Mutual Fund Agreement Template for the United Arab Emirates

A Mutual Fund Agreement is a comprehensive legal document that establishes the framework for investment funds in the United Arab Emirates. You need this agreement to define the legal relationship between all parties involved in fund operations, including the fund manager, custodian, administrator, and investors, while ensuring compliance with UAE securities regulations.

When do you need this document?

You require a Mutual Fund Agreement when establishing a new investment fund in the UAE, whether conventional or Islamic. This document is essential when applying for SCA licensing, restructuring an existing fund, or modifying fund terms and conditions. You also need this agreement when onboarding new service providers such as custodians or administrators, or when making significant changes to investment strategies or fund structure. Additionally, this document is crucial when raising capital from institutional or retail investors, as it provides the legal foundation that protects investor rights and defines operational parameters.

Key legal considerations

Your Mutual Fund Agreement must address several critical legal elements to ensure regulatory compliance and operational effectiveness. The document should clearly define the roles and responsibilities of the fund manager, including investment decision-making authority, risk management obligations, and reporting requirements. You need to specify custody arrangements, ensuring proper segregation of fund assets and compliance with UAE custody regulations. The agreement must include detailed subscription and redemption procedures, fee structures, and distribution policies. Risk disclosure provisions are essential, outlining potential investment risks and market volatilities. For Islamic funds, you must incorporate Shariah compliance mechanisms, including the role of the Shariah Supervisory Board and permissible investment criteria. The agreement should also address conflict of interest policies, valuation methodologies, and termination procedures.

Legal requirements in United Arab Emirates

Under UAE law, your Mutual Fund Agreement must comply with SCA Board Decision No. (9/R.M) of 2016, which governs mutual fund establishment and operations. The document must satisfy licensing requirements under UAE Federal Law No. 4 of 2000, ensuring proper regulatory approval before fund launch. You need to incorporate anti-money laundering provisions as required by UAE Federal Law No. 20 of 2018, including customer due diligence and suspicious transaction reporting procedures. The agreement must address UAE Commercial Companies Law requirements under Federal Law No. 2 of 2015, particularly regarding corporate governance and operational controls. Your document should specify minimum capital requirements, ongoing compliance obligations, and investor protection measures mandated by SCA regulations. For funds targeting retail investors, you must include specific disclosure requirements and cooling-off periods as prescribed by UAE securities law.