Lawyer in Dubai for Investment Funds & Fund Structuring

An investment proposal may begin with a straightforward idea: several investors contribute money and a manager uses it to acquire assets. The legal structure becomes more complicated when the proposal involves discretionary management, subscriptions, investor introductions, custody or marketing in several countries.

A lawyer in Dubai advising on investment funds should first establish how the proposed business will operate. Incorporation is one part of the project. The permissions required for management and distribution, the investors who may participate and the terms on which they can leave need to be settled before money is accepted.

This article explains the main decisions sponsors and investors should examine when considering fund structuring in Dubai and the wider UAE.

DIFC reported more than 500 wealth and asset management companies in its 2025 annual results, a 22% year-on-year increase, including 102 hedge funds. These ecosystem figures provide market context; they do not establish the permissions or suitability of any particular fund or manager.

Describe the investment arrangement before naming the vehicle

Start with a written operating proposal. State who contributes capital, who makes investment decisions and whether investors control individual transactions. Identify the assets, expected holding period, borrowing and proposed return mechanism.

Explain what each participant will actually do. A person introducing investors may perform a different activity from the investment manager. An administrator processing subscriptions is different from a custodian holding assets. One group may provide several services through separate entities.

Investment funds lawyers in Dubai can use this information to assess whether the arrangement falls within a regulated fund framework and what other permissions may be needed. Calling a project a club, partnership or holding company does not settle that assessment.

Compare the relevant regulatory frameworks

The UAE has distinct regulatory systems. Federal capital market activities within the relevant scope are overseen by the Capital Market Authority, which replaced the Securities and Commodities Authority under Federal Decree Law No. 32 of 2025. The Dubai Financial Services Authority regulates financial services in the DIFC, while the Financial Services Regulatory Authority operates within ADGM.

The location of the vehicle is only one factor. Identify where management takes place, where investors are approached and which entity receives their money. An overseas manager or a financial free zone entity may need additional analysis when targeting investors elsewhere in the UAE.

A useful comparison should explain the proposed activities, investor eligibility, governance obligations and ongoing operating costs. The cheapest incorporation package may provide little information about those questions.

Apply the current federal capital market framework

Federal Decree Law No. 33 of 2025, effective from 1 January 2026, regulates capital markets within its stated scope. Article 3 includes fund establishment and management, promotion, introductions and other financial activities, and prohibits carrying on regulated activities without the required licence or approval. Article 38 addresses investment fund forms and authorisation.

The law also contains exclusions and provisions relevant to activities targeting clients in the UAE. Those provisions should be read together rather than reduced to a rule based solely on an office address.

Existing documents may still refer to the former regulator. Article 82 continues earlier resolutions to the extent they do not conflict with the new framework until replacement measures are issued. A legal review should therefore examine the status of the applicable rule, rather than assuming every earlier requirement disappeared when the regulator changed.

Match a DIFC fund category to the intended investors

The DFSA identifies Public Funds, Exempt Funds and Qualified Investor Funds. Exempt Funds and Qualified Investor Funds are offered by private placement to Professional Clients, with minimum subscriptions of USD 50,000 and USD 500,000 respectively under the published framework.

These thresholds are not a substitute for investor classification. The offering process must establish that a prospective investor satisfies the relevant conditions. The manager’s authority, the fund’s category and any specialist requirements must also fit the strategy.

The DFSA framework allows domestic managers and qualifying external managers under specified conditions. A foreign licence does not by itself answer whether the proposed arrangement qualifies. Confirm the manager route before finalising administration, custody and investor documents.

Check the updated ADGM rules

ADGM provides its own framework for funds and managers. In September 2026, the FSRA announced finalised enhancements covering, among other matters, smaller fund managers, managers serving exclusively institutional investors and changes affecting foreign fund managers.

Sponsors should assess the enacted requirements and their eligibility under the current framework. A consultation paper or an earlier comparison may no longer describe the available route accurately.

Where a sponsor has already prepared an application, identify whether the operating model or chosen manager status needs revision. The legal analysis should connect any simplified requirements to the actual business and investors, without treating a streamlined route as permission to omit the remaining duties.

Make investor terms reflect the underlying assets

Liquidity is a central structuring decision. A fund investing in assets that may take months to sell should examine how it can meet frequent redemption requests. The documents should describe notice periods, permitted restrictions and the decision process during stressed conditions.

Fees also require precise drafting. Identify the calculation base for management fees and the treatment of expenses. If performance fees are proposed, explain how gains, previous losses and valuation dates affect the calculation. Investors should be able to understand the result from the documents.

Consider a strategy involving a small number of properties. The fund documents should address what happens if a sale is delayed, an asset needs additional funding or investors disagree with an extension. Those questions deserve attention before the first subscription.

Allocate responsibility for valuations and conflicts

Set out who values the portfolio, what information is used and how difficult assets are assessed. Explain how valuation disputes or errors will be corrected and communicated. A valuation policy should be usable by the people responsible for applying it.

Identify conflicts involving the sponsor, manager, related companies and different investor groups. Examples include purchases from an affiliated business, allocation of an investment opportunity between funds and a manager receiving fees from several participants in the same transaction.

The governing documents should state how such decisions are reviewed and recorded. Side letters granting particular investor rights should be checked against those documents and the applicable disclosure and treatment requirements.

Review distribution before circulating the presentation

Marketing analysis should cover websites, presentations, messaging groups and introductions through intermediaries. Record who will receive the material and where those recipients are located. A private meeting can still raise regulatory questions depending on its substance.

Do not assume that authorisation in one jurisdiction permits every form of distribution elsewhere. Where a recognised passporting or other permitted route is proposed, verify its conditions and complete the required steps before relying on it.

Maintain approved versions of the materials. The stated fees, investment strategy and redemption terms should match the subscription and constitutional documents. Inconsistent promises can later become the centre of an investor dispute.

Prepare compliance and service provider arrangements

Subscriptions require reliable investor records and a clear account of where the money goes. Allocate responsibility for investor identification, beneficial ownership checks, relevant source of funds enquiries and ongoing monitoring. The current federal financial crime framework includes Federal Decree Law No. 10 of 2025, alongside the applicable regulator’s requirements.

Service provider agreements should explain reporting, access to information, error handling and termination. Establish how the manager will continue operating if an administrator, custodian or other provider is replaced.

Obtain separate tax advice on the proposed structure and investors. The use of a regulated fund vehicle should not be treated as a complete answer to registration, reporting or exemption questions.

What investors should examine before subscribing

Verify the manager and the relevant permissions through the appropriate official register. Match the legal name in that register to the offering documents and payment instructions. Ask who holds the assets and how investor entitlements are recorded.

Read the provisions on withdrawals, transfers, suspension, valuation and winding up. An attractive return projection does not explain how an investor can recover capital when circumstances change.

If a dispute develops, preserve the documents that applied when the investment was made, subsequent reports and all relevant communications. A regulatory complaint and a contractual claim serve different purposes; the appropriate route depends on the conduct alleged and the remedy sought.

About the author

Dr. Hassan Elhais is a Senior Legal Consultant at Amal Al Rashedi Lawyers and Legal Consultants in Dubai. He advises on UAE family, civil, commercial and criminal law matters.

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