By CRYPTOVERSE Legal Consultancy | September 2026
A fund manager in London has a private equity strategy and an investor base interested in Abu Dhabi. It wants to establish its next fund in ADGM, but its investment team and existing regulated business will remain in the United Kingdom.
Must it establish a separately licensed ADGM fund management company?
Not necessarily. ADGM’s Financial Services Regulatory Authority (FSRA) has a route under which a Foreign Fund Manager may manage an ADGM fund. But the route is deliberately narrow. It depends on the foreign manager’s regulatory status, the type of ADGM fund, and specific local governance and service-provider arrangements.
The first question is therefore not simply, “Is the manager licensed overseas?” It is: Does the entire proposed fund and management structure satisfy FUNDS Chapter 7?
What is the Foreign Fund Manager route?
An ADGM fund is a Domestic Fund because it is established or domiciled in ADGM. Its manager, however, may be based outside ADGM.
Under FUNDS Rule 7.1.1, a Foreign Fund Manager using this route must:
- Manage only an ADGM Qualified Investor Fund (QIF) that is closed-ended;
- Be regulated by, or registered with, a financial services regulator in a Recognised Jurisdiction; and
- Submit to applicable ADGM laws and regulations and the jurisdiction of the ADGM Courts in relation to its activities concerning the Domestic Fund.
The manager must sign the appropriate declaration required by the FSRA. These are cumulative conditions: satisfying the overseas regulatory test does not make an open-ended or Exempt Fund eligible for this route. (adgm.com)
Why must the ADGM fund be a closed-ended QIF?
The 2026 version of FUNDS Rule 7.1.1(a) expressly limits this Foreign Fund Manager route to a closed-ended Qualified Investor Fund.
A QIF is an ADGM private fund offered by private placement to Professional Clients, with a minimum initial subscription of USD 500,000 under FUNDS Rule 3.3.4. If a sponsor wants an ADGM Exempt Fund, an open-ended fund, or a fund available to retail investors, it should not assume the same foreign manager arrangement is available.
| Proposed ADGM fund | Fit with FUNDS Rule 7.1.1 |
| Closed-ended QIF managed by an eligible foreign manager | Potentially within the route, subject to the remaining conditions |
| Open-ended QIF | Does not meet the closed-ended condition |
| Exempt Fund | Does not meet the QIF condition |
| Public Fund | Does not meet the QIF condition |
Fund classification should be settled before drafting the investment management agreement. A manager’s overseas status cannot cure a fund structure that falls outside the rule.
Which overseas managers qualify?
The foreign manager must be regulated by, or registered with, a financial services regulator in a Recognised Jurisdiction. The question involves both the jurisdiction and the manager’s actual regulatory standing.
FUNDS Appendix 8 lists Recognised Jurisdictions. The September 2026 list includes, among others, the United Kingdom, United States, Singapore, Hong Kong, Switzerland, Australia, Canada, South Africa and EU Member States. The list should be checked as part of each application; being based in an internationally active financial centre is not, by itself, the legal test.
A sponsor should be ready to evidence the manager’s identity, regulatory or registration status, permitted activities and good standing. It should also check whether its home jurisdiction rules permit it to manage the proposed ADGM fund. ADGM eligibility does not replace a separate home regulator analysis.
The ADGM connection remains substantial
A foreign management team does not mean the ADGM fund can operate without local arrangements. FUNDS Rule 7.1.2(1) requires the Foreign Fund Manager to put several safeguards in place before commencing management.
1. An FSRA-licensed fund administrator or trustee
The manager must ensure that the fund appoints a Fund Administrator or Trustee licensed by the FSRA. The appointment must be made before management begins.
This is an operating requirement, not a name to add to a service-provider list after launch. The parties need to agree which functions the administrator or trustee will perform and how the manager will oversee the arrangement.
2. An eligible custodian, subject to a limited exception
The fund must appoint an Eligible Custodian before management begins unless doing so is both impractical and disproportionate. The exception is framed as a two-part test. A sponsor should assess and document the basis for relying on it rather than assuming that private assets automatically make custody unnecessary.
3. Investor reporting and access to records
The manager must itself facilitate, or give the appointed administrator or trustee the powers needed to facilitate, required reports to unitholders and access to the fund’s constitution, latest prospectus, books and records.
The fund’s documentation and service agreements should make those responsibilities workable in practice.
4. A UAE-resident board member
A natural person resident in the UAE must be appointed:
- To the fund’s board, if the QIF is an Investment Company; or
- To the general partner’s board, if it is an Investment Partnership.
The required appointment therefore depends on the fund’s legal form. This is one reason the choice between an investment company and an investment partnership has practical consequences beyond tax and investor preference.
5. A local agent for receipt of process
The fund must appoint an ADGM-licensed corporate service provider authorised to act as the fund’s agent for receipt of process.
This requirement should be built into the launch workstream alongside the fund’s formation and service-provider appointments.
6. Restrictions on third-party investment advice and management
FUNDS Rule 7.1.2(1)(f) says the Foreign Fund Manager must not engage, or cause the fund to engage, a third party to provide investment advice or manage Fund Property.
This deserves particular attention where a global investment group intends to allocate portfolio decisions to an affiliate or appoint an external investment adviser. A proposed delegation model must be tested against the rule before the group finalises its operating structure.
Together, these conditions show why “we will simply manage the fund from overseas” is an incomplete launch plan.
Does the Foreign Fund Manager need an FSRA fund manager licence?
The rules distinguish a Foreign Fund Manager from an FSRA-authorised fund manager. ADGM’s Domestic Fund provisions contemplate a fund being managed by either an FSRA-authorised person with the relevant Financial Services Permission or a Foreign Fund Manager. The latter must meet the conditions of the specific foreign manager regime. See, for example, FUNDS Rules 6.1.4(b) and 7.1.1–7.1.2.
Sponsors should therefore avoid both oversimplifications: that every overseas manager must establish a fully licensed ADGM management company, and that an overseas licence alone is sufficient. The proposed management activities, the fund and any additional activities conducted in or from ADGM still require a proper regulatory perimeter assessment.
What is the FSRA approval path for the fund?
For a QIF, the relevant route is a fund notification under section 112 of the Financial Services and Markets Regulations 2015, with the additional information required by FUNDS Rule 6.2.2. The manager must also prepare the QIF’s constitution, prospectus and other launch documents in line with the applicable ADGM requirements.
The fund notification should not be confused with an FSRA authorisation of the foreign manager as a locally licensed manager. Nor should the notification be treated as a substitute for satisfying the Foreign Fund Manager conditions before management starts.
A practical launch sequence is:
- Confirm the manager’s eligibility: Identify its home regulator, registration or licence, and whether its jurisdiction is recognised.
- Fix the fund structure: Establish that the proposed ADGM vehicle will be a closed-ended QIF.
- Design the operating model: Appoint the administrator or trustee, address custody, appoint the required UAE-resident board member and local process agent, and test any proposed investment delegation.
- Prepare the fund documents and declarations: Reflect the manager’s role and the arrangements required under FUNDS Chapter 7.
- Complete the applicable QIF notification and formation steps: Ensure all conditions are met before commencing management and admitting investors in accordance with the applicable rules.
What changed in September 2026?
The FSRA finalised changes to its funds framework in September 2026. For Foreign Fund Managers, the current Chapter 7 provisions make the closed-ended QIF and recognised-jurisdiction requirements central and prescribe additional operational safeguards.
The FSRA also announced a transition period until 31 March 2027 for the new rules applying to existing Foreign Fund Managers. That transition is relevant to affected existing arrangements; it should not be assumed to remove the need for a new sponsor to structure its fund under the current requirements. (adgm.com)
The practical question for an overseas sponsor
An overseas fund manager can potentially manage an ADGM fund without building a second full management business in ADGM. But the route works only if the sponsor is comfortable with its defining conditions: a closed-ended QIF, an eligible and appropriately regulated foreign manager, submission to ADGM jurisdiction for the relevant activities, and the required local governance and service-provider arrangements.
Before choosing between a Foreign Fund Manager structure and an ADGM-licensed fund manager, sponsors should compare the routes against their actual fund strategy, home regulatory permissions, delegation model and future fund pipeline. That comparison is far more useful than treating the foreign route as a shortcut chosen solely to reduce setup cost.
CRYPTOVERSE Legal Consultancy advises overseas sponsors on ADGM fund structuring, FSRA regulatory scoping, QIF launches and Foreign Fund Manager arrangements.
FAQs
1. Can a foreign fund manager manage an ADGM fund without an ADGM licence?
Possibly, under FUNDS Rule 7.1.1. The manager must be regulated in a Recognised Jurisdiction and must manage only a closed-ended Qualified Investor Fund. It must also submit to ADGM law and the ADGM Courts for its activities concerning the fund.
2. Which type of ADGM fund can use this route?
Only a closed-ended QIF. Open-ended QIFs, Exempt Funds and Public Funds do not qualify.
3. What local arrangements are mandatory?
The fund needs an FSRA-licensed Fund Administrator or Trustee, an Eligible Custodian (unless impractical and disproportionate), a UAE-resident board member, and an ADGM-licensed agent for receipt of process. The manager must also make sure investor reporting and access to records work in practice.
4. Can the foreign manager appoint an external adviser or delegate investment management?
FUNDS Rule 7.1.2(1)(f) says the manager must not engage, or cause the fund to engage, a third party to provide investment advice or manage Fund Property. Any delegation plan should be checked against this rule first.
5. What FSRA filing is needed to launch the fund?
A QIF is launched through a fund notification under section 112 of the FSMR, with the additional information required by FUNDS Rule 6.2.2. This notification is separate from FSRA licensing of a local fund manager.