The Riffle
ADGM’s Financial Services Regulatory Authority (FSRA) provides specialised regulatory frameworks for certain categories of Fund Managers, allowing regulatory requirements to be calibrated according to the size of the funds managed and the type of investors they serve.
The framework covers two principal categories: Sub-Threshold Fund Managers (STFMs) and Institutional Fund Managers (IFMs), with Venture Capital Fund Managers (VCFMs) operating as a specialised sub-category of the STFM framework.
These categories offer targeted regulatory dispensations while maintaining requirements around capital, governance, investor eligibility and disclosure.
Key Highlights
A streamlined route for smaller Fund Managers
The Sub-Threshold Fund Manager (STFM) framework is designed for managers whose total committed capital does not exceed USD 200 million. The funds must be closed-ended and limited to Exempt Funds, QIFs or equivalent foreign funds, with no access for retail clients. An STFM also cannot operate as a “host” Fund Manager.
The framework reduces certain operational requirements: there is no requirement for an internal audit function or a formal Finance Officer, and the Expenditure Based Capital Minimum does not apply. However, STFMs must maintain a USD 50,000 Base Capital Requirement and Professional Indemnity Insurance.
A specialised framework for Venture Capital Fund Managers
VCFMs sit within the STFM category but are generally focused on funds investing in companies at an early stage of development. They may also apply for additional permissions to facilitate co-investments alongside the VC Fund.
The framework places particular emphasis on relevant experience: the SEO requires at least 10 years, while the Licensed Director/Partner requires at least five years of relevant experience. VCFM authorisation and annual supervision fees are capped at USD 10,000.
Institutional Fund Managers receive different dispensations
The Institutional Fund Manager (IFM) framework applies to managers of QIFs or equivalent foreign funds aimed exclusively at institutional investors. The minimum subscription is USD 5 million, and natural persons cannot be unitholders, subject to the Employee Investment Vehicle exception.
IFMs are not required to maintain an internal audit function or appoint a Finance Officer. Their capital requirement is the higher of USD 50,000 or 6/52nds of Annual Audited Expenditure. Unlike STFMs, IFMs are also exempt from the PII requirement.
Disclosure remains important
The streamlined frameworks do not remove ongoing regulatory responsibilities. Specialised Fund Managers must disclose their regulatory status and any restrictions on their Financial Services Permission in the Fund Prospectus. Where a manager intends to move beyond an applicable threshold—for example, an STFM exceeding USD 200 million—it must apply for a variation of its FSP in advance.
Next Steps
Fund Managers should assess their fund size, investor profile, fund structure, capital requirements and key-person experience before determining which regulatory category applies.
They must also disclose their regulatory status and applicable FSP restrictions in the Fund Prospectus. An STFM planning to exceed the USD 200 million threshold must apply for a variation of its FSP in advance.
Riffle Takeaway
ADGM’s specialised Fund Manager frameworks offer a more proportionate regulatory route for smaller funds, venture capital managers and institutional-only strategies, while retaining clear eligibility, capital and compliance requirements.
