Asset management without license - UAE

[lowprofiler]

Hello experts,

I have a freezone company registered in DSO, UAE with the activity code "Investment in Commercial Enterprises and Management"
My main purpose was to use it for asset management and investment for a small client portfolio - I have approx 30-40 clients in Europe (mostly my family and friends) - I am "investing" their money into some projects (trading of gold) and taking my commission.
I have 2-3 suppliers in UAE (trading and import of gold)

I already have a business account at Emirates Islamic Bank. But when i am trying to open business accounts in Europe or other places, they are asking for license which have the rights for asset/money management... Now this kind of license is very expensive and need of warranty, dedicated people for AML and bla bla. Too many requirements, and doesnt fit my size - since i am running this as a one-man show. Guide to the DIFC Asset Manager License - 10 Leaves

How can i structure my company in a way, that i dont need this "big" license, but still can legally continue my business? Also when i payout profit to my clients, they are asked from their bank about origin, contracts etc. I did made contracts etc, but i would say on base of wrong license. Cause i am literally managing my clients funds, which needs the extensive license.
I am also worried about my UAE business bank will ask me about the transactions, and have a look on my current license which is not appropriate to the activities.

Any good advice for me? Yearly in- and outgoing transactions are approx 2M USD.

 

[Martin Everson]

Can you not make them all shareholders and treat money they give you to invest as equity contributions?

P.S It will complicate things with bank (KYC) and clients (tax etc) but its cheap option.

 

[khinkali]

Proprietary trading with class A (management/founders) and class B preference shares (capital providers) shares seems a good structure.

But with shareholders in Europe and other places, would @lowprofiler still need authorisation where the investors are based? Would banks for business accounts in Europe just accept the UAE position and ignore regulation where the investors are based?

Reverse solicitation seems almost dead in the EU, so even family and friends funds are getting risky.

I guess what I'm asking is whether the activity can change from investment management of a collective investment vehicle to commercial trading, taking it out of collective investment regulation. Or would regulators look through that?

 

[lowprofiler]

Can you not make them all shareholders and treat money they give you to invest as equity contributions?

P.S It will complicate things with bank (KYC) and clients (tax etc) but its cheap option.

This was also my thought. But practically i assume i need to register the shareholders in the freezone authority? - My challenge is that i am getting 1-2 new clients monthly, and if i need to make amendments to the company license regarding shareholders, it would be a big administrative mess (i assume) . if not costly as well.
Second part is the bank yes, but maybe they wont realize since i already have it now...

 

[Martin Everson]

This was also my thought. But practically i assume i need to register the shareholders in the freezone authority? - My challenge is that i am getting 1-2 new clients monthly, and if i need to make amendments to the company license regarding shareholders, it would be a big administrative mess (i assume) . if not costly as well.
Second part is the bank yes, but maybe they wont realize since i already have it now...

In end its best to broker a deal with someone with appropriate license and negotiate a fee with them.

 

[Gediminas]

This was also my thought. But practically i assume i need to register the shareholders in the freezone authority? - My challenge is that i am getting 1-2 new clients monthly, and if i need to make amendments to the company license regarding shareholders, it would be a big administrative mess (i assume) . if not costly as well.
Second part is the bank yes, but maybe they wont realize since i already have it now...

You might set up a Europe-based partnership that might accept new partners easily (no need to register them with authorities, so it is an internal corporate documentation question). This partnership might own (together with you as a direct shareholder) your FZE. Small partners would not be considered as UBO (due to their percentage) therefore in UAE you would not need to submit them to the UBO register.

On the other hand, you should inform Emirates Islamic Bank that you have a new shareholder – an EU partnership. Initially, when you set up a partnership you might be only one UBO in partnership, so the bank might accept such a structure. Later you might add at once more investors, but you might remain as only one UBO in the bank.

The above might allow you to navigate, but of course, it is not bulletproof.

By the way - adding corporate shareholders in Dubai Silicon Oasis requires legalized and attested resolution from the EU side, so it will take a bit of time to arrange it.

As regards activities in trade license – I agree that current activities are not a perfect match.

If you need any help with that, let me know.