Investment Advisory Agreement Template for the United Arab Emirates

An Investment Advisory Agreement is a legally binding contract that establishes the professional relationship between a licensed investment advisor and their client in the United Arab Emirates. This document serves as the foundation for all investment advisory services and is mandated under UAE financial regulations to ensure transparency, compliance, and protection for both parties involved in the advisory relationship.

When do you need this document?

You need an Investment Advisory Agreement whenever you engage with a licensed investment advisor in the UAE for professional investment guidance. This includes situations where you're seeking portfolio management advice, asset allocation recommendations, or ongoing investment consulting services. The agreement is required before any advisory services begin, whether you're an individual investor building a personal portfolio, a corporate entity managing company funds, or a family office overseeing generational wealth. Licensed financial advisors are legally obligated to have this agreement in place with all clients, regardless of the size of the investment or the complexity of services provided.

Key legal considerations

Several critical legal elements must be addressed in your Investment Advisory Agreement to ensure comprehensive protection and regulatory compliance. The scope of services clause should clearly define what advisory services will be provided and any limitations on the advisor's authority, particularly regarding discretionary trading powers. Fee structures must be transparently disclosed, including management fees, performance fees, and any additional charges that may apply. Risk disclosure requirements are essential, as the agreement must outline potential investment risks and confirm that you understand the nature of investment activities. Confidentiality provisions protect your financial information, while termination clauses specify how either party can end the relationship and the procedures for transferring or liquidating assets upon termination.

Legal requirements in United Arab Emirates

Investment Advisory Agreements in the UAE must comply with stringent regulatory requirements established by the Securities and Commodities Authority (SCA). Under SCA Board Decision No. (13/R.M) of 2021, all investment advisors must be properly licensed and registered with the authority before providing advisory services. The agreement must include specific regulatory disclosures, including the advisor's license number, regulatory status, and compliance with UAE Federal Law No. 14 of 2018 regarding financial institutions. Client classification is crucial, as the agreement must identify whether you are classified as a retail or professional investor, which affects the level of protection and disclosure requirements. Anti-money laundering provisions must be included to comply with UAE Federal Law No. 20 of 2018, requiring proper client identification and ongoing monitoring procedures. Additionally, the agreement must address dispute resolution mechanisms, typically requiring arbitration or mediation within the UAE legal system, and specify which UAE courts have jurisdiction over any legal proceedings.