for the region.Read the full edition
Further to its media briefing in December 2022, wherein the SCA indicated its positive intent to achieve a 100% increase of the amount of the money managed by local funds and introduce new types of investment funds under regulation, the SCA has now repealed Board of Directors’ Decision No. (9/R.M) of 2016 Concerning the Regulations of Investment Funds (“Old Fund Regulations”) and promulgated the New Fund Regulations.
The New Fund Regulations aim to revamp the existing legislative framework relating to the incorporation and governance of public and private funds established in the UAE and is more comprehensive than the Old Fund Regulations to ensure the protection and cohesive growth of the local UAE funds market. Substantial developments include, inter alia, expedited processing periods for the approval of public/private funds, reduction of regulatory requirements and additional types of funds recognized by SCA, which are set out below.
The New Fund Regulations have expanded the exemptions of arrangements that would not be considered as a fund to cover joint bank accounts, insurance and pension contracts, joint investments between the parent, holding, subsidiary and sister companies, timeshare properties and other sharing property use, employees share options schemes managed by the issuer or group company and government funds.
New categories of fund structures have been introduced such as:
In addition, the New Fund Regulations establishes new categories of specialized funds such as real estate development funds, precious metal funds, direct financing funds, ESG funds, capital protection funds, protected-cell funds, charity investment funds and commodities investment funds.
An important measure is the reduction in capital requirements of fund management companies from AED 50 million to 1 million and fund administration companies from AED 5 million to AED 1 million. The New Fund Regulations removes foreign ownership restrictions, allowing 100% foreign ownership of such companies.
Furthermore, the application process timelines have been reduced to 5 working days for private funds and 10 working days for public funds for the approval of establishment of the respective fund. The SCA’s final decision on applications for new types of funds will be issued within 20 working days from the date of submission. This is a welcomed amendment that will streamline the application and establishment process for investment funds aiming to enter the UAE market.
While existing funds would need to conduct suitable due diligence to ensure compliance with the New Fund Regulations, it is worthy to note that there are some exemptions. Additionally, such funds are permitted to continue with activities as per the categorization and investment policy set out in their offering document. In the event no categorization or investment policy is set out then compliance on such matters in accordance with the New Fund Regulation shall apply.
It is expected that the SCA will issue a separate decision on the regulation of joint investment plans and investment funds linked to insurance products established by UAE licensed insurance companies and until further notice, status quo can be maintained.
Further notable provisions under the New Fund Regulations include:
The New Fund Regulations will be effective the day after publication in the Official Gazette.
Separately, the SCA has also issued Administrative Decision no. 8 RT of 2023 that contains annexes to the New Fund Regulations. The annexes contain guidelines on (i) the content of the offering document and Key Investor Information Document (“KIID”); (ii) the investment policies of the local funds; (iii) classifications of local funds; (iv) the evaluation of units of the local public fund.
The New Funds Regulations details matters relating to the incorporation, regulation and oversight of locally established funds. To align with its objective to provide impetus to the local funds market, the SCA has also issued the Foreign Funds Promotion Regulation that provides new criteria on the promotion, offering, and registration of foreign funds to investors in the UAE.
The SCA has issued approvals to 1965 foreign funds to promote and offer their funds through licensed promoters in the UAE. The intention of the Foreign Funds Promotion Regulation is to restrict the access of foreign funds to UAE retail investors.
The promotion of foreign funds in the UAE can only be made by way of private placement to professional and counterparty investors as defined in Resolution No. 13 of 2021 Concerning the Booklet of the Rules of Financial Activities and the Status Rectification Mechanism (the “Rulebook”). As such, investors appear to be restricted from accessing public foreign funds under the Foreign Funds Promotion Regulations. These are material developments.
UAE licensed promoters have been provided a grace period of 6 months, from 1st January 2023, to continue with existing promotion arrangements or until the remaining period of those arrangements expire, whichever is earlier. It is expected that the SCA will issue a circular and will reach out to promoters on existing foreign funds that have been registered with the SCA to provide further guidance.
The Foreign Funds Promotion Regulations is effective as of 17 January 2023.
We continue to work closely with the SCA in relation to investment funds and promotion of foreign funds in the UAE and we are well equipped to advise on the regulatory impact of this new regime.
If you require further information, please feel free to contact us.
To learn more about our services and get the latest legal insights from across the Middle East and North Africa region, click on the link below.