How to Start an Investment Fund in ADGM: The Fund, the Manager and the FSRA Approval Path

By CRYPTOVERSE Legal Consultancy | September 2026

A founder comes to us with what sounds like a straightforward plan:

“We have investors interested in a USD 50 million fund. We want to set it up in ADGM. What licence do we need?”

The answer begins with a distinction that can save months of work: the fund and the Fund Manager are not the same thing.

The fund is the arrangement through which investors participate in the investment strategy. The Fund Manager is the person responsible for operating that arrangement and managing its property. If a new ADGM manager is proposed, it will generally need a Financial Services Permission (FSP) from the Financial Services Regulatory Authority (FSRA) to Manage a Collective Investment Fund. The fund itself must be structured, documented and dealt with under the FSRA process applicable to its category.

There is also a question to answer before either workstream begins: is the proposed arrangement legally a fund at all?

This guide explains the decisions and approval path for sponsors seeking to establish an investment fund in ADGM.

Step 1: Establish whether the arrangement is a fund

It is tempting to begin by choosing a vehicle: a company, partnership, SPV or investment club. But the vehicle’s name does not decide its regulatory status.

Under section 106 of the Financial Services and Markets Regulations 2015 (FSMR), the definition of a Collective Investment Fund is broad. Chapter 2 of the FSRA Fund Rulebook (FUNDS) sets out arrangements that do not constitute a Fund. The assessment turns on the arrangement’s actual rights and operation.

Ask:

• Who contributes the investment capital?
• What do contributors receive in return?
• Are assets or returns managed collectively?
• Who decides which investments to buy and sell?
• Can each investor direct the management of their own assets?
• Does a specific exclusion in FUNDS Chapter 2 apply in full?

For example, FUNDS 2.1.14 addresses portfolios managed under a discretionary portfolio management agreement. A business managing separate client accounts may need permission for Managing Assets, rather than permission to operate a collective fund. By contrast, placing pooled investments inside a closed-ended company does not automatically avoid the fund rules: FUNDS 2.1.10 requires consideration of the arrangement’s investment management purpose or effect.

Practical lesson: Complete the fund-perimeter analysis before paying to incorporate a vehicle or drafting investor documents around an assumed exemption.

Step 2: Separate the fund from its manager

Think of the proposed structure as two connected businesses.

This distinction matters when budgeting. Investor commitments to the Fund are not the manager’s regulatory capital. A sponsor must establish how the manager will fund its application, meet ongoing capital and liquidity requirements, and operate before management fee income is available.

It also matters when drafting. The manager’s FSRA business plan and the fund’s prospectus must describe the same investment strategy, decision makers, service providers and flow of money.

Step 3: Decide where the fund will be established

Under FUNDS 3.1.1, a Fund established or domiciled in ADGM is a Domestic Fund. A Fund that does not meet that test is a Foreign Fund.

A sponsor may consider an ADGM fund managed by an ADGM-authorised firm, an eligible foreign-manager arrangement, or an ADGM manager operating a fund established elsewhere. Those structures have different requirements. A foreign domicile does not remove the need to assess what the manager does in or from ADGM, or how fund interests will be offered in each relevant jurisdiction.

For a first ADGM launch, the proposed domicile should be chosen alongside the investor base, target assets, service providers and commercial objectives—not as an isolated incorporation decision.

Step 4: Choose the ADGM fund category

Every ADGM Domestic Fund must be a Public Fund, Exempt Fund or Qualified Investor Fund (QIF) under FUNDS 3.2.1.

These amounts are investor subscription conditions, not the Fund Manager’s capital requirement.

A fund may have additional characteristics affecting its route other than ADGM Crypto Fund Structuring Guide. A proposed Venture Capital Fund must meet the investment and structural conditions in FUNDS 4.1.6. An Institutional Fund must satisfy FUNDS 4.1.10, including a USD 5 million minimum subscription and no subscriptions from natural persons, subject to the specific Employee Investment Vehicle provisions.

Consider the investors before choosing the category. A founder might prefer the flexibility of a QIF, but a planned USD 100,000 minimum ticket would not satisfy the ordinary QIF minimum. Equally, describing an offer as “private” does not make Retail Clients eligible to invest in an Exempt Fund.

Step 5: Choose who will manage the Fund

If the sponsor intends to establish its own ADGM Fund Manager, it must identify the precise FSRA permissions it needs. Managing a Collective Investment Fund is the central permission for operating and managing the Fund. Other activities may require separate permissions—for example, managing Assets and obtaining a Fund Manager licence in ADGM for separate discretionary portfolios or advising and arranging in relation to certain co-investments.

The Fund Manager route should then be tested against the business model:

• Full-scope Fund Manager: assess where the proposed funds, investors or activities do not fit a specialised category.
• Sub-Threshold Fund Manager (STFM): intended for eligible smaller, closed-ended, non-retail funds, with no more than USD 200 million aggregate Committed Capital across the manager’s funds.
• Venture Capital Fund Manager (VCFM): a subcategory of STFM that may manage only qualifying VC Funds.
• Institutional Fund Manager (IFM): manages only qualifying Institutional Funds aimed at institutional investors.

The FSRA formalised the new specialised frameworks in September 2026. They offer proportionate requirements, but each comes with eligibility conditions and restrictions on the manager’s FSP as per ADGM Guide.

For STFM and VCFM, Committed Capital includes amounts already drawn and undrawn amounts investors are contractually obliged to contribute when called (GLO, definition of “Committed Capital”). A target fund size, current cash balance and aggregate binding commitments are three different figures.

Can an existing foreign manager manage an ADGM fund?

Potentially, but this is a separate route, with conditions that should be assessed before structuring or marketing the Fund. FUNDS Chapter 7 addresses Foreign Fund Managers of Domestic Funds. The September 2026 FSRA reforms also revised the foreign-manager framework; the FSRA announced a transition period until 31 March 2027 for the new rules as they apply to existing Foreign Fund Managers and VCFMs as per ADGM Guide.

A sponsor with an established manager elsewhere should compare that route with obtaining its own ADGM FSP. The choice affects control, local operations, providers, cost and timing.

Step 6: Build a manager the FSRA can assess

A credible application is more than a business idea and a set of forms. The FSRA needs to understand who will run the manager and how it will control the risks of the proposed funds.

The manager workstream commonly covers:

• Promoters, ownership and controllers;
• Proposed Senior Executive Officer (SEO), directors or partners and investment personnel;
• Compliance Officer and Money Laundering Reporting Officer (MLRO);
• Investment committee authority and conflicts;
• AML, investor due diligence and sanctions controls;
• Financial forecasts, funding and regulatory capital;
• Custody, valuation, administration and outsourcing;
• Technology, records and business continuity; and
• Premises and the proposed operating presence in ADGM.

The applicable capital calculation depends on the permission and fund type. For example, PRU 3.3.2 provides a USD 50,000 Base Capital Requirement for a Category 3C firm whose relevant permission is solely managing non-retail funds, or USD 150,000 where it manages a Public Fund or another fund available to retail customers. The applicable expenditure-based calculation and any other permissions must also be considered. These are regulatory floors, not total launch budgets.

The specialised frameworks grant particular dispensations. Eligible STFMs, VCFMs and IFMs need not appoint a Finance Officer or maintain the specified internal audit function under GEN 5.5(3) and GEN 3.1(5). Other applicable governance, compliance, prudential and fund obligations continue.

Step 7: Engage the FSRA and apply for the manager’s FSP

The FSRA describes an authorisation process beginning with contact and an initial discussion of the business model. It may invite a draft regulatory business plan, provide feedback and then receive the completed application, supporting documents and fee. The FSRA reviews the submission, may ask further questions or interview proposed approved persons, and may issue an in-principle approval (IPA) if the application succeeds as per FSRA ADGM Guide.

The application should explain the investment model in concrete terms. “We will launch a private equity fund” leaves many questions unanswered. The FSRA will need to understand, among other matters, where investors and investments will be located, how the portfolio will be valued, how assets will be safeguarded, and who can approve an investment or override a risk limit.

The FSRA lists the General Information for Regulated Activities (GIRA) form, approved-person forms and an Asset Management Appendix among its authorisation materials. It separately lists forms for Public Fund registration and Exempt Fund or QIF notification. Applicants should obtain the appropriate current editable forms and instructions for their proposed activities in the setting up of ADGM Guide. 

What happens after IPA?

An IPA typically contains conditions the applicant must satisfy. The FSRA’s published process identifies matters such as obtaining an ADGM Registration Authority commercial licence, securing premises, opening bank accounts and, where relevant, capitalising the entity. Once the conditions are met, the FSRA may grant the FSP permitting the firm to commence its approved Regulated Activities in the FSRA ADGM Guide.

A sponsor should check the final FSP carefully. Its restrictions define what the manager has actually been authorised to do.

Step 8: Establish and document the Fund

The fund workstream can be prepared alongside the manager application, but its final sequence must align with the proposed vehicle, FSP and FSRA requirements.

Typical documents and arrangements include:

1. Constitution: the instrument governing the vehicle and investors’ rights;
2. Prospectus or private placement memorandum: the investment strategy, risks, fees, conflicts and other material information;
3. Subscription documents: investor representations, commitments and admission mechanics;
4. Service-provider arrangements: administration, custody or safeguarding, audit and valuation, as applicable;
5. Investment and risk policies: decisions, allocation, liquidity, conflicts and oversight; and
6. Banking and funds-flow arrangements: how subscriptions, capital calls, expenses and distributions will move.

FUNDS 9.3.1 requires prospectus information to be clear, fair and not misleading and sufficient for an informed investment decision. Its guidance expects disclosure of the manager’s regulatory status and FSP restrictions. The fund documents should accurately reflect the permission ultimately granted.

Step 9: Complete the fund registration or notification procedure

The fund procedure depends on its category:

• A Public Fund follows the registration process under FSMR section 107 and FUNDS 6.1.
• An Exempt Fund follows the notification process under FSMR section 112 and FUNDS 6.2.1.
• A QIF follows the notification process under FSMR section 112 and FUNDS 6.2.2.

FSMR section 112 requires the manager of an Exempt Fund or QIF to notify the FSRA at least 14 days before the initial offer. The FUNDS rules prescribe additional information for the notification. This interval should be built into the launch calendar; “notification” does not mean it can be left until the day investors sign in ADGM Rulebook Guide.

The FSRA publishes separate fund registration and notification forms. The correct form and required supporting materials should be checked against the fund’s final structure and the current filing instructions.

Step 10: Onboard investors and hold the first close

Before the first close, confirm that the manager is authorised for the activity, the applicable fund procedure has been completed, the investment documents are final, and the service providers can perform their roles.

Each proposed investor must be assessed against the fund’s eligibility conditions. For an Exempt Fund or QIF, that includes documented Professional Client classification and the applicable initial subscription. The manager should complete the required AML, sanctions and source-of-funds checks, execute subscription documents, record commitments and operate the agreed capital-call process.

Marketing outside ADGM also raises the rules of the jurisdictions where investors are approached. An ADGM fund classification does not itself grant permission to offer fund interests in every country.

First close is a controlled legal and operational event—not simply the date the first investor transfers money.

What happens after launch?

The Fund Manager must manage the Fund within its constitution, current prospectus and FSP restrictions (FUNDS 12.2.1). It must maintain applicable capital, liquidity, personnel, controls and reporting. FUNDS Chapter 16 addresses the Fund’s accounts, audit, investor reports and periodic fund returns.

The manager should also monitor changes to its eligibility. For example, an STFM must seek an FSP variation before accepting commitments that would take it above the USD 200 million aggregate ceiling (Specialised Guidance, paragraph 11).

The question to answer before spending money

A prospective sponsor does not need every fund document drafted before speaking to advisers or the FSRA. It does need a coherent answer to this question:

“Who will invest, what will they own, what will the Fund buy, and who will have legal responsibility for managing it?”

From that answer, the fund-perimeter assessment, fund category, manager permission, capital model and approval path can be built in the right order.

CRYPTOVERSE Legal Consultancy advises sponsors on ADGM fund setup and licensing services  and manager structuring, FSRA licensing, regulatory business plans, capital planning and fund launch documentation. We begin with regulatory scoping so the application reflects the business the sponsor intends to operate.

Disclaimer: This article is general information based on the FSRA framework available in September 2026. It is not a formal legal opinion or a guarantee of authorisation. The appropriate structure and approval sequence depend on the proposed facts, operative rules and the FSRA’s assessment.

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