Open a Hedge Fund in UAE
Updated on Monday 17th July 2017
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One of the top jurisdictions for performing investment activities is the United Arab Emirates (UAE). Foreign investors may open a hedge fund startup in this country, following the applicable regulations, which were last modified on 1st of August 2016.
Regulatory framework in the UAE
Investment funds and investment companies operating in the UAE are regulated under the rules established by the Central Bank of the United Arab Emirates. However, investors interested in how to start a fund in the UAE will also need to follow the rules of the Commodities Authority of the United Arab Emirates, which generally establishes regulations for securities and for the domiciliation of foreign funds on the local market.
An important aspect that should be known by businessmen interested in investing in UAE is that the jurisdiction provides a dedicated area for perfoming business activities, the Dubai International Financial Centre. Investment funds registered in Dubai, UAE, will fall under the regulations of the Dubai Financial Services Authority.
The meaning of hedge funds in UAE
Foreing investors interested in how to start a hedge fund in UAE should know that there aren’t specific regulations concerning this type of vehicle. More exactly, they are treated under the same legislation applicable to other types of fund.
Investment funds that are registered in the UAE will need to provide a prospectus, which will state relevant aspects, such as:
• objective of the fund;
• investment policies applicable through the fund;
• the manner in which the fund will be managed.
The above mentioned regulations are also applicable to hedge funds, as prescribed by the UAE Central Bank. However, when investing in Dubai, UAE, the regulations for hedge funds may differ.
Also, it is important to know that the investment vehicles registered as hedge funds do not prescribe any type of restrictions applicable to the investors.
As a general rule, in terms of taxation and legal structures, the UAE hedge funds will follow the same rules applicable to open-ended retail funds.
Investors starting a hedge fund in the UAE must know that the vehicle is considered a legal entity, accountable for its liabilities. The investors are liable for the company’s debts only in accordance with the unit share they own within the fund.
Investors interested in further information on the regulations available for hedge funds are invited to contact our team of partners in UAE.