UAE sets rules for venture capital funds

The UAE has issued rules for venture capital funds in a bid to stimulate lending to small and mid-sized businesses.

The rules, drawn up by the regulator, the Securities and Commodities Authority, and the Ministry of Economy, define venture capital funds as private investment funds investing in high-risk assets such as start-up companies, new technologies or non-performing projects.

“The availability of [a] legal system for venture capital funds is a major step towards the development of a supportive business environment for creative individuals,” said a government statement.

If a venture capital fund’s assets under management exceed 180 million dirhams ($49 million), the fund must appoint an administrator and prepare an annual report according to international reporting standards, state the rules. Smaller-sized funds are allowed only to provide a summary of an annual report.

The rules also state that venture capital funds’ exposure to risk must not exceed their net asset value.

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