ESCA New Investment
Management Regulation Webinar
Natalie Boyd
© Copyright 2014 by K&L Gates LLP. All rights reserved.
SCOPE OF REGULATION
 SCA Decision No.1 of 2014; anticipated follow up to
2012 Investment Funds Regulation
 SCA's intention is to prohibit unlicensed investment
management activities with non-governmental
institutions
 Applies to all firms operating within and outside the UAE,
including UAE free zones (query application to new Abu
Dhabi free zone)
 Definition of 'investment management activities' and
'securities' is broadly interpreted
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SCOPE OF REGULATION - CONTINUED
 No exemption for assets which are managed for a UAE
client but from outside the UAE
 UAE government owned institutions are exempted from
the restriction (eg ADIA, ICD)
 SCA confirmed that securities firms acting for their own
account; family offices; high net worth individuals are not
exempted (narrower application than Investment Funds
Regulation)
 SCA confirmed reverse solicitation exemption; no formal
guidelines but agreed with KLG approach
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LICENSING REQUIREMENTS
 Eligible applicant criteria
 AED 5m capital requirement (except for local banks and
foreign branches)
 AED 1 million guarantee
 AED 50,000 licensing fee (AED 25,000 annual renewal
fee)
 Premises in the UAE; internal systems and controls;
employment requirements
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LICENSING PROCESS
 Steps to be followed for application
 Timing (30 days following submission to SCA)
 Failed applications
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ONGOING REQUIREMENTS
 Corporate governance
 Reporting to SCA
 Client management
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MITIGATING FACTORS
 SCA will not grant individual waivers to foreign firms but
is open to discussion with foreign firms to improve scope
of regulation
 Reliance on one of the exemptions; reverse solicitation is
likely to be easier to rely on with existing clients
 Risk of sanction less likely for firms which do not already
have a presence in the UAE
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Q&A
If you would like to ask us questions after this
webinar, please email: natalie.boyd@klgates.com