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j. awan & partners | 23 September 2026 | Regulatory Briefing
The Financial Services Regulatory Authority has amended five ADGM rulebooks following Consultation Paper No. 12 of 2025 on the funds framework. The Funds, General, Prudential, Conduct of Business and Glossary rulebooks are all affected.
Three things matter for fund managers. The route for foreign fund managers into ADGM has narrowed considerably. Two new lighter-touch manager categories now exist for smaller and institutional-only managers. And existing Venture Capital Fund Managers lose a prudential exemption they have relied on, with a transition deadline of March 2027.
This briefing summarises the headline items. It is not a substitute for advice on your specific permission.
Two new manager categories
The FSRA has created two authorisation categories designed for managers whose risk profile does not justify the full Category 3C regime.
A Sub-Threshold Fund Manager manages closed-ended private funds, either Exempt Funds or Qualified Investor Funds, where combined committed capital across all funds managed does not exceed USD 200 million. Authorisation is simplified. The base capital requirement is USD 50,000, and no expenditure-based capital minimum applies. Beyond that minimum, an STFM remains subject to the other prudential requirements applicable to Category 3C firms, including liquid assets above the minimum capital requirement, operational risk management and professional indemnity insurance.
An Institutional Fund Manager manages Institutional Funds only. An Institutional Fund is a Qualified Investor Fund or Foreign Fund with a minimum subscription of USD 5 million that accepts no natural person investors. The category carries a simplified authorisation route, a lower capital requirement, and relief from certain controlled function and professional indemnity insurance requirements. It is aimed at managers raising from sovereign wealth funds and comparable institutional investors.
Both categories, along with the existing Venture Capital Fund Manager category, gain relief from the internal audit function and the mandatory Finance Officer appointment. The Senior Executive Officer, Compliance Officer and Money Laundering Reporting Officer remain compulsory for every firm.
A narrower route for Foreign Fund Managers
This is the largest item in the package. Three alternative routes to establishing an ADGM nexus have collapsed into one.
A Foreign Fund Manager may now manage only a Domestic Fund that is a Qualified Investor Fund and closed-ended. Exempt Funds and open-ended domestic funds are no longer available. The manager must be regulated in a jurisdiction the FSRA formally recognises, and the previous fallback of a jurisdiction merely acceptable to the Regulator has been removed, as has the equivalence concept.
Submission to ADGM law and the jurisdiction of the ADGM Courts is now mandatory rather than one option among three. Three further obligations apply. A UAE resident must sit on the board of the fund or its general partner. A licensed corporate service provider must be appointed as agent for receipt of process. And the manager may no longer engage, or cause the fund to engage, a third party to provide investment advice or manage fund property, which ends the host manager model.
The fund administrator or trustee must now be licensed by the Regulator, with the discretionary alternative removed. One relaxation runs the other way: the eligible custodian requirement can be waived where compliance is both impractical and disproportionate.
Changes to venture capital funds
The USD 100 million subscription cap on individual Venture Capital Funds has been deleted. In its place sits a USD 200 million limit on the collective committed capital of all funds managed by a Venture Capital Fund Manager.
Master-feeder structures are tighter. The master must be a domestic, closed-ended Exempt Fund or Qualified Investor Fund, must invest only in the specified early-stage assets, and must be managed by the same fund manager as the feeders. A foreign master is no longer permitted.
On personnel, a VCFM must appoint a Senior Executive Officer with at least ten years of relevant experience, and a Licensed Director or Licensed Partner with at least five years, in operating a venture capital or private equity fund or in the target sectors the firm intends to invest in. This dispensation recognises the specific nature of the venture capital ecosystem and does not extend to other Sub-Threshold Fund Managers.
Employee Investment Vehicles
A new Employee Investment Vehicle allows staff to invest alongside a fund they work on. The vehicle does not constitute a fund, and the usual minimum subscription thresholds of USD 50,000, USD 500,000 and USD 5 million do not apply to its subscriptions where six conditions are met.
Those conditions cover who may participate and what they must be told. Participants must be employees or directors of the fund manager or of an appointed investment manager or advisor, and must be directly involved in executing or advising on the strategy of that fund. The manager must have reasonable grounds to believe each participant understands the risks. Written disclosure and the prospectus must be provided in advance, written risk acknowledgment obtained, and participation must not be a condition of employment or board appointment.
Under the Conduct of Business Rulebook, an Employee Investment Vehicle is a deemed Professional Client, but only in respect of the underlying fund managed or advised by the participating employees. The classification does not travel with the vehicle to anything else.
Separately, multilateral trading facilities admitting fund units to trading now face additional controls, including a requirement that trading in units be restricted to Professional Clients.
What you need to do
Existing Venture Capital Fund Managers and Foreign Fund Managers must transition to the revised framework by March 2027. For venture capital managers, the transition carries a USD 50,000 base capital requirement, a USD 1,000 fee and a new policy statement.
Venture Capital Fund Managers should treat this as more than a cost change. The previous prudential carve-out, which limited PRU to the reporting and professional indemnity insurance sections, is removed in full. Base capital, capital resources, risk capital requirement, operational risk and disclosure now apply where they did not before.
Firms that could qualify as a Sub-Threshold or Institutional Fund Manager may be able to move across by disclosure to their Supervisory Officer rather than a full variation of permission. That simplified route is not available to firms currently in authorisation, to existing Venture Capital Fund Managers, or to ADGM branches. Confirm the process with your Supervisory Officer before acting on it.
Looking ahead
The FSRA confirmed at its Policy and Legislative Outreach session on 17 September 2026 that the wider funds review continues. Further consultation on private funds is expected in Q4 2026 and work on the public funds framework in 2027. A decentralised finance consultation is expected in October 2026, and the FSRA also signalled continued work on cyber risk, virtual asset staking, AML and CFT enhancements and its 2027/2028 business plan.
Speak to us
If any of this could touch your licence, speak to your j. awan & partners contact. We can assess whether re-classification or a transition step makes sense for your firm and coordinate the detail with your Supervisory Officer.
If you are new to j. awan & partners and you require any advice, reach out to us here. (https://www.jawanpartners.com/contact-us)
FSRA Updates the ADGM Funds Framework: What Changes for Fund Managers
The FSRA has amended five ADGM rulebooks following its consultation on the funds framework. Foreign Fund Managers are down to a single route in, two lighter-touch manager categories now exist, and Venture Capital Fund Managers lose a prudential carve-out. This briefing sets out what changed and what affected firms need to do.
FSRA Updates the ADGM Funds Framework: What Changes for Fund Managers
The FSRA has amended five ADGM rulebooks following its consultation on the funds framework. Foreign Fund Managers are down to a single route in, two lighter-touch manager categories now exist, and Venture Capital Fund Managers lose a prudential carve-out. This briefing sets out what changed and what affected firms need to do.
j. awan & partners | 23 September 2026 | Regulatory Briefing
The Financial Services Regulatory Authority has amended five ADGM rulebooks following Consultation Paper No. 12 of 2025 on the funds framework. The Funds, General, Prudential, Conduct of Business and Glossary rulebooks are all affected.
Three things matter for fund managers. The route for foreign fund managers into ADGM has narrowed considerably. Two new lighter-touch manager categories now exist for smaller and institutional-only managers. And existing Venture Capital Fund Managers lose a prudential exemption they have relied on, with a transition deadline of March 2027.
This briefing summarises the headline items. It is not a substitute for advice on your specific permission.
Two new manager categories
The FSRA has created two authorisation categories designed for managers whose risk profile does not justify the full Category 3C regime.
A Sub-Threshold Fund Manager manages closed-ended private funds, either Exempt Funds or Qualified Investor Funds, where combined committed capital across all funds managed does not exceed USD 200 million. Authorisation is simplified. The base capital requirement is USD 50,000, and no expenditure-based capital minimum applies. Beyond that minimum, an STFM remains subject to the other prudential requirements applicable to Category 3C firms, including liquid assets above the minimum capital requirement, operational risk management and professional indemnity insurance.
An Institutional Fund Manager manages Institutional Funds only. An Institutional Fund is a Qualified Investor Fund or Foreign Fund with a minimum subscription of USD 5 million that accepts no natural person investors. The category carries a simplified authorisation route, a lower capital requirement, and relief from certain controlled function and professional indemnity insurance requirements. It is aimed at managers raising from sovereign wealth funds and comparable institutional investors.
Both categories, along with the existing Venture Capital Fund Manager category, gain relief from the internal audit function and the mandatory Finance Officer appointment. The Senior Executive Officer, Compliance Officer and Money Laundering Reporting Officer remain compulsory for every firm.
A narrower route for Foreign Fund Managers
This is the largest item in the package. Three alternative routes to establishing an ADGM nexus have collapsed into one.
A Foreign Fund Manager may now manage only a Domestic Fund that is a Qualified Investor Fund and closed-ended. Exempt Funds and open-ended domestic funds are no longer available. The manager must be regulated in a jurisdiction the FSRA formally recognises, and the previous fallback of a jurisdiction merely acceptable to the Regulator has been removed, as has the equivalence concept.
Submission to ADGM law and the jurisdiction of the ADGM Courts is now mandatory rather than one option among three. Three further obligations apply. A UAE resident must sit on the board of the fund or its general partner. A licensed corporate service provider must be appointed as agent for receipt of process. And the manager may no longer engage, or cause the fund to engage, a third party to provide investment advice or manage fund property, which ends the host manager model.
The fund administrator or trustee must now be licensed by the Regulator, with the discretionary alternative removed. One relaxation runs the other way: the eligible custodian requirement can be waived where compliance is both impractical and disproportionate.
Changes to venture capital funds
The USD 100 million subscription cap on individual Venture Capital Funds has been deleted. In its place sits a USD 200 million limit on the collective committed capital of all funds managed by a Venture Capital Fund Manager.
Master-feeder structures are tighter. The master must be a domestic, closed-ended Exempt Fund or Qualified Investor Fund, must invest only in the specified early-stage assets, and must be managed by the same fund manager as the feeders. A foreign master is no longer permitted.
On personnel, a VCFM must appoint a Senior Executive Officer with at least ten years of relevant experience, and a Licensed Director or Licensed Partner with at least five years, in operating a venture capital or private equity fund or in the target sectors the firm intends to invest in. This dispensation recognises the specific nature of the venture capital ecosystem and does not extend to other Sub-Threshold Fund Managers.
Employee Investment Vehicles
A new Employee Investment Vehicle allows staff to invest alongside a fund they work on. The vehicle does not constitute a fund, and the usual minimum subscription thresholds of USD 50,000, USD 500,000 and USD 5 million do not apply to its subscriptions where six conditions are met.
Those conditions cover who may participate and what they must be told. Participants must be employees or directors of the fund manager or of an appointed investment manager or advisor, and must be directly involved in executing or advising on the strategy of that fund. The manager must have reasonable grounds to believe each participant understands the risks. Written disclosure and the prospectus must be provided in advance, written risk acknowledgment obtained, and participation must not be a condition of employment or board appointment.
Under the Conduct of Business Rulebook, an Employee Investment Vehicle is a deemed Professional Client, but only in respect of the underlying fund managed or advised by the participating employees. The classification does not travel with the vehicle to anything else.
Separately, multilateral trading facilities admitting fund units to trading now face additional controls, including a requirement that trading in units be restricted to Professional Clients.
What you need to do
Existing Venture Capital Fund Managers and Foreign Fund Managers must transition to the revised framework by March 2027. For venture capital managers, the transition carries a USD 50,000 base capital requirement, a USD 1,000 fee and a new policy statement.
Venture Capital Fund Managers should treat this as more than a cost change. The previous prudential carve-out, which limited PRU to the reporting and professional indemnity insurance sections, is removed in full. Base capital, capital resources, risk capital requirement, operational risk and disclosure now apply where they did not before.
Firms that could qualify as a Sub-Threshold or Institutional Fund Manager may be able to move across by disclosure to their Supervisory Officer rather than a full variation of permission. That simplified route is not available to firms currently in authorisation, to existing Venture Capital Fund Managers, or to ADGM branches. Confirm the process with your Supervisory Officer before acting on it.
Looking ahead
The FSRA confirmed at its Policy and Legislative Outreach session on 17 September 2026 that the wider funds review continues. Further consultation on private funds is expected in Q4 2026 and work on the public funds framework in 2027. A decentralised finance consultation is expected in October 2026, and the FSRA also signalled continued work on cyber risk, virtual asset staking, AML and CFT enhancements and its 2027/2028 business plan.
Speak to us
If any of this could touch your licence, speak to your j. awan & partners contact. We can assess whether re-classification or a transition step makes sense for your firm and coordinate the detail with your Supervisory Officer.
If you are new to j. awan & partners and you require any advice, reach out to us here. (https://www.jawanpartners.com/contact-us)