TRW & Co · Banking, Finance & Capital Markets
Investment Funds in the UAE
Investment funds in the UAE are regulated in three systems: the federal Capital Market Authority onshore, the DFSA in the DIFC and the FSRA in ADGM. New federal capital markets laws took effect on 1 January 2026 and ADGM reshaped its manager regime in September 2026, so domicile, licensing and marketing choices need fresh analysis.
Key pointThe fund's domicile decides how it is regulated, but the investor's location decides how it may be marketed: a DIFC or ADGM fund that targets onshore UAE investors falls within the CMA's reach under the 2025 decree-laws.
At a glance
Three fund regulators
The CMA regulates onshore funds and onshore marketing, the DFSA regulates DIFC funds, and the FSRA regulates ADGM funds, each under its own rulebook.
New federal law 2026
Federal Decree-Laws No. 32 and 33 of 2025 took effect on 1 January 2026, replacing the SCA with the CMA and giving covered entities one year to regularise.
Private fund tickets
In both the DIFC and ADGM, Exempt Funds require a USD 50,000 minimum subscription and Qualified Investor Funds USD 500,000, offered privately to professional clients.
ADGM manager reforms
Rules finalised on 16 September 2026 add sub-threshold and institutional fund manager regimes; existing VC and foreign managers transition by 31 March 2027.
Foreign fund marketing
Onshore, foreign funds may be promoted only privately to professional investors through a licensed promoter with approval; retail promotion of foreign funds is not permitted.
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What investment funds in the UAE involve
Investment funds in the UAE are pooled vehicles that collect money from several investors and invest it under a defined policy, managed by a licensed manager rather than by the investors themselves. They range from a two-investor co-investment company to a listed real estate investment trust, and include private equity, venture capital, hedge, credit, real estate, Islamic and family funds.
Three regulatory systems sit side by side. Onshore funds and any fund marketed to onshore investors answer to the federal Capital Market Authority (CMA), which replaced the Securities and Commodities Authority (SCA) on 1 January 2026. Funds domiciled in the Dubai International Financial Centre (DIFC) are regulated by the Dubai Financial Services Authority (DFSA), and funds in Abu Dhabi Global Market (ADGM) by the Financial Services Regulatory Authority (FSRA).
The legal question usually arrives earlier than sponsors expect. It is triggered when a founder pools friends-and-family money into a holding company, when a family office wants to admit outside capital, when a foreign manager plans a roadshow in Dubai, or when a real estate developer wants to sell units in a project vehicle. Each of those can amount to establishing or promoting a fund.
The legal and regulatory framework for investment funds in the UAE
Onshore: the CMA and the 2025 decree-laws
Federal Decree-Law No. 32 of 2025 established the Capital Market Authority as legal successor to the SCA, and Federal Decree-Law No. 33 of 2025 on the Regulation of the Capital Market replaced Federal Law No. 4 of 2000. Both took effect on 1 January 2026. Establishing and managing investment funds is one of the regulated activities listed in the new law, and no one may carry it on without a CMA licence or approval.
The new law reaches beyond the mainland. It applies to anyone who targets clients in the UAE with a regulated activity, even from abroad or from a financial free zone, while activity conducted exclusively inside the DIFC or ADGM stays outside the CMA's remit. Commentators also note that funds may now take commercial company forms under the Companies Law, subject to CMA approval or exemption.
Existing SCA resolutions continue to apply where they do not conflict with the decree-laws, until replaced. Entities covered by the new law must regularise their status within one year of 1 January 2026, a period the CMA may extend.
The onshore fund rulebook
The detailed onshore rules still derive from SCA Decision No. 1/RM of 2023 on Investment Funds Regulations, effective 1 February 2023, which repealed the 2016 mutual fund regime. That reform permitted full foreign ownership of fund management companies, reduced their minimum share capital from AED 50 million to AED 1 million, and introduced family funds (units held only by family members who are the ultimate beneficial owners) and self-managed funds.
An administrative decision later in 2023 added specialised categories, including real estate development, precious metals, direct financing, ESG, capital protection, protected-cell, charity and commodities funds. The published review targets were ten business days for a public fund and five business days for a private fund once a complete file is lodged.
DIFC: the Collective Investment Law and the DFSA rules
DIFC funds are governed by the Collective Investment Law 2010 (DIFC Law No. 2 of 2010) and the DFSA Collective Investment Rules (CIR) in the DFSA Rulebook. The DFSA funds overview describes three categories: Public Funds, Exempt Funds and Qualified Investor Funds (QIFs). Exempt Funds and QIFs are restricted to Professional Clients through private placement, with minimum subscriptions of USD 50,000 and USD 500,000 respectively.
ADGM: FSMR and the FSRA Fund Rules
ADGM funds sit under the Financial Services and Markets Regulations 2015 and the FSRA Fund Rules in the ADGM rulebook. The categories mirror the DIFC: Public Funds, Exempt Funds (minimum USD 50,000) and QIFs (minimum USD 500,000), the latter two offered by private placement to professional clients. On 16 September 2026 the FSRA finalised enhancements to its funds framework, adding lighter regimes for smaller and institutional-only managers.
| Feature | Onshore (CMA) | DIFC (DFSA) | ADGM (FSRA) |
|---|---|---|---|
| Core law | Federal Decree-Laws No. 32 and 33 of 2025; SCA Decision No. 1/RM of 2023 | Collective Investment Law 2010; CIR module | FSMR 2015; Fund Rules |
| Private fund categories | Private funds, family funds, self-managed funds | Exempt Fund; Qualified Investor Fund | Exempt Fund; QIF; institutional-only QIF |
| Typical investor base | Onshore retail and professional investors | Professional Clients (private); retail via Public Fund | Professional clients (private); retail via Public Fund |
| Legal system | UAE civil law; onshore courts | Common law; DIFC Courts | English common law applied; ADGM Courts |
| Common use | Funds targeting onshore retail or local institutions | Regional PE, credit and hedge funds | PE, VC, credit and institutional mandates |
Choosing a domicile and vehicle
The domicile decision drives cost, investor reach, court system and tax filings for the life of the fund. Start from the investors, not the jurisdiction. A fund raising from GCC institutions and international LPs will usually choose the DIFC or ADGM, because they offer familiar common-law vehicles, English-language rulebooks and fast-track registration for private funds.
A fund that must reach onshore retail investors needs either an onshore CMA-registered fund or a free-zone public fund that uses the passporting arrangements between the onshore regulator and the free-zone regulators. Those arrangements have historically been available only to managers established in the DIFC or ADGM, and have carried conditions such as appointing an onshore-regulated custodian.
Legal forms
In the DIFC the investment company is the most popular form; it can be internally or externally managed and can use protected cell or incorporated cell structures for umbrella funds. The investment partnership is a DIFC limited partnership whose general partner must be DFSA-authorised as fund manager, and it is the usual choice for private equity and hedge funds. The investment trust, constituted by trust deed between manager and trustee, is mostly used for property funds. ADGM offers equivalent investment companies (including cell companies), limited partnerships and investment trusts.
Exempt or QIF
QIFs carry the lightest regulation and the fastest DFSA timetable, but require a USD 500,000 ticket. Exempt Funds accept USD 50,000 tickets, which suits wealth-channel raises, in exchange for more prescriptive rules.
Open or closed-ended
Liquidity terms drive the rules that apply. DFSA open-ended managers must hold enough liquidity to meet redemptions, while credit and public property funds must be closed-ended.
Internal or external manager
A DIFC External Fund Manager from a recognised jurisdiction can run a domestic fund without a DFSA licence if it appoints a DFSA-licensed administrator or trustee as local agent and submits to DIFC law and courts.
Specialist fund rules
Property funds, REITs, credit funds, Islamic funds and money market funds carry extra conditions in the DIFC. A REIT must distribute at least 80 per cent of audited annual net income, and an Islamic fund needs a Shari'a Supervisory Board.
Manager licence
The manager's licence often matters more than the fund's registration. See our pages on asset management in the UAE and DIFC financial regulation for the licensing path.
Tax profile
A fund may apply for exemption as a Qualifying Investment Fund under the federal Corporate Tax Law if it meets the conditions; managers remain taxable on fees. Model this early with our corporate tax team.
The 2026 ADGM fund manager reforms
The FSRA reforms finalised on 16 September 2026 followed Consultation Paper No. 12 of 2025. They create a Sub-Threshold Fund Manager regime for managers whose aggregate committed capital does not exceed USD 200 million, whose funds are closed-ended and not available to retail clients, and who do not act as a host manager. The base capital requirement is USD 50,000 with no expenditure-based minimum.
A separate Institutional Fund Manager regime covers managers running only QIFs with a minimum subscription of USD 5 million and no natural-person unitholders, subject to employee investment provisions, with capital set at the higher of USD 50,000 and six fifty-seconds of annual audited expenditure. Venture capital fund managers now fall within the sub-threshold framework, and existing venture capital and foreign fund managers have until 31 March 2027 to transition.
Emerging managers launching a first closed-ended private equity or venture fund in ADGM should test the new sub-threshold regime before budgeting for a full-scope fund manager licence. The capital and staffing saving can be material, but the USD 200 million committed capital ceiling must be monitored across all funds, including successor vintages.
Launching a fund: process and timeline
A well-prepared launch of investment funds in the UAE runs in parallel workstreams: manager authorisation, fund constitution, service provider appointments and investor documentation. The sequence below reflects a DIFC or ADGM private fund; an onshore fund follows a similar path with CMA registration.
- Define the investor base and strategy. Confirm who will invest, minimum ticket sizes, liquidity terms, leverage and asset classes. These decide the fund category, domicile and whether retail access is ever needed.
- Secure the manager's licence. Apply for or extend the manager's licence with the DFSA, FSRA or CMA, or appoint a licensed host manager. Regulators assess systems and controls, key individuals, capital and compliance arrangements.
- Incorporate the vehicle. Register the investment company, limited partnership or trust with the relevant registrar, settling cell structures and the general partner where used.
- Draft the constitution and offering documents. Prepare the articles or LPA, private placement memorandum or prospectus, subscription agreement and side letter policy, aligned with the applicable fund rules.
- Appoint service providers. Engage the administrator, custodian or trustee, auditor, and for Islamic funds a Shari'a Supervisory Board. Confirm valuation and NAV policies.
- Notify or register the fund. File the notification for an Exempt Fund or QIF, or apply for public fund registration. The DFSA states targets of five business days for Exempt Funds and two business days for QIFs once a complete file is lodged.
- Onboard investors and close. Classify each investor, complete AML and source-of-funds checks under Federal Decree-Law No. 10 of 2025, accept subscriptions and issue units.
- Run ongoing compliance. Deliver periodic reporting, audited accounts, regulatory returns, tax filings and investor notices, and keep the marketing plan within the approved channels.
Marketing funds to UAE investors
Marketing is where investment funds in the UAE most often go wrong. Since 1 February 2023 the onshore rules on promoting foreign funds have allowed promotion only by private placement to professional investors and market counterparties, through a licensed local promoter, with approval of the fund. Marketing foreign funds to onshore retail investors is not permitted. Reverse solicitation survives but is narrow, applies on a cross-border basis, and must be provable from documents.
The 2025 decree-laws reinforce this: marketing foreign funds to UAE investors falls within domestic regulation wherever the marketing takes place. A DIFC or ADGM manager targeting onshore investors cannot rely on its free-zone licence alone. Promotions inside the free zones have their own rules; see financial promotions in the UAE and our guide to promotions rules and finfluencers.
The fund's licence tells you where it may be managed. The marketing rules tell you who may hear about it, and they follow the investor, not the manager.
Documents and evidence to assemble
Regulators and institutional investors will test the same file. Assemble it once, in a form that will survive due diligence questionnaires and a later supervisory visit.
- Business plan and regulatory business plan showing strategy, target investors, projected assets and the three-year financial forecast for the manager.
- Fund constitution: articles of association, limited partnership agreement or trust deed, with cell or umbrella provisions where relevant.
- Private placement memorandum or prospectus, subscription agreement, investor classification forms and risk disclosures.
- Service provider agreements: administration, custody or trusteeship, audit, and the investment management or advisory agreement.
- Valuation, liquidity, conflicts of interest, remuneration and side letter policies.
- AML and sanctions framework, including investor onboarding procedures and beneficial ownership records.
- CVs, fitness and propriety declarations for directors, senior managers and control function holders.
- Marketing plan mapping every target jurisdiction to its permitted channel and promoter.
Risks and common mistakes
Is a club deal or co-investment vehicle a fund?
Often it is. A vehicle that pools contributions from several investors and is managed by someone else for their benefit will usually meet the definition of a collective investment fund in the DIFC and ADGM, and onshore regulation looks at substance over label. The DFSA rules exclude arrangements whose main purpose is an unrelated business, but a holding company that simply buys shares with investor money rarely qualifies. Sponsors who run an unregistered fund risk enforcement, unenforceable subscriptions and investor rescission claims. Analyse the structure before taking money, and consider an employee or co-investment carve-out where the rules allow one.
Relying on a free-zone licence to market onshore
A DIFC or ADGM fund manager is authorised for activity in its centre. When it emails a pitch deck to a family office on the mainland, holds a dinner in Dubai for onshore investors or runs a webinar targeting UAE residents, it may be promoting a fund onshore. The 2025 decree-laws extend the CMA's reach to persons targeting UAE clients from free zones. Map every investor touchpoint, use a licensed promoter where required, and keep evidence of any genuine reverse solicitation.
Mismatched minimum subscriptions and investor classification
Exempt Funds and QIFs depend on investors being Professional Clients and meeting the minimum ticket. Errors arise when feeder vehicles, nominee platforms or employee schemes admit investors below the threshold, or when classification is done after subscription. The result can be that the fund no longer meets its category conditions. Build classification into onboarding, document the basis for each investor, and check how the 2026 ADGM employee investment provisions apply before admitting staff.
Ignoring the onshore transition deadline
Entities covered by the new federal law must regularise their status within one year of 1 January 2026, unless the CMA extends the period. Managers, promoters and fund administrators that relied on legacy SCA approvals should confirm whether their permissions map onto the new list of regulated activities and whether any new licence, approval or registration is needed. Leaving this to the last quarter risks a gap in permissions just as investor reporting cycles fall due.
Under-built governance and valuation
Investors and regulators increasingly focus on how illiquid assets are valued, how conflicts between funds are allocated and how fees are calculated. The CMA's 2026 fee resolution created a category for in-kind asset valuers for funds, reflecting attention to valuation. A fund whose valuation policy is generic, or whose investment committee minutes are thin, will struggle in a dispute or inspection. Adopt documented policies and follow them.
Cross-border investment funds: the UAE and its main counterparties
Cross-border investment funds in the UAE are the norm rather than the exception. The investor base, the assets and the sponsor usually sit in different countries, so the fund documents must work under several laws at once.
United Kingdom and Europe
A UAE-domiciled fund marketed to UK professional investors generally relies on the UK national private placement regime, which requires a notification to the Financial Conduct Authority before marketing. EU states apply their own private placement rules under the AIFM Directive. The DFSA has information-sharing arrangements with many European regulators, which supports these filings.
Singapore, China and India
Singapore sponsors often compare a DIFC or ADGM vehicle with a Singapore variable capital company; marketing a UAE fund into Singapore generally relies on the restricted scheme regime for accredited and institutional investors. Chinese and Indian investors face outbound investment controls at home, so subscription timetables must allow for approvals and foreign exchange formalities on their side.
Bangladesh, Saudi Arabia and the GCC
Bangladeshi investors face strict outward remittance controls, and any subscription from Bangladesh needs a clear legal channel under Bangladesh Bank rules before funds move. Saudi Arabia's Capital Market Authority regulates the offer of foreign funds to Saudi investors, typically through a licensed Saudi intermediary. TRW & Co's offices in Dhaka and Chattogram help coordinate the Bangladesh side; elsewhere we work with local counsel.
How TRW & Co helps
We advise sponsors, managers, family offices and investors on investment funds in the UAE from first structuring through to steady-state compliance. Our fund work links closely with private equity transactions, venture capital investments and family office structuring.
Structuring and domicile
We compare onshore, DIFC, ADGM and offshore options against your investor base, asset class and tax profile, and recommend the vehicle and manager model.
Licensing
We prepare manager authorisation applications to the DFSA, FSRA or CMA and coordinate regulator queries. Our guides to setting up a fund in the DIFC or ADGM explain the steps.
Fund documentation
We draft constitutions, LPAs, placement memoranda, subscription packs and side letters, and align them with the applicable fund rules and investor expectations.
Distribution mapping
We build a jurisdiction-by-jurisdiction marketing plan covering onshore UAE, the GCC, the UK, Singapore and South Asia, and identify where a licensed promoter or filing is needed.
Ongoing compliance
We support periodic reviews, regulatory returns, AML frameworks and responses to supervisory visits, working with our AML compliance practice.
Disputes and restructuring
Where investor disputes arise we provide strategy and coordination. Where representation before the DIFC or ADGM Courts or onshore courts is required, we work alongside locally licensed advocates and registered practitioners.
To discuss a launch or a review of an existing fund, contact TRW & Co or browse our practices.
Checklist for sponsors and decision-makers
- Confirm whether your vehicle is a fund under DIFC, ADGM or onshore rules before accepting any investor money.
- Choose domicile by investor base, retail access needs and court preference, not by headline cost alone.
- Check whether the ADGM sub-threshold or institutional manager regimes fit, and note the 31 March 2027 transition date for existing venture capital and foreign managers.
- Map every marketing touchpoint to a permitted channel, especially onshore UAE investors approached from a free zone.
- Verify that legacy SCA permissions are regularised under the CMA regime within the transition period.
- Document investor classification and minimum subscriptions at onboarding, not afterwards.
- Adopt written valuation, liquidity, conflicts and remuneration policies and follow them.
- Assess Qualifying Investment Fund status and the manager's own corporate tax position before first close.
Frequently asked questions
01Which regulator approves an investment fund in the UAE?
It depends on where the fund is domiciled and who it targets. A fund established onshore is registered with the Capital Market Authority, which replaced the SCA on 1 January 2026. A DIFC fund is notified to or registered with the DFSA, and an ADGM fund with the FSRA. If a free-zone fund is marketed to investors onshore, the CMA's rules on promotion also apply, so a single fund can deal with two regulators. The manager needs its own licence from the regulator where it operates.
02What is the difference between an Exempt Fund and a Qualified Investor Fund?
Both are private funds offered by private placement to professional clients in the DIFC and ADGM. Exempt Funds have a USD 50,000 minimum subscription and more prescriptive rules. Qualified Investor Funds require USD 500,000 and carry lighter, more proportionate regulation; the DFSA, for example, lets QIF managers self-certify the adequacy of their systems and controls and targets a two business day notification process, compared with five business days for Exempt Funds. QIFs suit institutional and high-net-worth raises, Exempt Funds wider wealth-channel distribution.
03Can a foreign fund be marketed to investors in Dubai or Abu Dhabi?
Onshore, since 1 February 2023, foreign funds may be promoted only by private placement to professional investors and market counterparties, through a locally licensed promoter, with approval of the fund; retail promotion of foreign funds is not permitted. The 2025 decree-laws confirm that marketing to UAE investors is regulated wherever it takes place. Inside the DIFC and ADGM, foreign funds may be marketed by licensed firms under each centre's own conditions. Genuine reverse solicitation remains available but is narrow and must be documented.
04How long does it take to set up a fund in the DIFC or ADGM?
The fund notification itself can be quick: the DFSA states targets of five business days for Exempt Funds and two business days for QIFs once a complete file is lodged. The longer path is usually the manager's licence, incorporation of the vehicle, service provider onboarding and document negotiation with anchor investors. A first-time manager should plan for several months end to end, while an established licensed manager adding a new fund can move much faster. Public funds take longer because a full prospectus is required.
05What changed for fund managers in ADGM in 2026?
On 16 September 2026 the FSRA finalised reforms following Consultation Paper No. 12 of 2025. A Sub-Threshold Fund Manager regime covers managers of closed-ended, non-retail funds with aggregate committed capital up to USD 200 million, with base capital of USD 50,000. An Institutional Fund Manager regime covers managers of QIFs with a USD 5 million minimum subscription and no natural-person investors. Venture capital managers move into the sub-threshold framework, and existing venture capital and foreign fund managers have until 31 March 2027 to transition.
06Do investment funds in the UAE pay corporate tax?
A fund may apply to be treated as an exempt Qualifying Investment Fund under the federal Corporate Tax Law if it meets the statutory conditions, which look at regulation, diversity of ownership and the purpose of the fund. If it does not qualify, the fund may be taxable or may be structured as a transparent partnership. The fund manager is a separate taxable person on its management and performance fees. Free zone rules may also apply to the manager. Model the tax position before choosing the vehicle.
07Do we need a licence to run a co-investment vehicle for friends and family?
Possibly. If several people contribute money to a vehicle that someone else manages for their collective benefit, it may be a collective investment fund even if it is small and informal. The DIFC and ADGM rules exclude some arrangements, such as those whose main purpose is an unrelated business, and onshore rules recognise family funds held only by family members who are ultimate beneficial owners. Take advice before accepting contributions, because operating an unregistered fund can lead to enforcement and investor claims.
Sources and official materials
- Capital Market Authority (UAE) — Federal regulator for onshore funds and fund promotion, successor to the SCA
- DFSA: Key Features of the DFSA Funds Regime — DIFC fund categories, minimum subscriptions, timelines and legal forms
- DFSA Rulebook — Collective Investment Law 2010 and Collective Investment Rules
- ADGM: FSRA finalises enhancements to its funds framework — 16 September 2026 reforms for fund managers
- ADGM FSRA Rulebook — FSMR 2015 and the FSRA Fund Rules
- ADGM Financial Services Regulatory Authority — FSRA authorisation and supervision
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
