UAE introduces new limits on venture capital funds

The new rules include limits on risk exposure and annual report requirements



The UAE has introduced new limits on venture capital funds as part of legislation announced on Saturday.

UAE minister of economy Sultan Bin Saeed Al Mansouri said the new controls were designed to boost the competitiveness of small and medium-sized enterprises.

It is also aimed at increasing the country’s ranking to among the top 10 in the world innovation index by 2021.

Under the new system, venture capital firms with assets exceeding Dhs180m ($49m) will be required to issue an annual report in compliance with IFRS standards and appoint a risk management officer.

The firm’s exposure to risk will also not be able to exceed its net asset value.

Firm with assets under management less than Dhs180m will be obligated to post an annual report summary and faced the same limit on risk exposure.

Venture capital funds must also invest no more than 30 per cent of their assets in lending to new or troubled projects or equity instruments issued by unlisted companies.

In addition, investments should not exceed 30 per cent in assets of the open public investment fund (Emirates UCITS).

UAE minister of economy Sultan Bin Saeed Al Mansouri said the new controls were designed to boost the competitiveness of small and medium-sized enterprises.

It is also aimed at increasing the country’s ranking to among the top 10 in the world innovation index, a report, co-published by Cornell University, INSEAD, and the World Intellectual Property Organisation, by 2021.

Read: UAE climbs six places in global innovation index