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ADGM Revises Pooled Fund Capital Req's

by Lorys Charalambous, Lowtax.net, Cyprus
11 April, 2017

Abu Dhabi Global Market, the low-tax international financial center, has revised the capital requirements applicable to managers of collective investment funds, with effect from April 10, 2017.

The revisions are intended to address the needs of market participants, and to further align the capital requirements with capital-adequacy standards of other jurisdictions, including the EU and the UK.

The capital requirements exist to ensure that an authorized firm maintains adequate financial resources to conduct regulated activities as a going concern and, in the event of its insolvency, to enable the firm to be wound down in an orderly manner.

Under current rules, an authorized firm that manages a collective investment fund is subject to a capital requirement that is either determined on a base capital requirement (BCR) of USD250,000, or an expenditure based capital minimum (EBCM), if higher than the BCR.

Following a review of existing BCR levels against established jurisdictions, an enhanced tier structure for BCR has been adopted. For collective investment fund managers of Public Funds, the BCR will be revised down to USD150,000, with a lower BCR of USD50,000 for managers of Exempt Funds and Qualified Investor Funds. This recognizes that collective investment fund managers of Public Funds present higher conduct risks. The current EBCM requirement remains unchanged.

ADGM is an international financial center established in 2013. It offers a range of attractive benefits to firms, including exemption from taxes guaranteed for 50 years, and relaxed rules on the repatriation of profits. ADGM permits 100 percent foreign ownership.

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