ADGM launches consultation paper on changes to funds framework: ADGM'S Financial Services Regulatory Authority (FSRA) has published a new consultation paper (pdf), outlining proposed changes to its regulatory framework for funds and fund managers, according to a statement. The consultation proposes introducing new regimes for managers of smaller funds and for managers exclusively targeting institutional investors, as well as for employee investment. The paper is open for feedback until 30 January 2026.

For smaller and institutional funds: ADGM is proposing rolling out a regulated framework for managers of smaller and institutional funds through a sub-threshold fund manager (STFM) regime for fund managers overseeing up to USD 200 mn in committed capital, closed-ended qualified investment funds, and exempt funds. Managers delegating investment discretion or operating as host managers would be excluded. The new framework would not limit the types of assets in which small fund managers can invest, unlike the current venture capital fund manager framework. ADGM is seeking feedback on whether to add a leverage cap of 100% of fund net asset value and a base capital requirement of USD 50k.

For funds targeting institutional investors: ADGM is considering a similar framework for fund managers working with only institutional investors, with proposals including a minimum USD 5 mn subscription requirement. Institutional fund managers (IFM) wouldn’t need to appoint a finance officer or internal audit officer, would have a base capital requirement equal to the higher of USD 50k or 6/52 of AAE, and also secure exemption from professional indemnity cover.

Venture capital fund managers (VCFMs) may be recast as a sub-category within the new STFM framework, retaining venture-specific dispensations while adopting the USD 200 mn manager-level committed capital limit and USD 50k base capital rule. Select investment managers not holding client funds or assets may also be eligible for the exemptions.

Employee investment: The changes propose amending the Conduct of Business Rulebook (COBS) (pdf) to exempt employee investment vehicles from minimum subscription requirements and implement systems to admit only eligible participants.

The paper also proposes limiting foreign fund managers to only overseeing close-ended qualified investment funds, requiring them to appoint a UAE resident as director, as well as ADGM-based fund administrators and corporate services providers, and prohibiting them from delegating investment management.

Other areas for industry input: The FSRA is asking for feedback on several additional points, including on its private credit fund and REIT framework, and the scope of assets investible for green and climate funds.

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