Crowdfunding Platform Operator Regulation

Cabinet resolution regulating crowdfunding in the State, including the free zones: entities barred from raising funds, licensing of platform operators, obligations towards investors and fundraisers, rights of the parties, inspection and sanctions.

Summary

Cabinet Resolution No. 36 of 2022 regulates equity crowdfunding across the UAE, including the free zones (Article 2): raising money from investors through an online platform in exchange for shares in a company to be formed, or a capital increase of an existing company, to finance a project. Operating a platform requires a CMA licence (Article 4). The resolution was issued on 11 April 2022, published in the Official Gazette on 15 April 2022 and took effect 60 days later, on 14 June 2022. Cabinet Resolution No. 139 of 2023 amended Articles 3, 6, 7 and 8 from 16 January 2024.

Article 3 bars joint stock companies, investment funds, securities, insurance and banking businesses, and companies raising money to lend or to invest in other companies from seeking crowdfunding. Article 4 requires the operator to be a licensed market or a UAE-incorporated company with paid-up capital of at least AED 1,000,000 that meets the Financial Activities Rulebook. Article 5 prohibits the operator from soliciting or advising investors, investing on their behalf, or taking more than 10% of any project, and requires disclosure of its ownership, conflicts, fees and investor rights.

Article 6, as amended, protects investors: a written agreement acknowledging that shares cannot be resold through the platform; a 12-month cap for retail investors of AED 30,000 per financing applicant and AED 100,000 across the platform; investor money held in escrow; project information published at least 14 days before investment opens; Etihad Credit Bureau reports on the applicant and its directors; immediate closure when the maximum is reached; and refunds within 5 days if the minimum is missed, the offer is cancelled or a material change occurs.

Article 7 requires the applicant to obtain preliminary approval for its project, offer on only one platform for no more than 15 working days (extendable once), raise no more than AED 15 million in total with its group, and form the company or increase capital within 5 working days of the offer closing. Article 8 gives investors withdrawal rights during the offer and for 5 working days after key events. Article 10 sets fines of AED 100,000 to AED 1,000,000 plus the profit made or loss avoided.

Status: in force as amended; the Rulebook's sixth licence category implements it.

Who it applies to

Crowdfunding platform operators anywhere in the UAE including free zones, companies and individuals seeking equity crowdfunding for a new or existing company, investors (with caps for non-professional investors), and markets licensed by the CMA that operate platforms.

Contents

English official text in 21 articles. Open the full text or jump to a provision:

1. Article 1 — Entering into an agreement with the investor as per the conditions specified in
2. Article 2 — Disclosing to investors their rights to retract their investment decisions and the
3. Article 3 — Disclosing the mechanisms available to investors to receive distributions of
4. Article 4 — Educating the investor on how to invest through the platform and the type of
5. Article 5 — Ensuring that the investments of an investors– except for professional
6. Article 6 — Restricting transactions on the platform to the aggregation of funds for the
7. Article 7 — Retaining the funds deposited by investors in an escrow account with one of
8. Article 8 — Segregation of the operator’s bank accounts from bank accounts where
9. Article 10 — Establishing procedures to ensure the financing applicant’s compliance with
10. Article 11 — Closing the offering immediately upon reaching the maximum required
11. Article 12 — Returning funds to the investor within 5 days in the following circumstances
12. Article 13 — Ensuring that there are no material changes in the financing request, the
13. Article 14 — Publishing the business plan, financial feasibility, and economic aspects of
14. Article 15 — Publishing information about the financing applicant on the platform and
15. Article 16 — Providing credit information about the financing applicant, the chairman, and
16. Article 17 — Publishing the applicants’ disclosures on the platform while retaining these
17. Article 18 — Immediately disclosing on the platform any errors, misleading information, or
18. Article 19 — Promptly disclosing to the investor if the financing applicant decides to settle
19. Article 20 — Verifying the absence of any fraudulent activities, deception, or harm to
20. Article 21 — Rejecting the financing applicant’s offer on the platform or removing their
21. Article 22 — Refraining from providing investment advice to investors, negotiating

Key provisions

Obligations and deadlines

• Obtain a CMA licence before operating a crowdfunding platform.
• Hold paid-up capital of at least AED 1,000,000.
• Keep investor funds in escrow with a licensed bank until the offer closes.
• Cap retail investment at AED 30,000 per applicant and AED 100,000 per platform each 12 months.
• Publish project information at least 14 days before investment opens.
• Refund investors within 5 days where the offer fails or is cancelled.
• Form the company or complete the capital increase within 5 working days of closing.

Penalties

Article 10 permits a warning, a fine of not less than AED 100,000 and not more than AED 1,000,000 together with a fine equal to the profit achieved or loss avoided, suspension of the operator, cancellation of its licence and sanctions on its employees under Section One of the Financial Activities Rulebook. The Authority may also cancel financing operations made in breach and order reinstatement, protecting good-faith third parties.

History and citations

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