Key amendments

The Dubai Financial Services Authority (DFSA) has recently amended the legislation applicable in the Dubai International Financial Centre (DIFC) in order, among other things, to amend the regulations relating to marketing of financial products in or from the DIFC. The DFSA Rulebook modules that contain rules and guidance specific to this issue have also been redrafted. The Regulatory Law Amendment Law (1/2011) came into force on April 28 2011.

Key amendments

The DFSA has amended the Regulatory Law 2004 and the related rules to clarify and strengthen the regulatory regime relating to financial promotions in or from the DIFC. The new provisions build on the current requirements contained in the Collective Investment Law 2010 and the Markets Law 2004, which will continue to apply.

The new financial promotions regime applies to any person who "approves, makes or intends to make" a financial promotion in or from the DIFC - that is, any communication, however made, which invites or induces a person to:

  • enter into, or offer to enter into, an agreement in relation to the provision of a financial service; or
  • exercise any rights conferred by a financial product (ie, an investment, credit facility, deposit, profit-sharing investment account or contract of insurance) or acquire, dispose of, underwrite or convert a financial product.

Financial promotions can be undertaken only by persons authorised by the DFSA under the DFSA laws and rules. These persons are:

  • authorised persons (ie, persons who hold a licence or persons licensed by the DFSA to operate an exchange or a clearing house);
  • persons licensed and supervised by a financial services regulator in the United Arab Emirates;
  • recognised persons or external fund managers;
  • reporting entities that make financial promotions in or from the DIFC exclusively for the purpose of discharging their mandatory disclosure requirements; and
  • persons that make an exempt financial promotion. A person is considered as making an exempt financial promotion if it is:
    • approved by an 'authorised firm';
    • directed at and capable of acceptance exclusively by a person who appeared on reasonable grounds to be a 'professional client' of the type specified in the DFSA Conduct Of Business (Rule 2.3.2(2));
    • made to a person in the DIFC as a result of an unsolicited request by that person to receive the financial promotion;
    • made or issued by or on behalf of a government or non-commercial government entity; or
    • made in the DIFC by a person in the course of providing legal or accountancy services and which may reasonably be regarded as incidental to and a necessary part of the provision of such services.

The abovementioned must comply with specific requirements required by the DFSA when making financial promotions. For example, to protect retail clients, the person making the financial promotion must present a balanced view of the financial products or financial services to which the promotion relates. The financial promotion must further contain a prominent warning that past performance is not necessarily a reliable indicator of future performance.

An agreement entered into in breach of any restriction imposed by the DFSA regarding financial promotions is, in all likelihood, unenforceable. The aggrieved party can apply to the DIFC courts to recover any loss or obtain compensation.


It is likely that these changes will provide even greater protection for investors or potential investors against false or misleading marketing of financial products, especially for investors coming into the DIFC. The amendments are expected to remove uncertainty by expressly permitting certain financial promotions and specifically prohibiting others.

For further information on this topic please contact Hasan Rizvi or Ben Constance at Taylor Wessing (Middle East) LLP by telephone (+9714 309 1000), fax (+9714 358 7732) or email ([email protected] or [email protected]).