Fund Managers established in the DIFC can manage a regulated fund in an EU jurisdiction such as Luxembourg. Luxembourg is the globally leading fund centre in the world for cross-border funds, the second largest investment fund centre in the world after the United States and the largest fund domicile in Europe.
According to the Luxembourg financial supervisory authority, CSSF (Commission de Surveillance du Secteur Financier), delegation of portfolio management and / or risk management activities to undertakings in countries located outside the European Union ("EU") are permitted, provided the following conditions are satisfied:
- the third country undertaking is authorised or registered for the purpose of asset management.
- the third country undertaking is subject to prudential supervision; and
- cooperation between the CSSF and the relevant third country's competent authority is ensured
The DFSA has entered into MoUs with various European regulators, the EU regulator ESMA (European Securities and Markets Authority), as well as the CSSF.
In practice that means that a DIFC Fund Manager can become the investment manager to a UCITS (Undertaking for Collective Investments in Transferable Securities), distribute the UCITS on the basis of the EU passport and benefit from the global distribution of this retail fund within the EU and in 70 jurisdictions. Certain functions may also be delegated to a DIFC Fund Manager. For more information on the establishment of a UCITS, please see: https://www.nomi-lux.com/blog/establishing-a-ucits-in-luxembourg/
In addition, a DIFC Fund Manager can become the investment manager to other fund types focusing on professional investors, such as the SIF, RAIF, SICAR, as well as Luxembourg limited partnerships, and benefit from distribution in the EU on the basis of the AIFMD passport. To see an overview of all funds in Luxembourg, please see: https://www.nomi-lux.com/publication/luxembourg-investment-funds/
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