ADGM Fund Documents Explained: Constitution, Prospectus, Subscription Agreement and Side Letters

By CRYPTOVERSE Legal Consultancy | September 2026

A sponsor is ready to launch an ADGM fund. Its investment strategy is clear, the manager’s FSRA application is progressing, and prospective investors want to see the documents.

The lawyers send four drafts: a constitution, prospectus, subscription agreement and proposed side letter.

To an investor, they may look like one large package. Legally, each has a different job. The constitution establishes how the fund operates. The prospectus explains the opportunity and its risks. The subscription agreement governs a particular investor’s entry. A side letter may give that investor additional negotiated terms.

The launch risk lies where the documents overlap. If the prospectus promises one fee, the constitution permits another, and a side letter offers a third arrangement, the problem cannot be solved by saying, “They are all standard documents.”

The four documents at a glance

An ADGM Investment Company, Investment Partnership and Investment Trust may use different instruments as their constitution. The document names and drafting style vary, but the need to make the package work together does not.

1. The constitution: the fund’s governing instrument

Under FUNDS Rule 11.1.2(1)(a), every ADGM Domestic Fund must have a written constitution. The form depends on the fund’s legal structure: it may be an instrument of incorporation, partnership deed or trust deed.

The constitution addresses matters that cannot safely be left to a pitch deck. Depending on the fund, these may include:

• The fund’s legal form, investment purpose and classes of units;
• Powers of the manager, general partner or trustee;
• Capital calls, transfers and distributions;
• Valuation and treatment of fund property;
• Investor voting and amendments; and
• The circumstances in which the fund is wound up.

FUNDS Rule 11.1.3 also addresses the constitution’s content and maintenance. The detailed content requirements vary by fund type: FUNDS Appendix 5 applies differently to a Public Fund, an Exempt Fund and a Qualified Investor Fund (QIF). A sponsor should therefore avoid copying a Public Fund constitution into a QIF without checking which provisions are applicable and whether the result is commercially suitable. (Rulebook)

The constitution is also a limit on what can be promised elsewhere. If a side letter purports to give an investor a new class of rights that the fund has no power to issue, changing the side letter’s wording will not necessarily fix the underlying problem.

2. The prospectus: the investor’s decision document

A common misconception is that a privately placed ADGM fund does not need a prospectus. Under FUNDS Rule 9.2.1, the manager of a Domestic Fund must produce a prospectus. If the fund is a Public Fund, the rule also requires a copy to be filed with the FSRA. That filing requirement should not be confused with the obligation to produce a prospectus for an Exempt Fund or QIF. (Rulebook)

For a private fund, the prospectus may be the document investors commonly call the private placement memorandum or offering memorandum. Its label is less important than meeting the applicable ADGM disclosure requirements.

Under FUNDS Rule 9.3.1, its presentation must be clear, fair and not misleading. It must contain the information a person and their professional advisers would reasonably need to make an informed decision to become a unitholder. The rule also addresses a supplementary or replacement prospectus where a material change or significant new matter arises after issue. (Rulebook)

A useful prospectus tells investors, in plain terms:

• What the fund may invest in and how decisions will be made;
• Who manages it and the scope of the manager’s FSRA permission;
• The main investment, liquidity and operational risks;
• Fees, expenses and potential conflicts;
• How assets will be valued;
• When investors may receive distributions or exit; and
• What rights and restrictions attach to their units.

The document must reflect the actual structure. For example, if the fund proposes to hold illiquid private assets for several years, the liquidity section should not read like a redeemable securities fund.

The manager must make the current prospectus available as required by FUNDS Rule 9.7.1 when offering units to eligible investors. (Rulebook)

3. The subscription agreement: admitting the investor

The subscription agreement turns a prospective investor’s decision into a proposed legal commitment. It commonly records the investor’s identity, subscription amount or capital commitment, the units sought, payment or drawdown obligations, representations and the conditions to admission.

It is also a practical control point. Before accepting an application, the manager needs to check matters such as:

• Whether the investor is eligible for the particular fund;
• Whether the minimum initial subscription is met;
• Whether the investor has received the current prospectus;
• Whether required identification, AML and sanctions checks are complete; and
• Whether any proposed transfer, tax or beneficial ownership information has been provided.

For example, an ADGM Exempt Fund requires eligible Professional Client unitholders and a minimum initial subscription of USD 50,000; a QIF has a USD 500,000 minimum, alongside its own private placement and Professional Client conditions under FUNDS Rules 3.3.3 and 3.3.4. The subscription process should be designed to verify those conditions, not merely ask an investor to declare that they are satisfied. 

The subscription agreement is a standard transaction document, but its precise form depends on the fund. It should not be treated as a replacement for the constitution or prospectus.

Capital commitment versus cash paid at admission

Closed-ended private funds often distinguish an investor’s total commitment from the amount initially drawn. The documents must use those terms consistently.

If the term sheet says “USD 500,000 minimum commitment,” while the applicable fund rule refers to the initial subscription to be paid to become a unitholder, counsel should examine how the structure satisfies the actual regulatory wording. A drafting convention borrowed from another jurisdiction should not silently determine an ADGM eligibility question.

4. Side letters: negotiated terms with individual investors

An institutional investor may ask for a reduced fee, additional reporting, notice of certain events or a right to participate in future opportunities. These requests often appear in a side letter.

Side letters can be commercially useful, but the FSRA rules address them expressly. Under FUNDS Rule 12.3.12(1), a fund manager must disclose in its prospectus:

1. How it ensures the fair treatment of investors; and
2. Whether it may enter into side-letter arrangements with investors. (Rulebook)

For a Public Fund, FUNDS Rule 12.3.12(2) imposes further requirements concerning disclosure of material benefits or concessions and the types of investors receiving them. It also prohibits side letters from granting an investor more favourable liquidity terms than those enjoyed by all other investors. Those additional provisions are specific to Public Funds; they should not be presented as a blanket rule for every private fund. (Rulebook)

A private fund sponsor should nevertheless assess every proposed concession against the constitution, prospectus, investor fairness disclosure, conflicts and its ability to administer the promise.

Four side-letter terms worth checking closely

1. Fee discounts. Do the fund documents permit the proposed treatment, and is the allocation of fees and expenses accurately described?
2. Enhanced information rights. Can the manager provide the information consistently with confidentiality obligations and the rights of other investors?
3. Liquidity or exit rights. Would the promise alter the fund’s disclosed strategy or require a power the constitution does not provide?
4. Most-favoured-nation rights. If another investor later receives a concession, which investors may elect it, and can the manager identify and administer those elections?
5. The practical danger is accumulation. Ten individually manageable side letters may create an operating model the administrator and investment team cannot reliably track.

Which document controls if they conflict?

There is no useful one-line answer that resolves every conflict. The result depends on the fund’s legal form, the terms of the documents and applicable ADGM law and FSRA rules. A clause stating that one document “prevails” cannot make an unlawful promise valid or remove a mandatory disclosure obligation.

The better approach is to prevent conflicts before launch. Check the documents against the same set of commercial decisions:

This comparison should be repeated after material negotiations. A side letter signed immediately before first close can change assumptions that were correct when the prospectus was drafted.

The launch review sponsors should insist on

Before issuing final documents, the sponsor and its advisers should perform a single, coordinated review:

1. Confirm the fund type and legal form. The applicable FUNDS provisions differ for Public Funds, Exempt Funds and QIFs.
2. Approve the commercial terms once. Settle fees, investment powers, capital calls, distributions and transfers in a shared terms schedule.
3. Draft the constitution and prospectus consistently. The governing powers and investor disclosure should describe the same fund.
4. Build admission checks into the subscription process. Classification, minimum subscriptions and onboarding must work in practice.
5. Set a side-letter approval process. Review concessions for legal consistency, disclosure, fairness and operational feasibility.
6. Reconcile the final signed versions. Ensure the administrator, manager and investor register reflect the terms actually agreed.

The takeaway

An ADGM fund is not ready to raise capital merely because it has four polished documents.

The constitution must support the fund’s operations. The prospectus must accurately explain them. The subscription agreement must admit eligible investors on the intended terms. Any side letter must fit within that framework and the FSRA’s investor fairness rules.

The strongest fund documentation reads as one coherent set of promises—and remains workable after the first close.

CRYPTOVERSE Legal Consultancy advises sponsors on ADGM fund formation, FSRA fund manager licensing, prospectuses, subscription documentation and side-letter review.

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