Amended law to enhance regulation and attract investors

His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister in his capacity as the Ruler of Dubai, has enacted the Dubai International Financial Centre (DIFC), DIFC Laws Amendment Law 2014. The Law, which amends the Regulatory Law 2004 and various other DIFC laws came into effect on August 21, 2014.

The amendments simplify and improve the structure and process for DFSA regulatory decisions and for appeals against those decisions. Under the changes, the DFSA will make all first instance decisions and must follow specified procedures designed to ensure its decisions are fair and reasonable. The process for appealing against DFSA decisions will be simplified with the Financial Markets Tribunal (FMT) continuing as an independent tribunal but with a revised role of reviewing DFSA decisions. The Regulatory Appeals Committee (RAC) which used to hear appeals from DFSA decisions will be abolished (as its role will now be undertaken by the FMT.

The changes also strengthen the DFSA's supervisory and enforcement powers in line with international practice. A new provision has been introduced which prohibits misleading, deceptive, fraudulent or dishonest conduct related to financial products or services in the DIFC. New powers are also given to the DFSA to suspend a licence or registration for up to twelve months and to prohibit Firms from using misleading names.  The DFSA already has the right to withdraw licences.

The current framework for the supervisory oversight of Auditors in the DIFC is also improved by, for example, introducing the registration of Audit Principals, strengthening Rules on Auditor independence and making other changes to ensure consistency with international auditing standards.

Also, the Collective Investment Law 2010 is amended to allow the creation of a new category of fund, called a "Qualified Investor Fund" (QIF). This type of fund would be available to professional investors willing to make an investment of at least USD500,000. Each QIF would be limited to 50 investors.  As an addition to the existing categories of DIFC funds, the new QIF rules provide for lower regulation of funds specifically designed for higher net worth investors.