Investment Advisory Agreement Template for the United Arab Emirates

An Investment Advisory Agreement is a legally binding contract that establishes the professional relationship between investment advisors and their clients in the United Arab Emirates. This document serves as the foundation for all investment advisory services, clearly defining responsibilities, expectations, and regulatory compliance requirements under UAE law.

When do you need this document?

You need an Investment Advisory Agreement when establishing any formal investment advisory relationship in the UAE. This includes situations where investment advisory firms provide portfolio management advice, asset allocation guidance, or strategic investment planning services to individual investors, institutional clients, family offices, or sovereign wealth funds. The agreement is mandatory for licensed investment advisors operating under Securities and Commodities Authority supervision and is essential when offering both conventional and Shariah-compliant advisory services. Financial institutions expanding into advisory services, pension funds seeking external investment guidance, and high-net-worth individuals engaging professional investment advisors all require this foundational document.

Key legal considerations

Several critical legal elements must be addressed in your Investment Advisory Agreement. The scope of services clause must precisely define the advisory services being provided, distinguishing between discretionary and non-discretionary mandates to avoid regulatory violations. Fee structures require careful documentation, including management fees, performance fees, and any third-party costs, ensuring transparency and compliance with UAE pricing regulations. Risk disclosure provisions are mandatory, clearly outlining investment risks, market volatility, and potential losses to protect both parties from future disputes. Confidentiality and data protection clauses must align with UAE privacy laws, while termination provisions should specify notice periods, asset transfer procedures, and final fee calculations. The agreement must also include regulatory compliance confirmations, demonstrating adherence to SCA requirements and ongoing reporting obligations.

Legal requirements in United Arab Emirates

UAE law imposes specific requirements on Investment Advisory Agreements that you must incorporate to ensure legal validity. Under UAE Federal Law No. 32 of 2021, investment advisory firms must maintain proper corporate structure and operational frameworks, with these requirements reflected in client agreements. The Securities and Commodities Authority Decision No. (13/R.M) of 2021 mandates that all advisory agreements include licensing information, regulatory status confirmation, and compliance with SCA's Financial Activities regulations. Your agreement must demonstrate adherence to SCA Board Decision No. (3/R.M) of 2017 regarding promoting and introducing regulations, particularly when defining advisory service scope. UAE Federal Law No. 14 of 2018 applies additional requirements for advisors dealing with banking products, requiring specific disclosures and operational safeguards. The agreement must be executed in accordance with UAE contract law principles, include Arabic translation provisions where required, and maintain compliance with ongoing regulatory reporting and client communication standards established by UAE financial authorities.