UAE Securities and Commodities Authority's new promotion regime

Following the entry into force of the new Rulebook issued by the UAE Securities and Commodities Authority (SCA), there have been some interesting developments to the UAE promotion and introduction regime that has been the subject of regulatory development over recent years. Of importance to many, the new promotion framework as outlined within the Rulebook repeals the previous Qualified Investor regime and introduces a new definition of Professional Investor.

Investors may now be classified as Professional in the following manner:

1. Professional Investor by nature;

2. Professional Investor by experience;

3. Professional Investor by evaluation;

4. an SPV that has been established to facilitate the management of the investment portfolio of a natural person who is a Professional Investor by evaluation; or

5. Undertakings that meet certain capital thresholds or control requirements.

Whilst there are obligations on SCA licensees to categorise all clients, this new categorisation of Professional Investors is particularly important in regards to the promotion of Financial Products. Specifically, it appears that the financial promotion regulations will not apply to the promotion of certain financial products to these Professional Investors.

The combined definition of Professional Investors includes many investors that would not previously have been classified as Qualified Investors under the previous regime, for example certain High Net Worth Individuals (HNWI) may now be Professional Investors, and therefore potentially expands the scope to promote to UAE prospects, including on a cross border basis.

For further information on the new promotion regime or how the new SCA Rulebook may impact you, please contact Muneer Khan or Adam Wolstenholme.