The United Arab Emirates (UAE) Securities and Commodities Authority (SCA) has issued a decision (No. 37 (R.M) of 2019), effective December 1, 2019, amending the definition of Qualified Investor in all regulations issued by the SCA. This is particularly relevant to persons marketing investment funds and other financial products in the UAE, because Qualified Investors may be marketed to without requiring a locally licensed placement agent or registration of the fund or financial product with the SCA. Some elements are unchanged: UAE governmental entities and international organisations are still Qualified Investors, for example, but the definition of Qualified Investor now additionally includes the following:
- Foreign governments and their entities, institutions, and authorities or companies wholly owned by any of them.
- UAE corporate entities meeting certain financial requirements (previously, the Qualified Investor criteria for UAE corporate entities was an investment-related business activity. This change means that investment companies have to meet the financial requirements set out below in order to be a Qualified Investor).
- Individuals accredited by the SCA or Similar Regulator (a supervisory authority which is an ordinary member or an associated member in the International Organization of Securities Commissions (IOSCO), including the UK Financial Conduct Authority and the US Securities and Exchange Commission) to perform functions related to financial activities or services.
The new definition of Qualified Investor is set out in full below. Please note that there is no official English translation of the SCA decision at this time, and accordingly the Arabic version will prevail in the case of any discrepancies.
“The natural or legal person that is capable of managing its own investments by itself according to the following conditions, unless it desires to be just a normal investor
- The corporate person that meets any of the following conditions:
- The Federal Government, local government and governmental entities, institutions and authorities, or companies wholly owned by any of the aforementioned
- Foreign governments, and their entities, institutions and authorities or companies wholly owned by any of them
- International authorities and organizations
- Entities licensed by the Authority or by a Similar Regulator
- A corporate person that meets, at the date of its last financial statements, at least two of the following requirements:
- Its total budget of AED (75) million
- Has net annual return of AED (150) million
- Has funds or paid up capital of AED (7) million
- The natural person accredited by the Authority or by a Similar Regulator to perform any of the functions related to financial activities or services.
- The natural person who meets the following conditions:
- His net equity, with the exception of his main house, is valued at AED (4) million.
- His annual income is not less than AED (1) million annually.
- Declaring that he has the adequate knowledge and experience in the field of investment and its risks, or represented by an entity licensed by the Authority without prejudice to the terms of its licensing.”