Do You Need an FSRA Fund Manager Licence in ADGM? A Legal Test for Sponsors, SPVs and Investment Clubs

By CRYPTOVERSE Legal Consultancy | September 2026

Three founders form an ADGM company to buy shares in a startup. Each contributes capital, and all three vote on the investment. They call it an investment club.

Now change one detail: one founder begins inviting outside investors. Those investors contribute money, receive a share of the returns and leave investment decisions to the founder. The company is still called an investment club. Its legal position may be very different.

That is the central question behind an ADGM fund manager licence: what are the participants actually doing, and who controls the investment activity?

An ADGM company registration, an SPV structure or a private invitation does not, by itself, answer whether FSRA authorisation is required. The analysis begins with the arrangement and the activities carried on around it.

First, is the arrangement a collective investment fund?

Section 106 of the ADGM Financial Services and Markets Regulations 2015 (FSMR) provides the starting point. In broad terms, it concerns arrangements under which participants share in profits or income from property, do not have day-to-day control over its management, contribute to a pool, and have the property managed as a whole. A right to be consulted or to give directions does not necessarily amount to day-to-day control. (Rulebook)

For a sponsor assessing an ADGM investment fund setup, the practical questions are:

1. What are participants paying for? Are they subscribing for an interest linked to the performance of investments?
2. Are their contributions and returns pooled? Is capital invested, and profit allocated, as part of a common arrangement?
3. Who makes the investment decisions? Do participants genuinely manage the property day to day, or does a sponsor, committee or appointed manager do so on their behalf?
4. What does the arrangement do in substance? Is its purpose the collective management of investments for participants’ benefit?

No single label settles those questions. “Club”, “syndicate”, “co-investment” and “SPV” describe possible structures; they do not provide automatic exemptions.

Second, does an exclusion apply?

The fund definition is broad, but FUNDS Chapter 2 identifies arrangements that do not constitute a Fund. These exclusions require a close reading of their conditions.

One is particularly relevant to SPVs. Under FUNDS Rule 2.1.10, an arrangement comprising a closed-ended partnership or body corporate is generally excluded, unless its purpose or effect appears, on reasonable grounds, to be discretionary investment management for a collective purpose for the benefit of shareholders or partners. (Rulebook)

That distinction matters. An ADGM SPV formed by business partners to acquire and hold a specified asset may present a different analysis from an SPV through which a sponsor raises capital and chooses investments for passive participants. Even a vehicle established for one transaction needs a review of its documents, decision-making powers and commercial purpose.

Other exclusions may be relevant to particular structures. FUNDS Rule 2.1.5 addresses certain arrangements confined to bodies corporate in the same group as the person performing the fund management function. FUNDS Rule 2.1.15 addresses arrangements in which every participant is a Close Relative. Their precise conditions matter: calling an arrangement a “family office” or “group investment” does not establish that an exclusion applies. (Rulebook)

Practical point: If your conclusion depends on an exclusion, document why every element of that exclusion is met. The company’s name and trade licence are insufficient evidence.

Third, who is carrying on the regulated activity?

If the arrangement is a Collective Investment Fund, the next question is who is Managing a Collective Investment Fund.

Paragraph 59 of Schedule 1 to the FSMR describes that regulated activity. It covers a person who is legally accountable to unitholders for managing fund property under the fund’s constitution or who establishes, manages, otherwise operates or winds up a Collective Investment Fund. The word or matters: the analysis is broader than identifying who places trades. (Rulebook)

A sponsor might negotiate deals, appoint service providers, determine the investment strategy and oversee exits. Another company might hold title to the assets. The licensing assessment must identify each person’s actual role, contractual authority and responsibilities.

An FSRA Financial Services Permission (FSP) must cover the regulated activities a firm proposes to carry on in or from ADGM. A commercial registration for an SPV does not itself grant permission to manage a fund. Equally, a sponsor should not assume that its only possible permission is fund management: depending on the model, Managing Assets, Advising on Investments or Credit, or Arranging Deals in Investments may require separate analysis. The FSRA’s authorisation materials require applicants to identify their proposed regulated activities. (adgm.com)

What does this mean for an ADGM SPV?

An SPV can be a useful holding vehicle. The question is whether it is only holding an asset or forms part of a collective investment arrangement operated for investors.

Consider two examples:

Specified acquisition. Four commercial partners agree to acquire one identified operating company. They negotiate the transaction together, invest through an SPV and retain genuine control over the venture. This calls for an assessment of the partnership’s purpose, governance and the FUNDS exclusions; the existence of multiple shareholders alone does not decide that it is a Fund.

Sponsor-led investment vehicle. A sponsor invites passive investors to subscribe into an SPV, reserves discretion to select investments, manages the portfolio and plans to distribute investment returns. Calling the vehicle an SPV does little to resolve the potential fund and fund management issues.

The difference lies in the rights and conduct: who chooses the assets, who controls them day to day, and whether the vehicle is being used for discretionary investment management for a collective purpose.

What does this mean for an investment club?

An ADGM investment club is not a separate, general exemption from FSRA licensing.

A group of members who jointly select and control their investments may have a different regulatory profile from a club where members contribute periodically and a founder or committee invests the pooled capital on their behalf. Voting on exceptional matters, receiving reports or having the right to replace a committee may not establish day-to-day control over the property.

Before launching a club, examine its constitution and its real operating model:

• Can the organiser invest without each member’s transaction-specific decision?
• Are members promised a proportionate share of pooled investment returns?
• Can new members join on standard subscription terms?
• Is the organiser paid a management fee, carried interest or another performance-linked amount?
• Are members genuinely participating in management, or mainly reviewing decisions made for them?

Fees and marketing are relevant facts, but neither a fee nor the absence of one determines the answer alone. A club can raise fund perimeter questions even when it is small, private and formed among acquaintances.

If it is a fund, which manager licence route applies?

The FSRA’s September 2026 reforms introduced streamlined frameworks for Sub-Threshold Fund Managers (STFMs) and Institutional Fund Managers (IFMs), with Venture Capital Fund Managers (VCFMs) addressed within the specialised framework. These are routes for qualifying fund managers. They do not turn a fund management activity into an unregulated one. Eligibility depends on the proposed funds, investors, capital commitments and other applicable conditions. (adgm.com)

There is also an important distinction between the manager’s authorisation and the fund’s regulatory path. A sponsor must assess both. Selecting an Exempt Fund or Qualified Investor Fund does not remove the need to determine who may lawfully manage it.

A six-question test before you incorporate or raise capital

If you are planning an ADGM fund, investment SPV or investment club, answer these questions before circulating terms to investors:

The output should be a written regulatory perimeter assessment, tied to the proposed constitution, shareholder or partnership agreement, investor terms, decision-making process and marketing materials. If those documents describe different models, resolve the inconsistency before approaching investors.

The decision to make early

Many founders ask, “Can I set up an SPV in ADGM?” A more useful first question is: “What investment arrangement am I creating, and who will run it?”

An SPV may be appropriate. An investment club may be possible. A regulated fund may be the right structure. Each conclusion depends on the arrangement’s substance and the activities carried on by the sponsor and others.

At CRYPTOVERSE Legal Consultancy, we help sponsors assess that perimeter before they commit to a structure, prepare investor documents or pursue an FSRA fund manager licence in ADGM. The aim is to build the proposed business on a licensing analysis that matches how it will actually operate.

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