§Article 48 — Enforceability of the Resolution
This Resolution shall be published in the Official Gazette and shall come into force from the day following the publication date thereof.
Appendix No. (1) Information in the Offering Document and offering document summary (KIID)
First: Information of the Offering Document The fund manager and founders of the self-managed fund shall comply with the following:
Preparing the local fund-offering document that includes the information of interest to the investor, on the form specified by the Authority, provided that it includes, as a minimum, the following information:
| 1. | Information about the fund manager and the self-managed fund founders.
| 2. | Name of the fund, its term and the purpose of its establishment.
| 3. | The fund's capital or its minimum capital.
| 4. | The internal organization of the fund's governance.
| 5. | The investment strategy of the investment fund, the investment risks, the method of calculating them, their upper limits, and borrowing limits.
| 6. | Method of issuing units, their classes, subscription and redemption and the circumstances in which redemption may be temporarily suspended.
| 7. | Circumstances in which it is allowed to reduce or increase the capital of the closed-end local fund.
| 8. | Defining the categories and persons who are permitted to invest in the local fund.
| 9. | Tax information of the countries in which the investment is made, if any.
| 10. | Rights of the unit holders, distribution policy, retention and distribution of profits
| 11. | Criteria and methodology for evaluating the assets of the local fund and the method for calculating the net asset value per unit (NVA per unit) and its periodicity.
| 12. | Name of the market in which the local fund units will be listed or traded.
| 13. | Application of Disclosure rules.
| 14. | Name and data of the custodian, its obligations, a statement of any cases of conflict of interests with the custodian, and details of any custody outsourcing agreements.
| 15. | Name of the real estate appraiser (in the event that the fund is a local real estate fund), any of the related parties to the local fund, the auditor, their fees and the mechanism for calculating the fees.
| 16. | Calculation of all fees and expenses incurred by the local fund and the mechanism for said calculation.
| 17. | If the fund is an Islamic investment fund then the obligations of the local fund to the provisions and principles of Islamic Sharia must be detailed.,
| 18. | The obligations of the fund related to the provisions and principles of Islamic Sharia, the names of members of the Sharia Supervisory Committee the Sharia Supervisory Committee's approval of the investment policy of the fund. These provisions must be compatible with the provisions of Islamic Sharia and be in accordance with the standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
| 19. | Details of fund liquidation.
| 20. | Relevant information about the umbrella fund and its sub-funds.
| 21. | Information on the feeder fund and master fund.
| 22. | Details if the fund has invested in other funds.
| 23. | The offering document of Charitable Funds, shall include the following:
| | a. | Clearly written methodoly of donation to be established when the fund is launched and operating.
| | b. | Method and criteria of selecting beneficiaries.
| | c. | Determining the entity (s) to which the Fund's assets will be transferred in the event of liquidation or termination of the Fund.
| | d. | The subscriber’s signature on an undertaking stating that he is aware that the Fund’s investments, all its profits and returns resulting from its investments, and all its assets, upon termination for any reason whatsoever, will transfer to the persons or charitable or social entities specified in the offering document and that the money paid by him to subscribe to the Charitable Fund is considered a donation.
| 24. | Indicate the possible changes to the offering document and the mechanism, and the means of notifying investors and obtaining their approval for such change as the case may be.
| 25. | Providing full disclosure on any offer related to shares in-kind and the units against which they will be issued, to include the following:
| | a. | Detailed information about each in-kind share, its owners and the value, and number of units that will be issued for each in-kind share.
| | b. | A summary of the in-kind valuation/appraisal report, including the full valuation report in the offering document
| | c. | Procedure for disposal or sale of in-kind shares
| | d. | Procedure related to change of value of in-kin shares.
| 26. | The following must be included in the offering document and KIID of an exchange traded fund:
| | a. | followed Updated information on the index that the ETF tracks
| | b. | Procedure for issuance and redemption of fund units.
| | c. | Determining the licensed entity that will perform the duties of the fund's authorized participant.
| | d. | Calculation of the spread between supply and demand prices that the liquidity provider should provide in the market, based on the announced NAV per unit.
| | e. | Determining the maximum deviation from the index that the fund tracks.
| 27. | Assigning the contact person/ responsible for the provision of information related to the local.
| 28. | Include the following important note to all investors as shown below:
(All investors are kindly requested to read the following note carefully).
| | ● | The main purpose of preparing the offering document is to provide potential investors with basic information that will help them facilitate their investment decisions in the offered fund. Each investor, prior to subscription, shall carefully and accurately examine and review all the data contained in the offering document, to decide whether or not it is appropriate to invest in such fund. Each investor shall also obtain from his financial and legal advisor the necessary advice on investing in the fund offered for subscription. Each investor, prior to subscription, must carefully and accurately examine all the data contained in the offering document, to decide whether or not it is appropriate to invest in this fund. The reader of the offering document shall also take into account that the words and phrases, which indicate that the data is a forecast estimate of future events only and, and that these future estimates should not be relied upon entirely, as they are subject to change since it is impossible to predict future conditions with certainty,
| | ● | Investing in the offered fund may involve a high degree of risk. As such the investor should not invest any money in the fund unless he can bear the loss of his investment. The terms and conditions of the Fund must also be read in full, in particular the “Investment Risks” section, which explains the factors and risks that must be taken into consideration before making any decision investing.
| | ● | The offering document shall contain data submitted in accordance with the issuance and disclosure rules applicable in the Securities and Commodities Authority of the United Arab Emirates (the “Authority”). The fund manager and the founders of the self-managed fund, whose names are included in the contents of the offering document, shall jointly and severally bear full responsibility with regard to the validity of the information and data contained therein. ,They shall confirm to the best of their knowledge, after exerting due care and conducting extensive research, that there is no information, other facts or material information that, if not included in the offering document, would make any statement contained therein misleading or affecting the investment decision of the subscribers or contrary to the provisions of the resolutions issued by the Authority, and that these resolutions apply and prevail in all cases to what is contained in the offering document.
| | ● | The information contained in the offering document shall not be subject to modification or addition except in accordance with the procedures stipulated in the investment funds regulation resolution.
| | ● | The offering of the fund has been presented to the Authority, for offering in the United Arab Emirates. Accordingly, in the event that the fund is offered in any other country, the fund manager, the founders of the self-managed fund and the board of directors of the self-managed fund shall be responsible for taking all procedures and measures and obtaining the necessary approvals from the concerned authorities in those countries before offering the fund there.
| | ● | Those in charge of managing the fund shall undertake to fully comply with all laws, regulations and resolutions in force in the State and those issued at any time by the Securities and Commodities Authority.
| | ● | The Securities and Commodities Authority of the United Arab Emirates approved the offering of the fund on (please insert the date…). The approval of the Authority shall not be an endorsement of the feasibility of the investment nor a recommendation to subscribe to the Fund’s units, but only means that the offering document included the minimum required information in accordance with the rules of issuance and disclosure applicable in the Authority. The Authority shall not be responsible for the accuracy, completeness, validity or adequacy of the information contained in the offering document and shall not be liable for any damage or loss incurred by any person as a result of reliance on the offering document or part thereof.
| | ● | The offering document has been prepared in accordance with the laws, regulations, and resolutions in force in the State. Any violation of those laws, regulations, and resolutions that may appear therein shall be null and void, and the fund manager and the founders of the self-managed fund shall bear all the consequences of such violation, unless a special resolution has been issued by the Authority.
| | ● | Such offering document was issued on (please insert the date…).
Second: Offering Document Information Summary (KIID) Obligations of the fund manager and the founders of the self-managed fund:
Prepare a summary of the data of the local fund-offering document, provided that it includes, the following:
| 1. | Basic information on the cover page, including (the name of the fund, its type and nature, any other classifications of the fund, number of the offered units, offering price, target capital, minimum capital, subscription price, par value of the investment unit, nature of offering (public/private), start and end dates of the subscription period, name of the fund manager and names of the founders of the self-managed fund.)
| 2. | Information and data on the local fund, indicating management, type of units, the mechanism for redemption, and the licensing authority.
| 3. | A summary of the objectives of the local fund and its investment policy.
| 4. | Fees and expenses to be incurred by the unit holders, methods of calculating and types of fund management fees and how to pay them, including:
| | a. | The costs of acquiring the investments and assets of the fund, including expenses and commissions for dealing in the assets of the public fund.
| | b. | Expenses, fees, interests and commissions associated with borrowing processes.
| | c. | Fund management fees, including incentive fees and performance fees.
| | d. | Fees and fees of the fund service providers, including the fees of auditor and legal advisors.
| | e. | Sharia Committee fees - if any.
| | f. | Fees of external consultants and experts, if any.
| | g. | Government fees and taxes.
| | h. | The general and administrative expenses of the fund related to the fund’s operations, such as advertising and publishing operations, and holding general assemblies.
| | i. | Remunerations of member of the Board of Directors
| | j. | Salaries of accredited employees in the self-managed fund.
| 5. | Activities that will be outsourced to others.
| 6. | The profits and risks that the local fund may be exposed to.
| 7. | Information on the umbrella fund and its sub-funds, and how to transfer from one sub-fund to another.
| 8. | Information on the feeder fund and the master fund.
| 9. | Whether the fund's investments are restricted to investing in other funds.
| 10. | Disclosing if all the investments of the local fund are structured or guaranteed.
| 11. | Mechanism for obtaining any information related to the local fund.
| 12. | Any further material information contained in the offering document.
| 13. | The following explanatory information is to be placed on the front cover page:
| | a. | This document (KIID) is an offering document summary (..) and is an integral part must be read with the offering document This document is subject to Federal Law No. (4) of 2000 regarding the Emirates Securities and Commodities Authority and Market and the Authority's Board of Directors’ resolution (...) regarding the Regulation of Investment Funds “the Resolution” and all laws and resolutions applicable in the State.
| | b. | Such summary shall be read as an introduction to the fund offering document (…), and it is not recommended to rely alone on the information that was detailed in the terms and conditions contained in the this offering document, as the offering document includes more detailed information. Any investment decision must be based on considering all the information of the offering document and the subscription application form.
The subscription application form must be attached to the offering document.
Appendix No. (2) Types of Investment policies of a Local Fund
First: Securities Investment Fund This is a local fund, whose investment policy is to invest in securities and/or foreign securities listed in the local market and foreign markets (1).
First: The investment of the local public fund is limited to the following:
| 1. | Investments in traded securities.
| 2. | Investing in financial derivatives of tradable securities to account for risk appetite as specified in the offering document or for hedging purposes provided that full disclosure is made.
| 3. | Investing in time deposits and money market transactions with a maturity of (12) months as a maximum with licensed banks.
| 4. | Investing in money markets and exchange traded funds, or in bank deposits to ensure the level of liquidity.
| 5. | Investing in units of public securities investment funds, provided that the investment percentage is specified, and that they are licensed by the Authority or a regulatory authority similar to the Authority.
Second: The manager of a public fund and the board of directors of the public self-managed fund shall comply with the following:
| 1. | Refrain from investing the assets and money of the Public Fund in securities issued by the Fund Manager itself or any of its parent, holding, subsidiary or sister companies, unless otherwise permitted and stated in the investment policy and offering document.
| 2. | Not invest in debt instruments that are not credit-rated. The credit rating of the invested debt instruments shall not be less than investment grade (2).
| 3. | Not borrow or enter into transactions that entail contractual obligations of more than (10%) of the total value of the fund’s assets.
| 4. | The percentage of investment in securities issued by a single issuer shall not exceed (10%) of the total value of the fund’s assets. The aggregate value of the investments that exceed 5% of the total value of the funds’ assets shall be capped at exceed (40%) of the fund's total assets.
| 5. | The percentage of investment in all securities of one issuer shall not exceed (20%) of the total value of the fund's assets.
| 6. | The percentage of investment in the unlisted securities shall not exceed (10%) of the total value of the fund's assets.
| 7. | The total of the fund's investments in different entities belonging to the same parent, holding, subsidiary or sister company shall not exceed (25%) of the total value of the fund's assets.
| 8. | The percentage of investment in the financial derivatives shall not exceed (15%) of the total value of its assets.
| 9. | The percentage of investment in a public exchange traded fund (s) shall not exceed (40%) of the total value of the assets of the invested fund.
| 10. | Investment in foreign securities must be made in listed investments on major active foreign markets subject to the supervision of a regulatory authority similar to the Authority and to be approved by the Authority.
| 11. | Subject to the fund’s investment policy, investing in securities funds or other public money market funds, must not exceed (25%) of the total value of its assets, along with the following:
| | a. | The total value of investments in those funds shall not exceed (20%) of the total value of the invested fund's assets.
| | b. | The investment in one fund shall not exceed (10%) as a maximum of the total value of its assets.
| 12. | The following shall be excluded from the above percentages:
| | a | Debt instruments issued by local government authorities not exceeding (35%) of the total value of the fund’s assets.
| | b. | Investing in debt instruments denominated in the fund’s currency and issued by non-local sovereign authorities, provided that the investment therein does not exceed (25%) of the net value of the fund’s assets.
| | c. | Investing more than (10%) of the net value of the public fund's assets in one class of debt instruments listed in a major market and issued by one issuer, provided that the investment therein does not exceed (20%) of the net value of the fund's assets.
(1) Foreign market: A market established outside the State and subject to a regulatory authority similar to the Authority.
(2) Investment grade: is a rating granted by recognized credit rating entities that indicates a relatively low degree of risk associated with investment.
Second: Debt Instruments | 1. | A local fund (3), whose investment policies are limited to investing in debt instruments with medium and long terms and which are issued by governments, governmental or semi-governmental companies, financial institutions and private companies, provided that they are rated by one of the international rating agencies recognized by the Authority.
| 2. | The local public fund may not borrow or enter into transactions that entail contractual obligations, with the exception of borrowing to cover redemption requests, with a maximum of (10%) of its net asset value.
| 3. | Except for the previous clause, a public investment fund in debt instruments shall be subject to the same investment policy provisions and investment restrictions of the investment fund in securities.
(3) Clause (1/second) has been amended pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
Third: Money Market Fund | 1. | An open-ended local fund whose investment policy requires investing in money market instruments, including treasury bills, commercial papers, certificates of deposit, and medium-term bonds.
| 2. | The fund manager and board of directors of the self-managed fund shall ensure that stress tests are conducted for the fund every (6) months to monitor the risks of the fund and develop plans and procedures to deal with them.
| 3. | A local public fund shall be limited to investing in the following:
| | a. | Bank deposits and money market transactions, provided that they are concluded with a bank or banks licensed in the State or licensed outside the State by a regulatory authority similar to the UAE Central Bank.
| | b. | Debt instruments.
| | c. | Derivative contracts.
| | d. | Units of public money market funds with an investment policy similar to the fund.
| | e. | Units of public investment funds specialized in fixed-income debt instruments.
| 4. | The public fund manager and the board of directors of the self-managed public fund shall comply with the following investment restrictions:
| | a. | Commitment to retain at least (10%) of the total value of the fund’s assets as cash liquidity or investments with a maturity date or remaining maturity period not exceeding (7) days.
| | b. | The maximum period of any investment in the fund shall not exceed (397) days, with the exception of investments that can be liquidated within five working days.
| | c. | The maximum weighted average of the maturity of the fund's investments shall not exceed (180) days.
| | d. | Evaluation of the fund's assets according to the Fair Value principle if current market price is not available.
| | e. | The credit rating (4) of the invested debt instruments shall not be less than investment grade (5) by one of the rating agencies recognized by the Authority.
| | f. | Refraining from borrowing or entering into transactions that entail obligations, with the exception of borrowing to cover redemption requests up to a maximum of (10%) of the of its net value asset.
| | g. | The fund’s investment in debt instruments from one issuance shall not exceed (10%) of the fund’s total asset value.
| | h. | The fund’s investments in securitization shall not exceed (10%) of the fund’s total asset value.
| | i. | The fund’s investments in deposits, debt instruments, derivatives, or investment units with one or more entities belonging to the same group shall not exceed (25%) of the total value of the fund’s assets, unless that is a local government entity.
| | j. | Investing in investment funds in other money markets, if its investment policy permits, not to exceed (15%) of the total value of its assets, provided that investment in funds managed by one manager does not exceed (10%) of the total value of the fund’s assets.
| | k. | A money market fund may not invest in derivative contracts except for the purpose of hedging, provided that the value of that investment does not exceed (5%) of the net asset value of the fund, and that the issuer of such contracts is subject to capital adequacy rules issued by a regulatory authority similar to the Authority.
(4) A credit rating is an independent report on the creditworthiness of an entity or a security.
(5) Investment grade is a rating granted by recognized credit rating entities that indicates a relatively low degree of risk associated with investment.
Fourth: Exchange Traded Fund (ETF) | 1. | A local open-ended fund that invests its money in the components of a specific index, which is determined by its investment policy
| 2. | Specific index: It is any investment components with specific investment ratios, whether previously prepared or developed, and the index followed by the investment fund must have the following characteristics:
| | a. | The index shall be clear, published, available and accessible to the public investors.
| | b. | Clearly indicate the sector of the market that the Index represents
| | c. | Its components shall be diversified and liquid securities traded in an recognized financial market.
| | d. | Actively reflect price movements and price changes that may occur in its components or relative weights.
| 3. | The ETF may:
| | a. | Fully track the components and relative weights of an index or, through a sample that represents the index by using specific correlation coefficient.
| | b. | Aim to follow the index or achieve outperform the index that it follows.
| | c. | Investing in another local or foreign exchange traded fund, wherein the portfolio's security weights align with those of the local fund’s in accordance with its specified terms and conditions (6).
| 4. | The fund manager and the board of directors of the self-managed fund shall comply with the following:
| | a. | Issue new fund units or liquidating units for the purposes of redemption in accordance with the regulatory controls and procedures specified in the offering document that is approved by the Authority.
| | b. | Appointing one or more authorized participants and liquidity providers.
| | c. | Listing the units of the ETF in one or more markets in the State if its units are offered in the State after obtaining the approval of the Authority in accordance with the listing rules and regulations set by the markets. Some or all units of an ETF may be listed in a regulated and recognised foreign market subject to approval by the Authority.
| | d. | Disclosure of the components of the ETF index on a regular basis, according to what is contained in the offering document.
| | e. | Including in the ETF offering document and the offering document information summary (KIID), the following additional data:
| | | 1) | Provide data of the index tracked by the fund
| | | 2) | Determine the mechanism for issuing and redeeming units.
| | | 3) | Determine the licensed entity that will perform the duties of the fund's authorized participant.
| | | 4) | Calculate the spread between the supply and demand prices that the liquidity provider must provide in the market, based on the net asset value of the unit declared on an ongoing basis.
| | | 5) | Determine the maximum deviation from the index that it tracks.
| | f. | Ensure that the ETF performs in the following manner:
| | | 1) | Achieving a correlation between the value of the fund’s units and the value of the index or commodity that the fund tracks when it was initially established, so that the correlation coefficient is not less than what was determined in the investment policy and originally specified in the offering document.
| | | 2) | To ensure that the liquidity provider offers continuous buy/sell orders for the fund units in secondary market.
| | | 3) | Linking the prices of the orders issued through the fund’s liquidity provider to the net asset value of the unit declared on a daily basis or to the value of the net asset value of the unit declared during active trading, provided that it does not exceed the spread agreed upon and specified in the offering document provides.
(6) Clause (3/c) in Fourth has been amended pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
Fifth: Real Estate Investment Fund | 1. | A closed-end local fund whose main purpose is to invest in real estate assets, building of property and real estate projects, and develop said assets for sale or lease, in order to establish a portfolio of real estate investment assets.
| 2. | The assets of the real estate investment fund portfolio may consist of any or all of the following:
| | a. | Real estate assets and properties of all kinds, and contributions to real estate development projects.
| | b. | Securities related to real estate, such as listed real estate debt bonds, listed real estate stocks issued by public real estate companies, traded securities backed by mortgages, investment units of other public real estate investment funds, and money market instruments, not exceeding (35%) of the fund's investment portfolio.
| 3. | The manager of the local fund and the board of directors of the self-managed fund are required to sign binding contractual agreements with a licensed real estate developer in the event that the licensed real estate developer builds, develops, or contributes to the development of real estate projects.
| 4. | The requirements for the real estate assets of the local real estate fund:
| | a. | Obtain the required approvals of the official authorities in the State in which the property is located.
| | b. | Provide evidence of the fund’s ownership the owned properties, its beneficial and usufruct rights, any other contributions to real estate development projects, or its indirect rights through ownership in a company that owns any of these rights, based on contracts, agreements, or documents proving said ownership, contribution, or benefit. This evidence must be ratified by the official authorities in the State in which the property is located.
| | c. | The real estate assets shall not be burdened with any restrictions, rights or conditions that affect the acquired rights of the fund in the assets or real estate projects.
| | d. | The real estate assets of the fund, in their entirety, shall meet the approval of the official competent authorities to plan, develop or build them . The official competent authority shall release a formal statement stating that the real estate assets of the fund in question have been approved and are fully authorized.
| | e. | All the fund's properties have been appraised and evaluated upon purchase.
| | f. | Register the property in the name of the fund or submit evidence that the fund owns the property in order to protect the rights of the unit holders in the public real estate fund.
| 5. | The local real estate fund shall have a board of directors in accordance with the terms and conditions regulating this.
| 6. | Requirements for the investments of the local public real estate fund:
| | a. | The remaining period of the usufruct shall not be less than (7) years.
| | b. | The fund’s investment in usufructs - the remaining period of which is less than (20) years - shall not exceed (25%) of the total value of its assets when the usufruct is transferred to it.
| | c. | The purchase price of the property shall not exceed five percent (5%) of the appraisal obtained by the fund manager from the property appraiser upon purchase, and the sale price of the property shall not be less than five percent (5%) of the appraisal obtained by the fund manager from the property appraiser upon sale (7).
| | d. | Without prejudice to the previous clause, the approval of the general assembly of the unit holders shall be obtained by virtue of a special resolution and the approval of the Authority when purchasing or selling a property from or to related parties of the fund.
| | e. | The percentage of investment in other real estate funds and/ or money market funds licensed by the authority or subject to a similar regulatory authority shall not exceed a maximum of (25%) of net asset value of the fund, provided that the following is adhered to:
| | | 1) | The offering document permits this.
| | | 2) | Investment in one fund shall not exceed a maximum of (10%) of the total value of its assets.
| | | 3) | Investment in private funds shall not exceed a maximum of (10%) of the total value of its assets.
| | | 4) | Investment in funds managed by one manager shall not exceed (10%) of the total value of its assets.
| | f. | Maintain a specified percentage of liquidity in the fund to pay the fund’s operating expenses or the requirements for developing, maintaining or equipping proprieties, and investing that liquidity in bank deposits and money market instruments that generate returns.
| | g. | The fund's investments in real estate-related securities are traded and offered for public subscription.
| | h. | The offering of the public local real estate fund shall not be less than (AED100 MM) one hundred million dirhams, and at least (25%) of its capital shall be owned by no less than (100) investors from the public.
| 7. | A public real estate fund may:
| | a. | Own one or more real estate services companies, provided that its investment in the ownership of that/these company/s and its/their subsidiaries does not exceed (20%) of the total value of its assets.
| | b. | Enter into contractual obligations for the purposes of Islamic financing to acquire real estate assets whereby the legal ownership of the property is held by a financial institution, provided that it is disclosed in the fund’s offering document or approved by a special resolution of the unit holders.
| | c. | Own real estate assets and real estate projects jointly with one or more third parties provided that the fund retains the majority stake and control, so that it has the right to dispose of those assets in the best interests of the funds unit holders.
| 8. | Public local real estate fund may borrow subject to the following:
| | a. | A public local real estate fund may borrow up to a maximum of 50% of the total value of its assets, provided that:
| | | 1) | The lender is authorized to do so by the concerned authority in the State.
| | | 2) | All borrowing by the fund is carried out on a strictly commercial basis.
| | | 3) | The fund manager and the board of directors of the self-managed fund disclose any relationship of the lender to the public real estate fund or any of the related parties of the fund, and ensure that mechanisms are in place to manage any conflict of interests that may arise from that relationship.
| | b. | In the event that the borrowing limit referred to in this Article is exceeded, the fund manager and the board of directors of the self-managed fund shall inform the unit holders and the Authority of the extent of the breach, the reason for the breach, and the proposed rectification and make efforts to reduce the excessive in borrowing as soon as possible.
| | c. | The fund manager may mortgage the assets of the fund to secure loans.
| | d. | The fund Manager shall do its best to reduce the excess borrowing as soon as possible.
| | e. | All borrowings by the fund shall be made on a commercial basis.
| 9. | The manager of the public real estate fund and the board of directors of the public self-managed fund shall comply with the following:
| | a. | Appraise all real estate assets before purchasing or selling them and ensure that such evaluation is conducted by a duly recognized and approved real estate appraiser who is formally contracted by the fund to carry out such duties.
| | b. | Assisting and ensuring that the real estate appraiser perform his duties, including providing documents and information necessary to complete the appraisal process.
| | c. | An appraisal report issued more than three months previously will not be considered valid when appraising real estate assets of the fund.
| | d. | Full responsibility for the fund's assets and insuring them against any risks.
| | e. | Ensure that the semi-annual financial reports of the fund's investments include details related to market value, type and location of assets, current value of real estate investments, the age/maturity of the asset, its suitability for rent , details of the facilities available and the location of the asset, the quality of the building in which the asset is located, the level of customer service provided if applicable as well as , customer feedback; asset management company and the credit rating of the bonds in which the fund invests its money, if applicable.
| | f. | The annual report must include all details of the fund's assets and any material and substantive legal actions taken by the fund or against it during the period.
| | g. | Legal counsel must prepare and review all contracts, contractual obligations and legal transactions of the fund and its real estate assets to ensure the legality of its disposals and the absence of any restrictions on its ownership.
| | h. | Ensure that a duly authorized and experienced real estate appraiser with the requisite experience in the real estate sector is engaged to evaluate and appraise the real estate assets of the fund.
| | i. | Contract the required third parties to implement the fund's business plan, including real estate developer, real estate management company, real estate distributor and promoter, and real estate service companies.
| | j. | Distribute annual net profits to unit holders s as per the provisions of the offering document,
| | k. | Periodic appraisal of the assets of the public real estate fund at least once every six months to be carried out and prepared by the real estate evaluator of the fund. The fund manager or the board of directors of the self-managed fund may, for acceptable reasons and after notifying the Authority, postpone the date of appraisal of the assets.
| 10. | The real estate appraiser shall comply with the following:
| | a. | Appraise the real estate assets entrusted to him by the fund management in accordance with the professional and technical principles and rules applicable in this regard.
| | b. | The following must be included in:
| | | 1) | The appraisal methodology and the basis of the assumptions made in the appraisal report.
| | | 2) | An analysis of the factors related to the real estate market, such as supply and demand, and property details and specifications.
| | | 3) | Risks related to the property.
| | | 4) | Disclosure of any violations or risks related to the assets being appraised and the proposed remediation mechanisms.
| | c. | Providing the fund manager, the board of directors of the self-managed fund, the management services company, and the auditor with a copy of the periodic appraisal report
| | d. | Provide the Authority with any reports and data requested by the Authority.
| | e. | Assume full responsibility to fund manager, the self-managed fund's board of directors and the unit holders, for any mistake occurring as a result of negligence or failure to carry out duties.
| | f. | To be fully independent of the fund and any of its related parties when evaluating and apprising the fund’s assets.
Public Real Estate Fund - Subscription and Order Book Building | 1. | The fund manager and founders of the self-managed fund, upon offering units of the public real estate fund for subscription through a book building mechanism, shall abide by the following:
| | a. | Appointing a financial advisor licensed by the Authority for the purposes of managing the process of subscription, building the order book, and coordinating between the participating parties, provided that he adheres to the same duties and obligations applicable to him when carrying out his tasks related to the book building for public joint-stock companies.
| | b. | Concluding any agreements to underwrite the subscription (if any) and disclosing them before starting the book building process, provided that the underwriting agreement includes that it is not permissible to specify a price for the units less than the offering price.
| | c. | Refraining from participating in the book building process, by requesting a quantity representing (5%) or more of the total number of the fund units.
| 2. | The participating entities shall abide by the provisions of this resolution and other investment conditions or restrictions that regulate their work and licensing.
| 3. | The providers of shares in-kind, the fund manager, the founders of the self-managed fund, or any of the parties that have a conflict of interest with the fund shall not be entitled to participate in the book building process.
| 4. | Receipt of subscription applications shall be in two phases. The first phase is for professional investors (according to an initial prospectus that determines the price range of the units), followed by the second phase for retail investors, in which the final investment offering price shall be determined in light of the results of phase (1). The fund shall declare this price before the start of the subscription period for retail investors to subscribe as per the provisions of the offering document.
| 5. | Retail and professional investors shall pay the value of the subscribed shares when submitting subscription applications.
| 6. | Without prejudice to the above clauses, the rest of the terms and conditions of the subscription and book building for regulating the offering and issuance of shares in public joint stock companies shall be applied, provided that the term “fund manager” or “founders of the self-managed fund” shall replace the term “company”, and the term “investment units of the fund” shall replace the term “shares”.
(7) Clause (6/C)/ in section (5) has been amended pursuant to the Administrative Resolution No. (21/CEO) of 2025 enforced on date 24/04/2025.
Sixth: Real Estate Investment Trusts (REITs) | 1. | A closed-end local real estate fund whose investment policy aims to provide periodic income to the fund's unit holders.
| 2. | The fund manager may maintain a percentage of liquidity in the fund to fulfill the fund’s operating expenses or the requirements for developing, and maintaining real estate assets The fund manager may invest that liquidity in bank deposits and income generating money market instruments.
| 3. | The fund may own a percentage not exceeding (25%) of the total value of the fund’s assets in tradable securities in public real estate companies and investment units of local public real estate funds.
| 4. | Real estate income generating assets shall not be less than (70%) of the total value of his assets.
| 5. | The manager of Public REIT and the board or directors of the public self-managed fund shall comply with the following:
| | a. | Invest no less than (75%) of the total value of the fund’s money in real estate assets to build and/or develop, or refurbish them for sale, lease, management or disposal.
| | b. | Distributing a percentage of not less than (80%) of the annual net profits, with the possibility of making more than one dividend distribution during the year.
| | c. | Any investment made in relation to real estate under development, whether on its own or in a joint venture, shall be made only when the real estate investment fund intends to retain its percentage in the developed property upon completion, provided that the total percentage of properties under development in the fund's investment portfolio does not exceed (30%) of the net asset value of the fund.
| | d. | The Public REIT shall be subject to all terms and conditions applicable to the public local real estate fund, as long as they do not conflict with its provisions.
Seventh: Capital Protection Fund(8) | 1. | A local investment fund with an investment policy aligned with its investment objectives of protecting the fund’s capital against investment risks and returning it, along with profits if any, to the unit holders at a future date specified in the offering document.
| 2. | The fund’s investment policy aims to protect the fund’s capital against investment risks.
| 3. | The fund manager and the fund’s board of directors must adhere to the restriction of not investing more than 25% of the fund’s net investments in one or more entities belonging to the same financial group, including bank deposits, debt instruments, and money market transactions (9).
| 4. | The fund manager and the fund’s board of directors are required to adhere to the conditions and restrictions of the investment policy of the investment fund in money markets, or any other investment policy of public funds that provides protection for the fund’s capital and is approved by the Authority (10).
| 5. | For the purpose of protecting the fund’s capital, the manager of the public fund and the board of the self-managed public fund may take the following actions (11):
| | a. | Appointing a qualified guarantor in accordance with the following conditions:
| | | 1) | An insurance company, or bank licensed and operating in the State, which has a credit rating to measure its capital adequacy and creditworthiness with a minimum of investment grade.
| | | 2) | If the rating of the guarantor is downgraded, the fund manager and the board of directors of the self-managed fund shall conclude a new agreement with a new guarantor that meets the minimum credit rating, and provide the same level of guarantee to unit holders as the original guarantee as a minimum.
| | b. | The qualified guarantor shall not be the issuer of transferable securities and money market instruments constituting more than (10%) of the net asset value of the fund for this purpose (12).
| | c. | Conclusion of a guarantee agreement: written between the guarantor and the fund to obtain an unconditional guarantee provided by the guarantor, provided that the guarantee is due at the first request, and is legally enforceable in the State against the guarantor by the fund manager or the board of directors of the self-managed fund in accordance with the following conditions:
| | | 1) | The guarantee shall cover at least (100%) of the capital invested by the participants.
| | | 2) | The amount and duration of the guarantee provided by the guarantor shall be in accordance with the offering document and the promotional and marketing materials of the fund.
| | | 3) | A prominent disclosure in the offering document if the guarantee applies only on any particular date(s) or after a specified period.
| | | 4) | There shall be no change in the guarantee agreement if the opinion of the fund manager or the board of directors of the self-fund is that it is detrimental to the interests of the investment unit holders of the fund.
| | | 5) | Any change in the guarantee agreement that is in favor of the unit holders shall be subject to the approval of the fund manager or the board of directors of the self-managed fund, unless these changes are material, in which case these changes shall be made by an ordinary resolution in the general assembly of the unit holders.
| | | 6) | If the guaranteed amount is reduced or increased due to redemption of existing units or subscription to new investment units, this shall not be considered a change to the guarantee agreement.
| | d. | Cases of termination and replacement of guarantee:
| | | 1) | If the fund is terminated or liquidated.
| | | 2) | By the fund manager or the board of directors of self-managed fund, in case of liquidation of the guarantor (except for voluntary liquidation for merger purposes).
| | | 3) | If a new legal or regulatory condition enters into force that renders the guarantee agreement unlawful or if the fund manager or the board of directors of the self-managed fund considers that continuation of the guarantee is impractical.
| | | 4) | If it appears to the fund manager or the board of directors of the self-managed fund that the cost of obtaining a new guarantor significantly exceeds the benefit of this guarantee for the investment unit holders of the fund. In this case, after obtaining a special resolution from the general assembly of the unit holders, the fund may be terminated and liquidated or be allowed to be continue without guarantee. In such case, the word “guarantee” “protected” or any equivalent meanings shall not be used in its name or in any communication or promotion thereof, whether in the form of marketing materials or otherwise, and describing it, or using a name indicating that it is a capital-guaranteed fund or its equivalent in a guaranteed fund.
(8) The fund’s name in section (7) titled “Capital Guarantee Fund” is amended to be “Capital Protection Fund,” pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
(9) Clause from 1-3 in section (7) has been amended pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
(10) Clause (4) in section (7) has been added pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
(11) Clause (4) in section (7) has become Clause (5), and amended the beginning of clause pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
(12) The Issuer and its subsidiaries, sister, parent and holding companies are considered one entity.
Eighth: Eligible Commodities Investment Fund | 1. | It is a special local fund established with the aim of investing no less than (85%) of the total value of the fund’s assets in eligible commodities while keeping the rest of the fund’s assets for the purposes of meeting liquidity requirements. It may be an Islamic fund. In such case, it gives the investor an option upon redemption, which is to transfer a percentage of the fund's assets to the investor, equivalent to the value of its investment in the fund.
| 2. | Eligible commodities means: commodity contracts that are traded in the market and/or the foreign markets (13) , provided that they enjoy liquidity that allows the fund manager and the self-managed fund board of directors to fulfill their obligations and make redemptions according to the nature of the fund, and that their evaluation is in accordance with applicable international standards.
| 3. | The manager of fund and the board of directors of the self-managed fund shall comply with the following:
| | a. | Achieving the correlation between the value of the fund’s units and the price of the eligible commodity in which the fund invests upon its incorporation, so that the correlation coefficient is not less than what is specified in the investment strategy and announced in the offering document.
| | b. | The offering document and the KIID, shall include the following:
| | | 1) | Detailed data on the eligible commodities in which investment is proposed, and their specifications, provided that they include the price index, quality level and other technical specifications related to the qualified commodity, subject matter of investment.
| | | 2) | The name of the market where the eligible commodities are traded.
| | | 3) | Provide a clear warning to investors in a prominent place and in a clear font and format on the cover page of the offering document stating that investment in the fund involves risks of a specific nature and that these risks are s not appropriate for all investors with a reference to the details of those risks contained in the offering document.
| 4. | If the fund is open-ended and traded, the fund manager and the board of directors of the self-managed fund shall comply with the following:
| | a. | Issuing new units of the investment fund or canceling units provided by the authorized participant for redemption pursuant to regulatory controls and procedures specified in the offering document approved by the Authority.
| | b. | Appointing one or more of the authorized participants and liquidity providers.
| | c. | Observing the performance of the fund to ensure the following:
| | | 1) | Achieving a correlation between the value of the fund's units and the value of the commodity that the fund tracks, so that the correlation coefficient is not less than what is determined in the investment strategy and declared in the offering document.
| | | 2) | Provide liquidity for the fund’s units in the secondary market and continuous buy/sell orders for those units through the fund’s liquidity providers.
| | | 3) | The prices of the orders issued through the fund’s liquidity providers are linked to the daily declared unit's net asset value or to the indicative value of the net asset value of the unit declared during trading, so that they do not exceed the spread agreed upon and mentioned in the offering document.
(13) Foreign market: The main commodities market established outside the State and subject to a regulatory authority similar to the Authority.
Ninth: Precious Metals Investment Fund | 1. | A local fund (14)whose investment policy requires investing no less than (85%) of the total value of its assets in physical precious metal bullions that meet the standard specifications for trading in global markets and are stored in (100%) insured safe safes by a licensed insurance entity, with the provision of in-kind redemption or cash liquidity to unit holders through the mechanism of accepting redemption requests of the investment units it issues if the nature of the fund and the offering document permit that. In the event of cash redemption, the redemption value of the investment units shall be determined on the basis of the share of the investment unit in the net asset value of the fund.
| 2. | Precious metals mean: gold, silver, platinum, and any other precious physical metals approved by the Authority. The above terms refer to the following:
| | a. | The term “Gold” means physical gold bullions conforming to the London Bullion Market Association (LBMA) specifications and certifications for Good Delivery Gold Bullion.
| | b. | The term “Silver” refers to physical silver bullions conforming to LBMA specifications and certifications for Good Delivery Silver Bullion Group.
| | c. | The term "platinum" refers to a physical platinum plate or bullion conforming to the Good Delivery specifications and certifications set forth by the London Platinum Palladio Market (LPPM).
| 3. | The fund manager and the board of directors of the self- managed fund shall comply with the following investment restrictions:
| | a. | Investing a percentage of not less than (85%) of its assets in physical precious metal bullions.
| | b. | Investing a percentage not exceeding (10%) in investment instruments directly related to the spot price of gold, exchange traded funds for gold and precious metals, and gold and precious metal certificates.
| | c. | The fund’s investments in bank deposits and money market instruments shall not exceed (5%) of the fund’s total assets and only for the purposes of meeting operational and liquidity requirements.
| | d. | The minimum investment in the fund is 180 thousand dirhams if it is a private fund (15).
| | e. | Not investing in diversified investment companies or investments related to securities, bonds, common or preferred stocks, unlisted corporate bonds, forward contracts, options or derivatives linked to the price of precious metals.
| | f. | Not giving guarantees and warrants, guaranteeing issuances, or discounting cheques.
| | g. | Not speculating or trading on short-term price movements in the precious metals market.
| 4. | The fund manager and the board of directors of the self-managed fund are obligated to appoint each of the following:
| | a. | Precious Metals Agent: to provide technical advice and logistical services for precious metals to the fund in relation to the acquisition, transportation, storage, evaluation and resale processes.
| | b. | Precious Metals Auditor: to provide independent verification of specifications, measures and weights at the storage location for precious metal bullions that are deposited with an insured guarantee or cancel its deposit in the safe designated for holding the precious metal bullions of the fund at the safe storage facility.
| | c. | Approved supplier of precious metal bullions: The licensed and approved entity in the State to practice the activity of manufacturing and supplying precious metal bullions according to the standard specifications of the precious metal bullions in which the fund invests.
| | d. | Safe transportation service provider: The party with which a contract has been entered to provide safe and secure transportation services for precious metal bullions from the approved supplier to the storage location.
| | e. | Safe Storage Service Provider: The party with which a contract has been entered to provide safe and secure storage services for precious metal bullions held by the fund.
| | f. | Precious Metal Bullion Insurer: The insurance company with which a contract has been entered to insure the fund’s precious metal bullions at all times at the full market value, including the process of transportation and delivery from the supplier to a safe store, and transfer from the store to the customer in the event of in-kind redemption.
| 5. | The manager of the fund and the board of directors of the self-managed fund shall comply with the following:
| | a. | Include a disclaimer on the cover page of the offering document as follows: Investing in the Precious Metals Bullion Investment Fund involves risks of a different nature than other types of investment funds that invest in securities. The Precious Metals Investment Fund may not be suitable for investors seeking returns and cash distributions and those who do not wish to be exposed to the risks of possible movements and fluctuations. in precious metals prices. As a potential investor, you should carefully consider whether investing in this fund is suitable for you and is aligned with your investment objectives as you bear full responsibility for your choices when selecting your investments (16).
| | b. | That the evaluation of the value of the fund's investment portfolio in precious metals is based on the following:
| | | 1) | In the case of gold and silver bullions, prices shall be quoted from the London Bullion Market Association (LBMA), which is independently managed by IBA Standards Management (ICE Benchmark Administration).
| | | 2) | In case of platinum, the price of LBMA platinum that is managed by London Metal Exchange in agreement with London Bullion Market Association (LBMA).
(14) The beginning of clause (1) in (9) Section has been amended pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
(15) Clause (3/d) in (9) Section has been amended pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
(16) Clause (5/a) in (9) Section has been amended pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
Tenth: Credit Fund | 1. | A closed private local fund whose investment strategy is limited to lending companies, investment funds and legal entities by investing in bonds, sukuk and debt instruments backed and unbacked by assets of all kinds issued by them.
| 2. | The fund manager and founder of the self-managed fund are obligated to attach to the application for incorporation a detailed business plan that includes the targeted sectors, policies and procedures related to granting credit, provisions and procedures for collection, estimating the size of business during the life of the fund, estimates of working capital, operating costs for the first two years, the extent of capital adequacy to finance those costs, and annual returns expected for the fund.
| 3. | The Fund's investments are subject to the following:
| | a. | The tenure of the Fund shall not exceed (10) years and it may be renewed by virtue of a special resolution of the unit holders with the Authority’s approval.
| | b. | It is prohibited to redeem the units or distribute dividends to the unit holders before the end of the term of a fund except by a special resolution of the general assembly of the unit holders and approval of the Authority.
| | c. | Providing additional disclosures and detailed information in its periodic reports on the following:
| | | 1) | Debt tenor, delinquency and default rates of borrowers as a percentage of the fund's total assets.
| | | 2) | Exposure to entities facing liquidation, restructuring or financial failure.
| | | 3) | Provisions to be allocated in accordance with International Financial Reporting Standards.
| | | 4) | Ratios of asset-backed loans to the fund's total loan portfolio and coverage ratios.
| | d. | Adopting and applying clear, written and specific policies, standards and procedures for granting credit and obtaining loans that enable it to prepare a comprehensive credit evaluation study on the beneficiary, which includes the adequacy of the credit record and verification of its adequacy, creditworthiness, ability to pay, available guarantees and/or assets supporting financing; and for this purpose, it must clearly define the process for credit approval, modification, renewal, refinancing and obtaining loans.
| | e. | Providing applicable internal methodologies for assessing credit risk at the portfolio level, which are not solely or mechanically dependent on external credit ratings.
| | f. | Providing a continuous monitoring and management mechanism for various portfolio positions that bear credit risk and exposures, including identification and management of credit problem and for making value adjustments and adequate provisions.
| | g. | Ensuring adherence to appropriate written policies, standards, governance procedures and decision-making structures relating to the following:
| | | 1) | Evaluating, pricing, granting, managing and owning credit.
| | | 2) | Credit control and renewal.
| | | 3) | Managing and evaluating the provided guarantees, including evaluating the guarantees and determining any impairment in its value.
| | | 4) | Concentration risk management.
| | | 5) | Identifying and managing the debt problem.
| | | 6) | Delegated authority.
| | | 7) | Documentation and maintaining the confidentiality of customer information.
| | h. | Refraining from granting loans if he is unable to obtain sufficient information from the beneficiary to enable him to complete and document all aspects of the credit evaluation study.
| | i. | The fund shall have a comprehensive Stress Test program that is conducted at least once a year.
| | j. | Prohibition of providing credit facilities to borrowers listed below:
| | | 1) | A natural person.
| | | 2) | The fund manager or a related party to the fund manager or any other person working for or on behalf of the fund manager.
| | | 3) | Another fund affiliated to a fund manager.
| | | 4) | A financial institution or legal entity associated with a financial institution.
| | | 5) | The entity that intends to use the credit for trading in investments, commodities or crypto assets.
| | | 6) | The entity that intends to use the credit for providing the credit.
| | k. | The fund may not lend debt instruments that are convertible into shares or equity stakes.
| | l. | The period of lending granted by the credit fund shall not exceed the remaining period of the fund's term, including any rescheduling or extension of financing.
| | m. | Lending pledges provided to clients by the fund may not exceed its total volume in addition to any capital pledged to be paid by the unit holders.
| | n. | The fund shall not bear an exposure of (25%) or more of the total fund size to one or more beneficiaries belonging to the same related group.
| | o. | The fund may not provide the following types of credit facilities:
| | | 1) | Letters of credit.
| | | 2) | Financial guarantees.
| | | 3) | Financing trade across state borders.
Eleventh: Private Equity Fund | 1. | A closed private local fund established with the aim of investing no less than (70%) of the fund’s total asset value in the following:
| | a. | Shares in limited liability companies, partnerships, limited partnerships, or private joint stock companies.
| | b. | Securities of public joint-stock companies that have initiated procedures to convert into private joint-stock companies(17).
| 2. | The manager of the fund and the board of directors of the self-managed fund are obligated to:
| | a. | Verify the calculation of the fund's net asset value and the price of its unit at the end of every three months.
| | b. | Verify the evaluation of the fund's assets in accordance with the international standards by using fair value evaluation criteria according to the nature of its assets.
| | c. | Verify the periodic evaluation of the fund's assets at least once a year based on the audited annual financial reports of the companies in which it invests.
| | d. | Verify the evaluation of the fund's assets through specialized persons who are independent of the fund and the parties related to the fund.
| | e. | Determine the borrowing percentage that will be approved in the fund’s investment strategy, the expected level of borrowing, and its minimum and maximum percentage, while adhering to these limits, with a maximum of (100%) of the fund's net asset value.
| | f. | Not to reply on an evaluation report that was prepared more than three months ago when purchasing or selling any fund asset.
(17) Clause (1/b) in (11) Section has been amended pursuant to the Administrative Resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
Twelfth: Venture Capital Fund | 1. | A private closed-end local fund established with the aim of investing no less than (70%) of the fund’s total asset value in one or more of the following investments:
| | a. | Units of other venture capital funds, provided that the investments of such funds do not exceed (10%) of their total assets in other venture capital funds.
| | b. | Equity instruments issued by companies that are not listed in the main regulated market, or other instruments issued by those companies or their subsidiaries that end with ownership in any of them.
| | c. | Investments in which an open-ended public investment fund may invest up to a maximum of 30% of the total value of the fund’s assets.
| 2. | The fund manager and the board of directors of the self-managed fund shall comply with the following:
| | a. | Verifying the calculation of the fund's net asset value and its unit price at least once a year.
| | b. | Issuing an annual report that includes the components of the fund's investments, the activities that took place, and the profits or losses achieved during the year.
| | c. | The percentage of the fund’s borrowing or guarantees on the fund’s assets shall not exceed (100%) of the fund's net asset value.
| | d. | The exposure to the fund's risk shall not exceed its net asset value.
| | e. | With regard to the investment fund whose total value of assets under management is (180) million dirhams or more, as follows:
| | | 1) | Preparing an annual report in accordance with the International Financial Reporting Standards (IFRS).
| | | 2) | Preparing a summarized annual report in accordance with the International Financial Reporting Standards (IFRS).
Appendix No. (3) Other Classifications of Local Fund
First: Standalone Fund A local fund that has no sub-funds or feeder funds.
Second: Master Fund | 1. | A master fund is a standalone local fund with at least one local or foreign feeder fund.
| 2. | The master fund itself shall not be a feeder fund, and it shall not have units in any feeder fund.
| 3. | The Authority shall be notified of all feeder funds that invest in the master fund.
| 4. | The master fund may not charge or impose fees for subscription, sale or redemption of units or promotion on the feeder fund.
Third: Umbrella Fund and Sub-Fund | 1. | The Umbrella fund is a local fund that aims to establish sub-local funds affiliated thereto, and it shall have at least one local sub- fund.
| 2. | The fund manager shall comply with the following:
| | a. | The Umbrella fund shall have a master offering document, and each sub fund shall have a schedule of conditions linked to the master offering document.
| | b. | Establishing and licensing each sub-fund in accordance with terms and obligations contained in a resolution regulating investment funds and paying the fee for each fund separately.
| 3. | A public sub-fund may not invest in another sub-fund of the same Umbrella fund, or invest in any other fund managed by the same fund manager, unless the offering document stipulates otherwise.
Fourth: Fund of funds A local fund, whether standalone or a sub-fund of an umbrella fund, with the purpose of investing directly or indirectly in other investment funds that are linked directly or indirectly with its investment policy is subject to the fund manager or board of directors adhering to the following restrictions:
| 1. | Not investing in a fund of funds, feeder fund, or sub-fund of an umbrella fund the purpose of which is to invest in a single investment fund.
| 2. | Investments made by a public local fund must be in local or foreign public funds whose investment policies do not conflict with the conditions and restrictions of its investment policy which in turn must be in line with the nature of its unit offering to the public.
| 3. | Investments, of a public local fund in private local or foreign funds, must not exceed 10% of the total value of the fund’s assets
| 4. | The fund diversifies its investment portfolio among at least three investment funds, with a percentage not less than 5% of its total investments in each individual fund (This ratio does not apply to additional funds), and it is a prerequisite that the nature of the offering of those funds aligns with the fund’s nature, whether it is a public or private offering.
Fifth: Feeder Fund | 1. | Feeder fund: A standalone local fund or one of the sub-funds of a local (Umbrella) fund, the purpose of which is to invest no less than (85%) of its assets in a master investment fund that has the same investment strategy, provided that that percentage in the public feeder fund shall be limited to invest in a local or foreign master fund2.
| 2. | The Public Feeder Fund shall invest the remaining percentage of its assets in one or more of the following:
| | a. | Liquid assets.
| | b. | Financial derivatives that can be only used for hedging purposes.
| 3. | The manager of the public feeder fund and the board of directors of the self-managed fund shall adhere to the following:
| | a. | Fulfil the feeder fund and its local or foreign master fund’s the conditions for licensing as per the requirements of its jurisdiction of incorporation, and ensuring that it is not exempted or restricted from any of those conditions.
| | b. | Having an investment policy similar to the general local or foreign master fund’s policy, and is subject to the supervision of an equivalent supervisory Authority that is recognized by the Authority, and the fund is not exempted or restricted from public offering in its home country3.
| | c. | Concluding an agreement with the master fund4 that includes all the data of the master fund and making it available to the unit holders before starting to subscribe to the units and the Authority may set the controls it deems appropriate regarding that agreement. The fund is excluded from the conclusion of this agreement if the fund and the master fund are managed by one fund manager or same self- managed fund’s board of directors.
| | d. | Disclosing to the current and prospective investors of all information related to the master fund and any changes made thereto before undertaking any subscription or redemption process.
| 4. | If the master fund5 temporarily stopped issuing or redeeming its units, whether on its own initiative or at the request of the competent authorities, the affiliated feeder fund shall stop issuing and redeeming its units during the same period.
| 5. | In the event of the master fund’s liquidation, the feeder fund is either liquidated or transformed into a feeder fund for another master fund or converted into a public or private fund according to the fund regulation resolution and only receiving the approval of the Authority6.
2 Clause (1) in Fifth has been amended pursuant to the administrative resolution No. (80/CEO) of 2023 enforced on date 29/12/2023.
3 Clauses (a, b/3) in Fifth has been amended pursuant to the administrative resolution No. (80/CEO) of 2023 enforced on date 29/12/2023.
4 The beginning in Clause (c /3) in Fifth has been amended pursuant to the administrative resolution No. (80/CEO) of 2023 enforced on date 29/12/2023.
5 The beginning in Clause (4) in Fifth has been amended pursuant to the administrative resolution No. (80/CEO) of 2023 enforced on date 29/12/2023.
6 Clause (5) in Fifth has been amended pursuant to the administrative resolution No. (80/CEO) of 2023 enforced on date 29/12/2023.
Sixth: Sharia compliant fund
| 1. | A local fund whose investment strategy and offering document are compliant with the provisions of Islamic Sharia.
| 2. | The fund manager and the board of directors of the self-managed fund shall comply with the following:
| | a. | Appointing a Sharia Supervisory Committee to approve the investment strategy that is compliant with the provisions of Islamic Sharia, as well as giving opinion and monitoring the activity, operations and procedures of the fund in accordance with the principles of Islamic Sharia.
| | b. | Including in the offering document the name of the Sharia Supervisory Company or the number and names of the members of the Sharia Supervisory Committee of the Sharia compliant fund.
| | c. | Including the report of the Sharia Supervisory Committee in the fund financial reports.
| | d. | Coordinating with the Sharia Supervisory Committee to develop tools for evaluating the committee works and the performance of its members.
Sharia Supervisory First: Conditions for appointing the Sharia Supervisory Company or the Sharia Supervisory Committee:
| 1. | The fund manager or the board of directors of the self-managed fund shall appoint a company licensed by the competent authority of the State, or members of a Sharia Supervisory Committee, provided that they meet the following conditions:
| | a. | The number of members of the Sharia Supervisory Committee shall not be less than minimum three members, provided that one of them is the chairman of the committee.
| | b. | A member of the Sharia Supervisory Committee shall not occupy the membership of more than three Sharia Supervisory Committees of the fund manager.
| | c. | They shall meet the following criteria of Fit& Proper:
• Full eligibility: A natural Muslim person who does not have one of the impediments to competence (lack or absence of legal competence).
• Qualification and Experience: To have at least a bachelor degree in Islamic law from one of the accredited universities in the state, and to have experience of no less than five years in fatwa in the field of jurisprudence of financial transactions, or in teaching or scientific research in the same field. He is familiar with the legal and regulatory framework related to financial activities and capital markets in the state, and is able to perform his duties in both Arabic and English.
• Honesty and integrity: by providing correct and complete information and documents to the authority, and his previous professional record shall be devoid of any matter that may damage or harm the safety or reputation of the Authority or the state, and the absence of lawsuits, reports or investigations in the prosecution, whether inside or outside the state related to honesty and integrity, and the absence of a judgment or a decision issued by courts or prosecutions related to breach of trust, fraud or deception.
•Compliance: He shall be of good reputation, comply with the legislations applicable within the State, and his name shall not be included in the sanctions lists issued by the United Nations and other foreign organizations, especially those concerned with countering money laundering and combating the financing of terrorism and illegal organizations. Not to have committed any criminal offense or serious violation inside or outside the State during the five years preceding the date of appointment, not to have committed any moderate offense inside or outside the State during the two years preceding the date of appointment, and not to have been subject to any administrative or criminal investigations inside or outside the State during his appointment.
| 2. | The Sharia Supervisory Company or Committee shall be appointed for a period not exceeding three consecutive fiscal years, and it is not permissible to be re-appointed again before the passage of two fiscal years.
| 3. | The terms of appointment shall continue for the duration of the appointment.
Second: The independence of the company and the members of the Sharia Supervisory Committee | 1. | The continuity of the independence of the Sharia Supervisory Company and the members of the Sharia Supervisory Committee shall be ensured throughout the tenure on the job, follows:
| | a. | The committee member shall not have a first-degree relationship with any of the members of the board of directors of the fund manager or the self-managed fund or any of the members of the executive management of the fund manager or the self-managed fund.
| | b. | The member shall not be an employee of the fund manager, the self-managed fund, services providers or any of the companies affiliated with any of them.
| | c. | The Company or the Committee member shall not be an owner in the fund's units.
| | d. | The Company or the Committee member shall not accept any fees or remunerations from the manager of the fund or the self-managed fund or any of their affiliates, with the exception of the remuneration due for the tasks of the Sharia Supervisory Committee.
| | e. | The entitlement of the Company or Committee member to fees or remuneration is not conditional on achieving specific results.
| 2. | The fund manager and the board of directors of the self-managed fund are obligated to immediately inform the Authority in writing of any information affecting the independence of the company or any member of the Sharia Supervisory Committee, while preventing the member who has one of the cases of lack of independence from voting on the decisions in respect of which his independence has been absent.
Third: Changing the Sharia Supervisory Company or vacancy in the membership of the Committee:
| 1. | If the position of one or more members of the Sharia Supervisory Committee becomes vacant at any time for any reason.
| 2. | In the event of a change in the Sharia Supervisory Company for any reason, or the dismissal, resignation or vacancy of the position of a member of the Sharia Supervisory Committee, the Authority shall be notified prior to that date with a statement of the reasons therefor. The fund manager and the board of directors of the self-managed fund are obligated to appoint a new Sharia Supervisory Company or nominate another member to replace the vacant member within a period not exceeding thirty (30) working days.
Fourth: Duties of the Sharia Supervisor Company or Committee:
The Company or Committee is committed to:
| 1. | Monitoring and issuing fatwas and Sharia decisions related to the extent to which the fund’s investments, offering document, investment policy, businesses and procedures are compliant with the provisions and principles of Islamic Sharia.
| 2. | Providing guidance related to mechanisms and ways of complying with the provisions of Islamic Sharia in relation to the fund's investments and its objectives and businesses.
| 3. | Detecting cases of failure of the fund manager and the board of directors of the self-managed fund to comply with the provisions of Islamic Sharia, fatwas and decisions issued by the committee, and review and approve the following:
| | a. | Corrective measures to be taken regarding failures.
| | b. | Sharia treatment of the effects of breach.
| | c. | Appropriate preventive measures to avoid future breaches.
| 4. | Issuing an annual report showing the compliance of the fund's investments with the provisions of Islamic Sharia.
Seventh: An investment Fund Compatible with ESG Standards A local fund whose investment strategy is consistent with environmental, social and corporate governance standards issued by the concerned authorities in the State when choosing its investments.
The fund manager and the board of directors of the self-managed fund shall comply with the following:
| 1. | The name of the fund shall express the nature and objectives of the fund; and use terminology related to environmental, social, corporate governance or the like (such as “sustainable”, “green”), which reflects such a focus on the fund in its investment portfolio and/or strategy in a substantial way.
| 2. | Evaluating and selecting investment asset classes that show acceptable performance and are in line with ESG Standards adopted by the investment strategy of the fund as specified in the offering document, along with specifying the minimum percentages of investments that are compliance with (ESG) standards and to be included in the fund's investment portfolio.
| 3. | That the fund's investment portfolio and/or strategy focuses on one of the ESG standards in a substantial way representing a minimum of two-thirds of the fund's investment portfolio, with the possibility of including in the fund's investment portfolio one or more of the (ESG) standards as specified in the offering document.
| 4. | That the offering documents include a description for how to invest the rest of the one third of the fund's portfolio value that is not compliant with ESG standards, as the fund manager or the board of directors of the self- managed fund may include, in the fund's portfolio, other investment assets that do not comply with those standards, with a maximum of one-third of the fund’s investment portfolio, especially if it is a fund that considers other investment methodologies compliance with the fund’s investment objectives specified in the offering document.
| 5. | Including, in the offering document, sufficient and detailed information about:
| | a. | Description of the investment methodology and sustainable investment strategy used by the fund to achieve the focus towards investment compatible ESG Standards, the binding elements of that strategy in the investment process, and how to implement the strategy in the investment process on an ongoing basis.
| | b. | Clarifying the degree of concentration, distribution and balance of its investment portfolio on each of the (ESG) standards, and determining the minimum distribution of assets used to achieve ESG concentration according to the fund's investment strategy.
| | c. | How to incorporate ESG-compliant investment risks into their investment strategy and the potential impacts of those investment risks on fund returns.
| | d. | Selecting and defining relevant ESG standards, methodologies, or measures (such as third party ratings or certifications, designations, ownership thresholds) used to measure the extent to which the ESG concentration is achieved, assess the fund's compliance degree with ESG standards and explain how the benchmark is compatible with or appropriate to its investment focus.
| | e. | Defining clearly any ESG terms used in the offering document.
| | f. | Clarifying risks and potential impact on the fund's returns and the rights of unit holders as a result of its compliance with the ESG standards.
| 6. | Including, in the fund’s annual and semi-annual reports, sufficient information about ESG practices and other customized information about relevant ECG features or approaches used by the fund manager, provided that it includes the following:
| | a. | Clarifying how and to what extent the concentration of the (ECG) standards followed during the financial period, including comparison with the previous period (if any) were met
| | b. | Actual percentage of investments meeting concentration of ECG standards.
| | c. | Any other measures taken by the fund manager to achieve ECG concentration in the fund's investment portfolio.
| 7. | Disclosure of additional information on the following areas in relation to the ECG fund, its manager, or the index provider to investors or potential investors on the website of the fund manager or self-managed fund:
| | a. | The methodologies used to measure and monitor the extent to which the fund's concentration has met ESG standards and relevant internal or external oversight mechanisms that monitor the fund's compliance with ESG concentration on an ongoing basis.
| | b. | Sources and use of ECG data or any assumptions made when data is missing.
| | c. | Any stakeholders’ engagement policies that can help in shaping the corporate behavior of the companies in which the fund invests and contribute to achieving the ECG concentration.
| 8. | The ESG standards-compliant fund auditor is obligated to issue a report on the extent to which the fund manager has implemented relevant compliance policies with the ECG standards contained in its offering document.
Eighth: Charitable and/or endowment Investment Fund | 1. | A local fund 7 whose units are not redeemed or traded. Its investment strategy aims to provide societal needs by investing the fund’s money, including charitable donations or endowment funds and assets, whether in kind or cash, in various investment aspects, and distributing a specific percentage of its net profits that can be distributed to charitable, social and humanitarian aspects to the beneficiaries specified in the offering document.
| 2. | The founders of the fund are obligated to provide evidence of the approval of the concerned authorities in the state to collect funds from subscribers for the purpose of the donation, and to indicate the persons or entities to whom these donations will be transferred, the purpose of the fund, the sources of the fund’s assets, aspects of their investment, aspects of spending the dividends, their distribution to their destinations, and the distribution mechanism, accompanied by a request submitted to the Authority for initial approval of establishment of the fund.
| 3. | The fund manager and the board of directors of the self- managed fund shall comply with the following:
| | a. | Including, in the subscription form, either through the endowment or charitable donation, delegation of all his powers and rights of the investor to the fund manager or the board of directors of the self-managed fund in the event of his death or loss of eligibility.
| | b. | Applying the investment requirements and restrictions applicable to local public funds to the extent that they do not conflict with the endowment nature of the fund and do not conflict with the different classifications of investment strategies, so that there is no overlap between these strategies.
| | c. | The fund’s charitable investments shall comply with the provisions of Islamic Sharia.
| | d. | The investment of the fund's money and assets in the private funds shall not exceed (25%) of the total value of its assets.
| | e. | The fund's investment value shall not be less than (75%) of the total value of the fund's assets.
| | f. | The percentage of dividends to the beneficiaries shall not be less than (50%) of the annual net profits available for distribution, if any.
| | g. | Distributing profits or returns resulting from the endowment fund’s investments until the date of its termination through one of the governmental charitable or endowment bodies or one of the associations or civil institutions licensed in the state.
| | h. | The charitable purposes to which the fund’s profits and returns are distributed shall be limited to qualified non-profit entities.
| | i. | The assets of the fund shall, upon its termination, be transferred to the beneficiary in accordance with what is specified in the offering document. The General Authority of Islamic Affairs and Endowments may, at its discretion, instruct to transfer the fund’s liquidation proceeds to another charitable fund or to other charitable entities designated for the same purpose specified in the fund’s offering document.
7 The beginning of Clause (1) in Eighth has been amended pursuant to the administrative resolution No.(80/CEO) of 2023 enforced on date 29/12/2023.
Ninth: Protected Cells Fund | 1. | A local investment fund whose investment units consist of the issuance of the fund’s basic capital units in addition to the issuance of various investment units. Each of these issuances has rights and obligations within a cell protected from the rest of the fund’s other cells and the issuance of the basic capital of the fund. These protected cells have no legal personality independent of the fund.
| 2. | The fund manager and the board of directors of the self-managed fund shall comply with the following:
| | a. | Allocating completely separate and independent assets and liabilities for the fund’s basic capital and for each of the other issues (cells) of the fund for the purpose of protecting assets and separating the liabilities of each cell from each other and from the fund’s basic capital.
| | b. | Prohibition of investing the basic capital of the fund in issuances of investment units of cells protected by the fund.
| | c. | All issuances of the protected cells shall have the same targeted investment purpose of the fund.
| | d. | Requiring the administrator to prepare separate accounts for the fund and for each cell of the issues, separate from the rest of the accounts of the cells of other issuances.
| | e. | Each cell shall have a separate general assembly consisting of the unit holders of this cell, provided that its convening and terms of reference follow the same terms and conditions of the general assembly of the fund’s unit holders.
| | f. | The unit holders in the same cell shall have the same rights and obligations.
| | g. | Including, in the fund's offering document, a full disclosure of the terms and conditions for each issuance. A supplementary offering document may be prepared for each issuance separately, according to the general terms and conditions of the fund.
| | h. | The capital for each cell shall consist of funds obtained from issuing and increasing the capital of the cell with investment units that have the same characteristics, rights, and obligations of that cell.
| | i. | Each protected cell shall have revenues, returns, and dividends separate and independent from the rest of the basic capital of the fund and from the rest of the other cells of the fund.
| | j. | Paying the dividends of the investment units for each cell based on the returns realized from assets and liabilities or the profits and losses attributed to the cell to which the issuance of the cell units relates.
| | k. | When determining whether or not profits are available for the purpose of paying dividends of investment units to the various cells of the fund, the following shall not be taken into consideration:
| | | 1) Profits and losses or the net value of assets and liabilities attributed to any other cell in the fund.
| | | 2) Profits and losses or the net value of assets and liabilities attributed to the basic capacity of the fund.
| | l. | Including, in the offering document of the open-ended protected cell fund, a condition that the unit holders in each cell are entitled to redeem their units from the fund on demand at a price that depends on the net asset value of the relevant cell.
| | m. | Separately publishing the net asset and liabilities value attributed to the basic capital of the fund and to each separate cell in the fund.
| | n. | The unit holders of the open-ended protected cell fund may transfer the ownership of their units between the protected cells of the fund or to the basic capital of the fund according to the replacement rate calculated on the basis of the net value of the investment units, subject matter of the replacement.
| | o. | Prohibition of dealing or transactions between the protected cells of the investment fund.
| | p. | Not transferring an asset attributed to one of the cells of the fund to another cell of the fund.
| | q. | Not merging a cell of the fund with or in one or more cells of the fund except with the approval of 100% of the holders of the investment units of the merged and merging cells and after obtaining the approval of the Authority.
| | r. | Disclosing the nature of the protected cell fund to any person dealing with it, and when dealing with a specific cell, disclosing to the customer that the assets associated with the relevant cell are available to meet the liabilities related to that cell only.
Appendix No. (4) Appraisal of shares in-kind in a Public Local Fund
First: Shares In-kind
Article (1) Requirements for shares in-kind The shares in-kind offered by the investor to subscribe to the units of the local public fund shall:
| 1. | Be a right of ownership or usufruct over a property or a tangible movable property.
| 2. | Be compliant with the fund's offering document and investment strategy.
| 3. | Be Convertible to liquidity
| 4. | Not be judicially disputed.
| 5. | Not to be burdened with any rights, guarantees, or obligations in favor of third parties. In the event that there are any rights, guarantees, or obligations in favor of third parties, it shall have a specified value according to a certificate submitted by a legal advisor or the party that has the obligation, and it is deducted from the evaluation to reach the net value of the share in-kind.
| 6. | Its ownership or usufruct be transferred to the investment fund in accordance with the official procedures applicable in the State where the shares in-kind are located.
| 7. | Be registered with the competent authorities at the location of the share subject to evaluation, or a valid allocation resolution was issued by the competent authorities at the location of the property.
Article (2) Conditions for evaluating in-kind shares
| 1. | The valuation should be carried out by two evaluators specialized in evaluating the in-kind asset, subject matter of evaluation.
| 2. | Estimate the fair value of the shares in-kind as per international valuation principles for the asset, provided that the lowest value is taken for each valued asset.
| 3. | If the shares in-kind represents shares in companies or securities that are not listed in the main market, or if there are no published market prices therefor at the time of its evaluation, or (3) months have passed since the last declared price, or its trading is limited and inactive, then the two evaluators shall be a financial advisor licensed by the Authority.
| 4. | If the shares in-kind represents a share in a company owning properties and the investment fund aims to invest in these properties, then the outputs of the evaluators’ evaluation report shall be presented to a third evaluator who takes the form of an auditor accredited by the Authority to undertake the task of evaluating the offered share, provided that he meets the following conditions:
| | a. | Taking into account the conditions mentioned in Article (2) of this appendix.
| | b. | Taking into account the evaluation outputs reached by the evaluators, unless he has concerns about these reports.
| | c. | Adopting the lowest value for each property owned by the company that owns the property.
In such case, the fund manager or the board of directors of the self-managed fund is not obligated to assign the fund auditor to issue a comparative report on the results of the evaluation of the in-kind shares received from the in-kind evaluators.
Second: The Appraiser of shares in-kind
Article (3) Requirements for the Appraiser of shares in-kind First: For the Authority’s approval of the appraiser of shares in-kind, the following conditions must be met:
| 1. | It shall take any of the following forms:
| | a. | A company incorporated in the state in accordance with the Commercial Companies Law.
| | b. | A branch of a foreign company incorporated in the state in accordance with the Commercial Companies Law, provided that the parent company has an experience of not less than (5) years in the field of evaluating the asset presented as an in-kind share, and is licensed in the state of its incorporation to do so.
| | c. | An international house of expertise licensed in its state of incorporation to evaluate the assets provided as in-kind shares.
| 2. | It shall have obtained a license or approval from the competent authority in the state for evaluation.
| 3. | It shall have experience of no less than (5) years in the field of evaluation, and no less than (3) years in the field of evaluating the asset provided as an in-kind share, and that it shall be fully independent, and not have common interests with the founders of the fund or any of its related parties.
Second: The fund's auditor or financial advisor is not allowed assess the in-kind shares provided to the same fund.
Article (4) Obligations of the Appraiser of shares in-kind The evaluator of shares in-kind is obligated to fulfil the following:
| 1. | Prepare an evaluation report on the shares in-kind in accordance with the applicable international evaluation reporting standards.
| 2. | The validity and accuracy of the evaluation, and the adequacy and completeness of the data and information contained in the evaluation report.
| 3. | Demonstrate whether or not the shares in-kind provided to the Fund are liquid.
| 4. | Check the future assumptions and growth rates of the sector indices to which the asset, subject matter of the evaluation, belongs, competition and market conditions, the reasonableness of those assumptions and the possibility of their realization.
| 5. | Analyze all the risks associated with the asset, subject matter of the evaluation, and conduct analyzes to ensure that their impact on future expectations and assumptions, on which the evaluation report is based, is included.
| 6. | Maintain the confidentiality of data and information.
| 7. | Manage conflict of interests between its duties and any other financial activities it conducts, while disclosing them.
| 8. | Exercise due care in accordance with the provisions of law, take into account commercial norms in this regard and the principles of honesty, fairness and equality in collecting data and information from official authorities, carry out all necessary procedures, reviews or audits to verify the accuracy and completeness of the data and information of the evaluation report and ensure that they cover all aspects to reach the fair value of the asset being evaluated.
| 9. | Comply with the Authority's requirements and resolutions.
Article (5) Appraisal report of shares in-kind First: The Appraiser of the Shares in-kind is required to:
| 1. | Disclose any securities associated with the evaluation report that are owned by him prior to the preparation of the report.
| 2. | Refrain from trading in securities related to the evaluation or any related financial derivatives within a period of (15) fifteen days prior to the issuance of the evaluation report and a period of (5) five days after the issuance of the evaluation report.
| 3. | Prepare the evaluation report using correct, clear, non-misleading, and recent data that does not exceed (3) months from the date of the evaluation.
| 4. | No objection to publishing the evaluation report and its summary in the fund offering document and on the website of the fund manager, the board of directors of the self-managed fund, and the market in which the fund units are listed (if any).
| 5. | Provide the Authority with the evaluation report and its summary in Arabic without disclosing any of them to others before submitting them to the Authority, provided that no more than (3) months have elapsed since the date of the evaluation report.
| 6. | Submit a copy of the report to the fund manager and the board of directors of the self-managed fund after the Authority receives the report.
| 7. | The summary of the evaluation report shall include the most important valuation data, including the following:
| | a. | The fair value of the asset being evaluated.
| | b. | Confirming that there are no obligations, debts, mortgages, rights or other guarantees that are charged on the asset in favor of third parties, with the possibility of relying on a special report issued by the fund’s legal advisor and under his responsibility in this regard.
| | c. | The different evaluation methods used by the evaluator to determine the fair value of the assets being evaluated according to the professionally recognized principles and according to the nature of the asset.
| | d. | The evaluator's opinion on the validity, accuracy and adequacy of the data necessary for evaluation that it obtained from the fund manager and fund the board of directors of the self-managed, and the extent to which they are relied upon to reach the fair value.
Second: The Authority may discuss the evaluation reports with the evaluator of the in-kind shares according to the mechanism it deems appropriate.
Third: The Authority may appoint another evaluator of in-kind shares at the expense of the fund manager or the board of directors of the self-managed fund, as the case may be, if it deems it necessary.
Article (6) Post-establishment valuation The valuation of shares in-kind following the establishment of the local fund shall be subject to the same evaluation provisions stipulated in this appendix. In such case, the fund shall bear all related expenses in lieu of the fund manager and the board of directors of the self-managed fund.
Third: Obligations of the fund manager and the board of directors of the self-managed fund with regard to shares in-kind The fund manager and the board of directors of the self-managed fund shall comply with the following:
| 1. | Verifying the feasibility of accepting the share in-kind, and the extent to which it is compatible with the nature of the fund and its investment strategy.
| 2. | Allowing the appraisers of shares in-kind to obtain all required information to perform their duties.
| 3. | Assigning the fund’s auditor to: issue a comparative report on the results of the valuation of the shares in-kind that was received from the appraisers, indicating the approved value of each shares in-kind (which is the lowest value of the asset mentioned in each evaluator's report in the event that there is more than one value of the asset in the evaluation report), the name of the subscriber (who provided the share in-kind), and the approved total value of the provided assets.
| 4. | Amending the offering document after the establishment or increasing the capital to reflect the position of the fund without the details of in-kind shares, evaluation reports, allocation mechanisms, and what the Authority deems necessary in this regard.
| 5. | The value of shares - if it is a usufruct for period of less than (30) years - shall not exceed (25%) of the total units of the fund upon allocation.
| 6. | Bearing the costs of appraising the shares in-kind provided that they are recovered after the fund is established as foundational expenses, and this shall be stipulated in the offering document.
| 7. | Bearing the expenses of transferring the ownership or usufruct of the shares in-kind to the fund, provided that they are recovered after the establishment of the fund and accounted for according to what the fund’s auditor deems appropriate, unless it is agreed with the investor to bear these expenses and return their value to it after establishment whether in cash or by allocating units. The mechanism to be followed shall be stipulated in the offering document.
| 8. | Bearing the costs and expenses incurred in appraising and transferring the shares in-kind and returning said the shares in-kind to the providers in the event of failure of the subscription, unless it is agreed with the providers of the shares in-kind to bear all or any of these expenses, and this shall be stipulated in the offering document.
| 9. | Ensuring that the provider of the shares in-kind adheres to the following:
| | a. | Undertaking to provide all information and documents that may be requested for evaluation purposes.
| | b. | Providing an initial appraisal or valuation of the fair value of the shares in-kind provided by it at the time of its provision to the fund.
| | c. | Providing all documents of ownership or usufruct of the shares in-kind and all rights and privileges arising therefrom, and evidence that the shares in-kind fulfill the conditions stipulated in this appendix.
Appendix No. (5) gratuity Regulatory requirements for incorporation and licensing Investment Funds for the purposes of applying the optional alternative framework to the end-of-service gratuity system “End-of-service gratuity savings funds”
First: An end-of-service Gratuity savings fund:
A public open-ended fund licensed by the Authority for the for the purpose of implementing the optional alternative framework to the applicable end-of-service gratuity system and in accordance with the applied regulation gratuity Authority.
Second: The investment policy for end-of-service gratuity savings funds:
| 1. | Any licensed end-of-service gratuity savings fund shall adhere to one of the investment policies outlined below:
| | a. | The investment policy of the Capital Protection Fund, this is the main option for all beneficiaries of skilled and unskilled workers, provided that it is the only option for unskilled workers as classified in accordance with the decisions of the Council of Ministers This applies to the basic subscription, and the investment policy to be applied is only one of those applied by a local public open-ended fund.
| | b. | Any of the existing risk-based investment policies may be implemented and made available if the beneficiary belongs to the skilled labor category or if the subscription is voluntary. The investment policies for the local public open-ended fund is to be implemented only if the subscription is basic, while one of the investment policies for public local funds (whether open-end or close-end) is to be implemented if the subscription is voluntary.
Third: Classification of End-of-Service Gratuity Savings Funds:
The classification of end-of-service gratuity savings funds is limited to the following:
1. Umbrella Fund.
2. Protected Cells Fund.
Fourth: Further obligations on service providers for end-of-service gratuity savings funds In addition to the provisions outlined in the investment funds regulations and the Rulebook for Financial Activities, end-of-service benefit savings fund service providers are obligated to provide the following:
| 1. | Obligations of an Investment Fund Investment Management Company:
| | a. | Providing the investment policy of the Capital Protection Fund as the main option.
| | b. | Offering at least one option for each investment policy applied by the fund that complies with Islamic Sharia principles.
| | c. | Executing a written agreement with the employer in Arabic or in both Arabic and English, encompassing, at a minimum, all obligations and rights of employers and beneficiaries, terms and conditions of participation in the fund, and clearly state the financial services provided, ensuring compliance with laws, ministerial decisions, or any regulations governing the financial activities offered, and the authorization granted to the investment fund’s investment management company, should not involve services that are not licensed by the Authority, and should be signed by the legal representative or authorized person.
| | d. | The fund’s offering document and subscription form shall include the terms and conditions and principles that clearly define the rights and obligations of the employer and the beneficiary. It shall specify the terms and conditions for accepting voluntary subscriptions directly from beneficiaries or through the employer. The employer shall provide an annual report on participating employees and annual accounts of contributions paid by participants for verification against the data available to the Administrator.
| | e. | The funds and assets under management by the Investment Fund’s investment Management Company shall not be less than 1,000,000,000 (one billion) dirhams, and the Authority at its discretion and in coordination with the Ministry of Human Resources and Emiratization may adjust the minimum limit Authority.
| | f. | Adhere to the Authority’s requirement regarding investing a percentage of the Fund’s money in local investment products.
| | g. | Attach a statement of non-objection from the Ministry of Human Resources and Emiratization’s when applying to the Authority for the establishment and licensing of the Fund, including its structure, the custodian, administrator, and those proposed to be appointed for the purposes of operating the Fund, Ministry and fulfillment of the standards and requirements set by the Ministry in this regard.
| | h. | Providing capital adequacy or additional capital of no less than 2.5% of the total funds to be invested in the fund, with a maximum limit of 50 million dirhams. The Authority may, at its discretion, and after coordination with the Ministry adjust the percentage and maximum limit as deemed necessary.
| | i. | Must have been carrying out the activity of management of investment funds for a period of not less than 3 years. The Authority, at its discretion and following coordination with the Ministry, may adjust this duration.
| | j. | Submission of a guarantee letter amounting to AED 5 million in favor of the Authority. The Ministry, in coordination with the Authority, reserves the right to encash or utilize it in whole or in part at any time. The guarantee must meet the following conditions in all cases:
| | | 1. | The guarantee should be in the form of either a bank guarantee or cash, with the ability to combine the two forms.
| | | 2. | If the guarantee is in the form of a bank guarantee, it must be issued by a bank operating in the country, be unconditional, and unrestricted. The payment obligation shall be transferable upon demand, by the Ministry of Human Resources and Emiratization and/or the Authority, as applicable, at any time. The cancellation of the guarantee is only permissible by the Ministry and/or the Authority.
| | | 3. | The guarantee must be issued for the purpose of securing the settlement of all transactions undertaken by the Investment Fund’s Investment Management Company or fulfilling its obligations arising from the exercise of its activities for the employers or beneficiaries, or in fulfillment of its obligations towards the Authority or the Ministry, or resolutions issued by the Authority or the Ministry. The Authority and after coordinating with the Ministry, may adjust the value of the mentioned guarantee at its discretion.
| | k. | Establish procedures for addressing complaints related to the fund submitted by employers or beneficiaries, and promptly notifying the Authority or the Ministry, as applicable, of such complaints, accompanied by reports detailing the actions taken to address them, provided that this occurs within a maximum period of 10 working days from the date of submitting the complaint.
| | l. | Disburse the collected amounts of the basic subscription and any associated returns to the beneficiary or those entitled to receive them, when they are due, in accordance with the resolution of the Council of Ministers.
| | m. | Provide insurance coverage on the amounts of the basic subscription paid by employers in the event of choosing the Capital Protection option (Fund Protection Capital). This coverage shall be fully provided by the insurance company. The Authority, at its discretion and in coordination with the Ministry, may adjust the insurance coverage system referred to herein.
| | n. | Invest the amounts of the basic subscription only as specified and outlined in paragraph II of this appendix.
| 2. | Obligations of the Administrator:
| | a. | The administrator must have engaged in the provision of administrative services for investment funds for a period of not less than 3 years. The Authority, at its discretion and in coordination with the Ministry, may grant exceptions to the mentioned duration.
| | b. | Provide account statements and periodic reports at least semi-annually, sent electronically or through any other documented method to employers and the workers who are the beneficiaries, in accordance with the fund offering document. The report should include a statement of their basic and voluntary contributions and the returns realized during the subscription period.
| | c. | Provide financial performance reports, compliance reports and the procedures required by the Authority and the Ministry of Human Resources and Emiratisation upon request.
| | d. | Establish electronic connectivity with the systems of the Ministry of Human Resources and Emiratisation in accordance with its requirements.
| | e. | Verify the validity of the mechanism for calculating and transferring the basic subscription amounts in accordance with the provisions of Article (6) of the Council of Ministers decision.
| | f. | Provide customer service, handle complaints arising from the application of alternative framework from beneficiaries or employers, settle them amicably, and report the results to the Ministry on a monthly basis.
| 3. | Custodian’s obligations:
| | a. | The appointed custodian must hold a valid license as a licensed local bank from the Central Bank, and its capital shall not be less than three billion dirhams.
| | b. | Ensure that the funds and assets under its custody do not be less than one billion dirhams.
| | c. | Must have engaged in the activity of custodian for investment funds for a period of not less than 3 years.
| | d. | Audit the annual reports, monitor the performance level, and oversee the compliance of the Investment Fund’s Investment Management Company and the Administrator with applicable prevailing laws, and promptly notifying the Authority of any observations.
| | e. | Execute the instructions of the Investment Fund’s Investment Management Company and the Administrator for the collection of basic and voluntary subscriptions, and disbursement of the entitlements to the beneficiaries after thorough verification and confirmation of compliance with the required conditions and documents.
| | f. | Ensure that the decisions made by the Investment Fund’s investment Management Company are taken solely for the benefit of the beneficiaries.
Fifth: Procedures for establishing and licensing end-of-service gratuity savings funds Except for Articles 6, 7, and 12 of the Investment Funds resolution, the following provisions shall apply:
| 1. | Request for approval of incorporation and licensing:
| | a. | The Investment Fund’s Investment Management Company shall submit an application to the Authority for preliminary approval to establish and license an End of Service Benefits Savings Fund on the specified form. The application form shall be accompanied by all relevant documents and data outlined in detail in the provided form and attached schedules, with particular emphasis on:
| | | 1) | Clearly specifying the fund’s name in a manner that avoids confusion or ambiguity and complies with the prevailing regulations in the country.
| | | 2) | A document for offering an end-of-service gratuity savings fund, and a summary of the information of the offering document (KIID) according to the form prepared for this purpose, provided that it includes statement of the investment policy and classification of the local fund.
| | b. | The applicant is obligated to pay the application review fee as determined by the Authority
| | c. | The Investment Fund’s Investment Management Company shall be responsible for the accuracy of the data and documents submitted to the Authority and any information contained therein, and for immediately notifying the Authority of any change in the documents or information submitted to it.
| | d. | The Authority may request from the applicant any data, documents, or amendments Authority, and such requirements must be met within a maximum of 20 working days from the date of the request made by the Authority. Failure to do so shall be deemed as a renunciation of the application.
| | e. | The Authority shall issue its approval or rejection of the application for establishment and licensing within ten (10) working days from the date of receiving a completed application, and may attach to its approval any conditions or restrictions it deems necessary. The Authority reserves the right to reject the application, despite its meeting the requirements, for the protection of public interest, or if it deems the application inappropriate for the investment environment in the country, or if it perceives that the application does not meet the interests of the investors. The Authority shall promptly notify the applicant of its rejection, providing reasons thereof.
| 2. | The issuance of the establishment and licensing decision
| | a. | The Authority shall issue a certificate of establishment for the End of Service Benefits Savings Fund and its license to commence operations within five (5) working days from the date of payment by the Investment Fund’s investment Management Company of the prescribed license fee set by the Authority.
| | b. | The duration of the End of Service Benefits Savings Fund license shall be one year, commencing from the date of issuance of the license. The Investment Fund’s investment Management Company shall apply for the renewal of the license annually, at least one month before its expiration, and upon payment of the annual renewal fee set by the Authority from the fund’s monies.
| | c. | All legal consequences resulting from the establishment and licensing process carried out by the Investment Fund’s Investment Management Company shall be transferred to the End of Service Benefits Savings Fund. The fund shall bear all associated expenses, excluding expenses related to the issuance of fund units, their promotion, the preparation of the offering document, and any other documents associated therewith, which shall be borne by the Investment Fund’s investment Management Company from its own resources.
| | d. | The end-of-service gratuity savings fund has a separate legal personality and has independent financial liability from the date of issuance of the certificate of incorporation, which authorizes it to carry out all legal actions as a company, including ownership, leasing, opening bank accounts, or appointing approved employees, etc.
| | e. | The Authority shall immediately revoke the license of the End of Service Benefits Savings Fund in the following circumstances:
| | | 1) | The failure of the Investment Fund’s Investment Management Company to contract with at least one employer within (12) months from the date of receiving its license.
| | | 2) | The failure of the Fund to practice its investment policy within (12) months from the date of its licensing.
Sixth: General Provisions:
| a. | Participation in the End of Service Benefits Savings Funds is achieved through either mandatory or voluntary subscriptions based on the provisions outlined in the resolution of the Council of Ministers.
| b. | The provisions regarding subscription, allocation, redemption and distribution of profits contained in the investment funds’ decision do not apply to basic subscriptions.
| c. | The Investment Fund’s Investment Management Company must obtain approval from both the Authority and the Ministry before making any decisions related to the basic subscriptions, including but not limited to:
| | 1) | Approving amendments to the terms and conditions of the offering document.
| | 2) | Changing the Investment Fund’s Investment Management Company or fund administrator.
| | 3) | Cessation or liquidation of the Fund.
| | 4) | Transformation or merger of the Fund.
| | 5) | Appointment and change of the Fund’s board of directors, if applicable.