Private Equity Fund Offering Memorandum Template for the United Arab Emirates
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What is a Private Equity Fund Offering Memorandum?
A Private Equity Fund Offering Memorandum is a crucial document used when establishing and marketing a private equity fund in the United Arab Emirates. It serves as the primary disclosure document for potential investors and must comply with UAE federal regulations, particularly those issued by the Securities and Commodities Authority (SCA). The document provides comprehensive information about the fund's investment strategy, risk factors, management structure, fees, and operational procedures. It needs to address specific UAE requirements, including SCA Board Decision No. (9/R.M) of 2016, and may also need to comply with DIFC or ADGM regulations if the fund operates in these financial free zones. The memorandum is essential for fund managers seeking to raise capital while ensuring regulatory compliance and providing adequate investor protection in the UAE market.
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Frequently Asked Questions
Is a Private Equity Fund Offering Memorandum legally binding in the UAE?
Yes, a Private Equity Fund Offering Memorandum is a legally binding disclosure document under UAE Federal Law No. 4 of 2000 and SCA Board Decision No. (9/R.M) of 2016. The fund manager is legally obligated to provide accurate information and investors rely on its contents for investment decisions. Any misrepresentations or omissions can result in legal liability and regulatory penalties from the Securities and Commodities Authority.
Can I launch a private equity fund in the UAE without a complete Offering Memorandum?
No, launching a private equity fund without a complete and compliant Offering Memorandum violates UAE securities laws and SCA regulations. The Securities and Commodities Authority can impose significant penalties, halt fund operations, and pursue legal action against fund managers. You cannot legally market or accept investor commitments without this mandatory disclosure document.
Which UAE laws specifically govern Private Equity Fund Offering Memoranda requirements?
Private Equity Fund Offering Memoranda in the UAE are primarily governed by Federal Law No. 4 of 2000 (Securities and Commodities Authority Law) and SCA Board Decision No. (9/R.M) of 2016. These laws establish mandatory disclosure requirements, marketing restrictions, investor protection standards, and regulatory compliance obligations. Additional DIFC or ADGM regulations may apply if the fund is domiciled in these financial free zones.
How does a Private Equity Fund Offering Memorandum differ from a prospectus in the UAE?
A Private Equity Fund Offering Memorandum is used for private placements to qualified investors, while a prospectus is required for public securities offerings under UAE law. The Offering Memorandum has more flexibility in disclosure format and is subject to less stringent regulatory review than public prospectuses. However, both documents must comply with anti-fraud provisions and material disclosure requirements under SCA regulations.
How long does it typically take to prepare a UAE-compliant Private Equity Fund Offering Memorandum?
Preparing a comprehensive UAE-compliant Private Equity Fund Offering Memorandum typically takes 6-12 weeks, depending on the fund's complexity and strategy. This includes time for legal drafting, financial modeling, regulatory review, and SCA compliance verification. Additional time may be required if operating across multiple UAE jurisdictions or if the fund structure involves cross-border elements.
Why do Private Equity Fund Offering Memoranda get rejected by UAE regulators?
Common rejection reasons include insufficient risk disclosure, unclear investment strategy descriptions, inadequate management team qualifications, missing regulatory compliance statements, and failure to meet SCA formatting requirements. Many also fail due to incomplete financial projections, unclear fee structures, or inadequate investor eligibility criteria under UAE qualified investor standards.
Can foreign investors use a UAE Private Equity Fund Offering Memorandum for international fundraising?
UAE Private Equity Fund Offering Memoranda are designed for UAE regulatory compliance and may not meet requirements in other jurisdictions. Foreign marketing typically requires additional legal opinions, regulatory filings, or modified disclosure documents in each target country. You should consult with international securities lawyers before using a UAE Offering Memorandum for cross-border fundraising activities.
About the Private Equity Fund Offering Memorandum
When establishing a private equity fund in the United Arab Emirates, you need a comprehensive Private Equity Fund Offering Memorandum that serves as your primary disclosure document to potential investors. This legally binding document provides detailed information about your fund's investment strategy, risk factors, management structure, fees, and operational procedures while ensuring compliance with UAE federal regulations and Securities and Commodities Authority requirements.
When do you need this document?
You require a Private Equity Fund Offering Memorandum when launching a new private equity fund in the UAE, seeking to raise capital from limited partners, or when making material changes to an existing fund structure. This document is essential when marketing your fund to institutional investors, high-net-worth individuals, or family offices within the UAE or internationally. You also need this memorandum when establishing funds in DIFC or ADGM free zones, where additional regulatory requirements may apply. The document becomes crucial during due diligence processes and regulatory submissions to the Securities and Commodities Authority.
Key legal considerations
Your offering memorandum must include comprehensive risk disclosures covering market risks, liquidity risks, regulatory changes, and fund-specific investment risks. The document should clearly outline the fund manager's fiduciary duties, potential conflicts of interest, and the governance structure including advisory boards or investment committees. Fee structures must be transparently disclosed, including management fees, carried interest arrangements, and any other charges that may impact investor returns. You must also address investor qualification criteria, subscription procedures, redemption terms, and transfer restrictions. The memorandum should specify the fund's investment strategy, geographic focus, sector preferences, and any investment restrictions or limitations that may apply.
Legal requirements in United Arab Emirates
Under UAE Federal Law No. 4 of 2000 and SCA Board Decision No. (9/R.M) of 2016, your offering memorandum must comply with specific disclosure requirements for investment funds operating in the UAE. The document must include regulatory statements, jurisdiction restrictions, and appropriate disclaimers as mandated by the Securities and Commodities Authority. If your fund operates in DIFC, you must also comply with DIFC Law No. 2 of 2010 (Collective Investment Law), which provides additional requirements for fund documentation and investor protection. For ADGM-based funds, the ADGM Funds Regulations 2015 apply, requiring specific documentation standards and operational procedures. The memorandum must be prepared in Arabic and English if required by local regulations, and you may need to obtain regulatory approvals or notifications before marketing the fund to UAE investors. Additionally, if your fund includes Shari'ah-compliant investments, you must include appropriate Islamic finance disclosures and obtain approval from a qualified Shari'ah Advisory Board.
GOVERNING LAW
Applicable law
This Private Equity Fund Offering Memorandum is drafted to comply with United Arab Emirates law. Key legislation includes:
SCA Board of Directors' Decision No. (9/R.M) of 2016: Concerning the Regulations on Investment Funds - provides specific requirements for fund establishment, operation, and documentation including offering memoranda
DIFC Law No. 2 of 2010 (Collective Investment Law): If the fund is established in DIFC, this law governs collective investment funds and provides requirements for fund documentation and investor protection
ADGM Funds Regulations 2015: If the fund is established in ADGM, these regulations govern fund establishment and operation, including documentation requirements
UAE Federal Law No. 20 of 2018 (Anti-Money Laundering Law): Provides AML/CFT requirements that must be addressed in fund documentation and operational procedures
UAE Federal Law No. 2 of 2015 (Commercial Companies Law): Governs company formation and structure, relevant for fund vehicle establishment and corporate governance disclosures
SCA Board of Directors' Decision No. (3/R.M) of 2017: Concerning the Organization of Promotion and Introduction - relevant for marketing and distribution of the fund
UAE Federal Law No. 14 of 2018 (Central Bank Law): Regarding the Central Bank and Organization of Financial Institutions and Activities - relevant for overall financial services regulation
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