The SCA guidance, known as Decision 57 and 58. also indicates that foreign funds approved by the SCA for promotion in the UAE before 1 August last year, when new mutual funds regulations came into effect, can continue to be promoted.
The funds will just need to ensure that a renewal fee, which would have been due on 31 December 2016, is paid within six months of the Decisions being gazetted in the Official Gazette, which is expected by around the end of December 2017.
“The whole foreign fund registration and promotion approval process has effectively been re-opened,” said Muneer Khan, a partner at international legal firm Simmons & Simmons based in Dubai.
“The SCA was previously processing applications for new funds, but is now also able to process applications for these funds and the automatically renewed funds to be promoted by the approved local promoters.
“Such previously approved local promoters of foreign funds, of which there are 26, have been given a grace period of a year within which to apply for a new promotion license from the SCA,” he said.
The mutual funds industry in the UAE has been waiting for this clarity from the SCA on its new Mutual Fund Regulations and Fees system since the start of the year, with those asset managers who had applied to renew existing funds or to launch new ones not seeing any progress on their applications.
The new guidance notes were placed on the SCA website in Arabic near the end of last month and are expected to come into force by the end of June 2017, when they are officially gazetted.
Automatic registration
The decision notes make clear that all funds registered for sale in the UAE on 1 August 2016 are now deemed to have been registered and can continue to be promoted providing they pay an annual licence renewal fee. Crucially, managers of existing funds won’t have to pay a new fund registration fee as well.
The new fees are around AED35,000 (£7,658, $9,527, €8,986) for an initial registration and AED7,500 for an annual renewal.
However, those asset managers renewing existing funds do have to conform with the new system which requires them to assume responsibility for their fund’s distribution and inform the regulator of its authorised distributors.
New licence
These distributors, who are mainly the local banks, will also have to have a new “Promoters Licence”, also issued by the SCA, and have a grace period of one year, probably from the end of June, to apply for these licences.
To promote funds to retail clients in the UAE, firms that are currently SCA licenced and have an onshore UAE company can use this vehicle for the new licence. The SCA guidance makes it clear that a firm can have multiple licences.
So if an IFA business is an Insurance Authority-licenced company, itcan also apply for the SCA licence and become dual licenced by two regulators.
Life Wrappers
Finally, the SCA notes make clear that funds linked to insurance products licenced by the UAE Insurance Authority will not have to comply to the new system yet.
“The previous exemption for mutual funds linked to insurance products and licenced by the Insurance Authority has been re-introduced until such time as separate regulations are issued.” said Khan.
“So life companies can continue to promote their Insurance Authority approved unit-linked products until SCA issues separate regulations on these types of products,” Khan said.
