The Financial Services Regulatory Authority, FSRA, of Abu Dhabi Global Market, ADGM, has introduced a risk-proportionate regulatory framework for managers of venture capital, VC, funds, the first such framework in the MENA region.
With immediate effect from 15th May 2017, VC managers will not be subject to any base capital requirement or expenditure based capital.
As part of ADGM’s wider efforts in fostering a vibrant ecosystem for FinTech firms and small and medium enterprises, SMEs, the framework is a further enhancement to ADGM’s funds regime that includes among others, a comprehensive platform for real estate investment trusts, REIT, as well as a boutique licensing framework for fund managers in the MENA region.
VC funds seek private equity stakes in start-ups or young, small or medium enterprises which typically offer products that are innovative, at the cutting-edge of technology, and possess strong growth potential. These funds play an important role in nurturing start-up ecosystems by providing funding to early stage companies seeking to launch and grow their businesses. As such, there are economic and other benefits for a tailored regulatory regime to support the activities of VC managers in ADGM to serve the region.
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