3.1 Establishing a local fund
▼Three routes to establish a fund (Article 4) syllabus 3.1
Under Resolution No. 01/Chairman of 2023, a local fund can be established via one of three routes:
- Authority-licensed investment fund manager sets up the fund
- Entity licensed for family investment management sets up a family fund
- Two or more natural / corporate persons set up a self-managed fund (subject to conditions)
Family fund — 100% ownership (NOT 90%) syllabus 3.1
Family fund units must be 100% owned by family members — whether natural persons OR corporate persons wholly owned by them. The unit holder must also be the beneficial owner.
Trap: some exam-dump sources misstate this as 90%. The workbook is unambiguous at 100%.
Self-managed fund — founder criteria syllabus 3.1
3.2 Approval workflow
▼The five approval clocks syllabus 3.2
| Step | Window |
|---|---|
| Initial approval — PUBLIC fund | 10 working days |
| Initial approval — PRIVATE fund | 5 working days |
| Final approval — doc submission after subscription close | Within 30 days |
| SCA certificate issuance | Within 5 days of complete submission |
| Begin investment policy | Within 12 months of licensing |
3.3 Fund types & thresholds
▼Venture capital fund syllabus 3.3
Cash / money market fund — three constraints syllabus 3.3
Real estate fund (non-REIT) syllabus 3.3
A general real estate fund must hold at least 75% of assets in real estate or real-estate-related instruments. Permitted: real estate directly, REITs, listed property cos, qualifying cash for liquidity.
REIT — three distinguishing features syllabus 3.3
Private fund — qualifying investors only syllabus 3.3
Private funds are restricted to qualified investors (corporate or natural-person criteria — see Ch 4). Private fund secondary unit transfer requires minimum nominal of AED 180,000 to pro investors.
3.4 ETFs & index funds
▼ETF prospectus — required contents syllabus 3.4
The ETF prospectus + data summary must include:
- Tracked index details
- Issuance / redemption mechanism
- Listing market(s)
- Authorised agent name
- Bid / offer spread mechanism (based on continuously-available NAV)
- Maximum permitted deviation from the index
3.5 In-kind subscriptions
▼Evaluator — 5+3 years experience syllabus 3.5
The evaluator must have:
- 5 years general valuation experience, PLUS
- 3 years specific experience in the asset class being valued
Both limbs are cumulative — failing either disqualifies. Trap: often misremembered as 5/2 or 3/5.
Evaluator blackout — 15 before / 5 after syllabus 3.5
The evaluator cannot trade the relevant shares for 15 days BEFORE and 5 days AFTER the evaluation date. The longer pre-window prevents front-running their own valuation. Pre > post — remember the larger number comes first.
Evaluation data — 3-month freshness syllabus 3.5
The data used in the valuation report must not be older than 3 months. If it ages out before subscription closes, the evaluator must refresh or re-perform.
3.6 Custodian & fund manager
▼Custodian — SCA licence required syllabus 3.6
The custodian must be licensed by the SCA as a custody service provider. Self-custody by the fund manager is forbidden (independence rule). Banks may act as custodian ONLY if they hold the relevant SCA licence — not by virtue of being a bank.
Custodian — independence test syllabus 3.6
"Independent" means not a related party or affiliate of the fund manager (≥30% common ownership triggers the sister/affiliate test — see Ch 1). Geography, individual shareholder identity, audit-firm choice are NOT the test.
Fund manager — SCA licence required syllabus 3.6
The investment manager must hold an SCA licence specifically for fund management. Applies even where management is delegated — the contracting entity must be SCA-licensed. GCC central bank licensing does NOT substitute.
3.7 GP/LP structures
▼Natural person LP — qualifying tests syllabus 3.7
3.8 Reporting & governance
▼First financial year — 6 to 18 months syllabus 3.8
The first FY must be between 6 and 18 months long. Flexibility to align reporting cycle with calendar/audit cadence.
Reporting cadence syllabus 3.8
3.9 Foreign fund promotion
▼SCA approval required syllabus 3.9
Promotion of foreign funds to UAE investors requires prior SCA approval. The fund manager or appointed promoter must notify and obtain authorisation — regardless of where the fund is domiciled or where its manager is regulated.
Private offering minimums — onshore vs free zone syllabus 3.9
Approval & objection windows syllabus 3.9
3.10 Cheat sheet — all the numbers
▼Every Ch 3 threshold in one place exam day
| Topic | Threshold |
|---|---|
| Family fund family ownership | 100% (NOT 90%) |
| Self-managed corporate founder capital | AED 20 million |
| Self-managed founders' subscription | ≥ AED 5 million |
| Self-managed founders' lock-up | 6 months |
| Prior profitability | 2 financial years |
| Initial approval — public fund | 10 working days |
| Initial approval — private fund | 5 working days |
| Final approval doc submission | Within 30 days |
| SCA certificate issuance | Within 5 days |
| Begin investment policy | Within 12 months |
| First financial year duration | 6 to 18 months |
| Semi-annual audited reports | Within 45 days |
| Annual audited reports | Within 3 months |
| Private fund secondary transfer min | AED 180,000 |
| VC fund — qualifying investment | ≥ 70% |
| VC fund — lending cap (unlisted) | ≤ 30% |
| VC fund — full reporting | ≥ AED 180m AUM |
| Cash fund — credit rating | BBB+ |
| Cash fund — cash allocation | ≥ 90% |
| Cash fund — WAM | ≤ 120 days |
| Real estate fund — allocation | ≥ 75% |
| REIT distribution | ≥ 80% of net profits |
| REIT borrowing | ≤ 50% of assets |
| In-kind evaluator — general/field exp | 5 yrs / 3 yrs |
| In-kind evaluator — pre/post blackout | 15 days / 5 days |
| In-kind evaluation freshness | ≤ 3 months |
| GP/LP natural LP — annual income | ≥ AED 3 million |
| GP/LP natural LP — net equity (ex-residence) | ≥ AED 7 million |
| Foreign fund — onshore private min | AED 500,000 |
| Foreign fund — free-zone private min | AED 1,000,000 |
| Foreign fund — approval window | 15 days |
| Promoter notification — stop window | 10 days |
This is THE chapter to nail
- 🎯 102 calibrated Ch 3 questions in the bank — the most of any chapter.
- 📊 Hardest 20 mode will surface the toughest threshold traps quickly.
- 🔄 The trap-pairs (75% / 80% / 50% — RE fund / REIT distribution / REIT borrowing) reward repetition.