UAE CMA Rules Tighten Cross-Border Fund Marketing for Foreign Managers

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UAE's new CMA rules tighten cross-border fund marketing, raising compliance stakes for foreign managers and local advisers.

Two UAE federal decree laws took effect on 1 January 2026, replacing the SCA with the new Capital Market Authority (CMA).
Foreign funds marketed to UAE investors are now explicitly treated as onshore regulated activities, regardless of where the marketing physically occurs.
The CMA's jurisdiction extends to firms in ADGM and DIFC that actively target onshore UAE clients, not just those operating onshore.
Administrative fines can reach AED 200 million, with criminal penalties up to AED 250 million for serious market misconduct.
A transitional period runs until 1 January 2027, during which existing SCA regulations remain in force pending new CMA rulebooks.
Foreign managers and local advisers are advised to begin reviewing licensing, fund registration, and distribution structures without delay.

Federal Decree-Law No. 33 of 2025 Reshapes UAE Onshore Capital Markets

Two landmark federal decree laws took effect in the UAE on 1 January 2026, fundamentally reshaping onshore capital markets regulation. Federal Decree-Law No. 32 of 2025 reconstitutes the former Securities and Commodities Authority as the Capital Market Authority (CMA) - a federal public authority with expanded powers and a broader statutory mandate. The CMA assumes all rights, obligations, and regulatory responsibilities previously held by its predecessor.

The companion legislation, Federal Decree-Law No. 33 of 2025, sets out the substantive architecture governing UAE onshore regulated activities, including capital market services, fund distribution, and securities promotion. Together, these decree laws replace Federal Law No. 4 of 2000 and introduce a consolidated, statute-driven framework. The reforms carry direct implications for any firm involved in cross-border fund distribution to UAE investors - including those classified as Professional Investors, broadly defined as high-net-worth or institutional clients, under UAE law.

Marketing Foreign Funds Now Treated as an Onshore Activity

The most consequential clarification in the new framework concerns cross-border fund distribution. Federal Decree-Law No. 33 of 2025 codifies that marketing, soliciting, or distributing foreign funds to UAE-based investors is an onshore regulated activity - regardless of where that marketing physically takes place. Offshore roadshows, digital campaigns, or materials directed at UAE investors from abroad all fall within CMA jurisdiction.

According to RegTech Analyst, the decree reinforces the need for regulatory approval before offering foreign funds onshore and strengthens the CMA's supervisory toolkit. Fintech Global similarly notes that the new framework removes ambiguity for global fund managers accustomed to cross-border approaches. The practical effect is that targeting UAE investors is now sufficient on its own to bring an activity within scope - regardless of where execution or settlement occurs.

Jurisdictional Reach Now Extends to Free Zones and Offshore Activity

The Capital Markets Law takes an assertive approach to regulatory scope. It applies to any person carrying out regulated activities inside the UAE or targeting UAE clients - even if that person is located abroad or licensed within a UAE financial free zone. Cleary Gottlieb and Latham and Watkins both describe this as an "expansive" jurisdictional posture in their legal updates on the new regime.

Firms operating from the Abu Dhabi Global Market (ADGM) or Dubai International Financial Centre (DIFC) can no longer assume their free-zone licences are sufficient where they actively target onshore UAE clients. Only activities conducted exclusively within financial free zones and not directed at onshore investors remain outside CMA jurisdiction. Once onshore investors are targeted, CMA rules and approvals become relevant.

Impact on Foreign Fund Managers

Under the previous SCA regime, foreign funds could be marketed to Professional Investors onshore via a licensed promoter on a private placement basis, typically with a minimum subscription of AED 500,000 per investor. A reverse-solicitation exemption also allowed managers to respond to investor-initiated approaches without triggering full registration requirements.

The new statutory framework narrows the practical scope of reverse-solicitation arguments. Commentators note that characterising activity as investor-initiated becomes difficult to sustain where marketing materials or roadshows are directed at onshore clients. Foreign managers are now expected to secure CMA approval or fund registration and to work through CMA-licensed promoters or locally authorised intermediaries. King and Spalding advises that firms with any UAE nexus should begin reviewing their cross-border marketing and distribution structures without delay.

What Local Advisers and Distributors Must Do

Local wealth managers, distributors, and financial advisers face heightened oversight under the CMA regime. Any firm involved in recommending or distributing foreign funds must ensure those funds hold the relevant CMA approval. Firms must also confirm they hold the appropriate licence for promotion and advisory activities, and review investor categorisation processes, suitability documentation, and minimum asset thresholds.

Dechert describes the CMA's enforcement toolkit as materially stronger than the SCA's. Administrative fines can reach AED 200 million, with additional per-violation fines of up to AED 1 million. Courts can impose criminal penalties of up to AED 250 million and mandatory custodial sentences for serious misconduct. Compliance failures are now considerably more costly for both foreign and locally based market participants.

Transitional Period and Practical Next Steps

Market participants benefit from a transitional period running to 1 January 2027 to achieve full compliance. During this period, existing SCA decisions and regulations remain in force to the extent they do not conflict with the new decree laws. New CMA rulebooks and implementing regulations are expected to be issued during this window, and firms should monitor these closely.

Law firms uniformly recommend that firms start their compliance review now rather than waiting for implementing rules to be published. Key steps include mapping the current UAE investor base, revisiting any reliance on reverse solicitation or passive marketing positions, and reassessing distribution channels, promoter arrangements, and investor documentation. Analysts describe the overall direction as a more precise but more demanding regulatory environment for all participants in UAE capital markets.

What Clients are Asking their Advisors

What is the UAE Capital Market Authority and how does it differ from the SCA?

The Capital Market Authority (CMA) formally replaced the Securities and Commodities Authority (SCA) under Federal Decree-Law No. 32 of 2025, effective 1 January 2026. It is a federal public authority with an expanded statutory mandate, broader jurisdictional reach, and significantly stronger enforcement and sanctioning powers than its predecessor.

How do foreign fund managers get CMA approval to market funds to UAE investors?

Foreign funds marketed to UAE onshore investors generally require CMA approval or registration and must be offered through a CMA-licensed promoter or authorised intermediary. Managers should review the CMA's implementing regulations - expected before January 2027 - and seek legal advice on the most appropriate approval or private placement route for their fund type.

Does a DIFC or ADGM licence allow a fund manager to market to UAE onshore investors under the new CMA rules?

Not automatically. The new framework explicitly states that free-zone licences do not exempt managers from CMA jurisdiction when they actively target onshore UAE clients. Firms based in the ADGM or DIFC must assess whether their marketing activities create a sufficient UAE nexus to trigger CMA oversight and approval requirements.

What are the penalties for breaching UAE CMA cross-border fund marketing rules?

The CMA can impose administrative fines of up to AED 200 million, suspend or revoke licences, and issue management bans. Courts can additionally impose criminal penalties of up to AED 250 million and mandatory custodial sentences for serious market misconduct - a material increase on the sanctions available under the previous SCA regime.