Non Discretionary Investment Advisory Agreement Template for the United Arab Emirates

A Non Discretionary Investment Advisory Agreement is a crucial legal document that defines the relationship between you and your investment advisor in the United Arab Emirates. Unlike discretionary agreements, this arrangement ensures you maintain complete control over all investment decisions while receiving professional advice and recommendations from licensed advisory firms.

When do you need this document?

You need this agreement when engaging with investment advisory firms, wealth management companies, or financial institutions that provide investment recommendations in the UAE. It's essential when establishing new advisory relationships with banks, independent advisory firms, or family offices. The document becomes particularly important when transitioning from discretionary to non-discretionary arrangements, ensuring you retain decision-making authority while benefiting from professional investment guidance. Corporate investors, institutional clients, and high-net-worth individuals commonly use this agreement when seeking advisory services without granting trading authority to their advisors.

Key legal considerations

Your agreement must clearly define the scope of advisory services, distinguishing between recommendations and actual investment decisions. Fee structures require detailed disclosure, including advisory fees, performance-based compensation, and any third-party arrangements that could create conflicts of interest. Risk disclosure provisions are mandatory, outlining potential investment risks and the advisor's liability limitations. Client classification sections must specify whether you're classified as a retail, professional, or institutional investor under SCA regulations, as this affects the level of protection and disclosure requirements. Anti-money laundering provisions must include comprehensive Know Your Customer (KYC) procedures and ongoing monitoring requirements as mandated by UAE Federal Law No. 20 of 2018.

Legal requirements in United Arab Emirates

Under UAE Securities and Commodities Authority Decision No. 13/R.M of 2021, your advisor must hold valid licenses for providing investment advisory services and comply with specific operational requirements. The agreement must include advisor registration details and regulatory status disclosure. UAE Federal Law No. 14 of 2018 requires clear documentation of the advisory relationship, including service limitations and client consent procedures. If your advisor operates from financial free zones like DIFC or ADGM, additional regulatory requirements under UAE Federal Law No. 8 of 2004 may apply. The agreement must include dispute resolution mechanisms, preferably specifying UAE courts or recognized arbitration centers. Confidentiality provisions must protect your financial information while allowing for regulatory reporting requirements. Regular review and update clauses ensure ongoing compliance with evolving UAE financial regulations and SCA guidelines.