UAE frames VC funds

The government has established a legal framework for venture capital funds operating in the United Arab Emirates.

The government of the United Arab Emirates (UAE) announced a legal framework for VC funds on Saturday, Zawya has reported.

The new rules mean any firm that has assets under management of more than Dh180m ($50m), will need to publish annual reports and appoint a risk management officer. Funds must also not be exposed to a risk exceeding their net asset value.

Funds also should not invest less than 70% of assets in one or more of the following:

  • Lending to new or troubled initiatives by no more than 30% of its assets;
  • Equity or other instruments issued by unlisted businesses or their subsidiaries;
  • Other VC funds so long as the investments do not exceed 10% of assets;
  • Lending any such companies no more than 30% of assets so long as the fund is already a shareholder.

The news follows the launch of several government-owned accelerators. UAE is endeavouring to boost the competitiveness of local SMEs and hopes to become one of the top 10 countries internationally for innovation by 2021.

Sultan Bin Saeed Al Mansouri, minister of economy, said: “Approving the controls and obligations governing the venture capital fund is the fruit of a strong cooperation and partnership between the public and private sector, aiming to expand the scopes of funding innovation-based projects in the UAE.”

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