Consultation Paper No. 3 of 2019 - Proposed revision of FEES Rules

CONSULTATION PAPER
NO. 3 OF 2019
23 SEPTEMBER 2019
PROPOSED REVISION OF FEES RULES

TABLE OF CONTENTS
INTRODUCTION................................................................................................................ 3
BACKGROUND.................................................................................................................. 5
PROPOSED AMENDMENTS - FUNDS.................................................................................. 5
PROPOSED AMENDMENTS – REMOTE BODIES, REMOTE MEMBERS AND STRUCTURED
PRODUCTS ....................................................................................................................... 7

INTRODUCTION
WHY ARE WE ISSUING THIS PAPER?

1. The Financial Services Regulatory Authority (“FSRA“) of Abu Dhabi Global
   Market (“ADGM“) has issued this consultation paper to consult on proposed changes to certain fees for Domestic Funds, Foreign Fund Managers of Domestic Funds, Remote Bodies and Remote Members.
2. The amendments to the FEES Rules proposed within this paper have been
   drafted to reflect the FSRA’s ongoing and future workload associated with its funds and markets frameworks. Other proposed changes would align the collection of fund-related fees with the calendar year, rather than the anniversary of the launch of the fund. The proposed changes would not affect the amount of, nor the timing of collection of, fees introduced through the recent implementation of the Domestic Funds passporting regime 1 . The FSRA would like to invite comments on the proposed amendments presented in this paper.
3. Unless otherwise defined, capitalised terms used in this paper have the
   meanings attributed to such terms as contained in the Financial Services and Markets Regulations 2015 (“FSMR”) and/or the Glossary (“GLO”). WHO SHOULD READ THIS PAPER?
4. This Consultation Paper may be of particular interest to Fund Managers,
   Remote Members, Remote Bodies, potential applicants and any professional advisors to those persons. HOW TO PROVIDE COMMENTS
5. All comments should be made in writing and sent to the address or the
   email address specified below. If sending your comments by email, please use the Consultation Paper number in the subject line. If relevant, please identify the organisation you represent when providing your comments.

1 “Fund Passporting Rules (FP)” (March 2019, http://adgm.complinet.com/en/display/display_viewall.html?rbid=4503&element_id=19535)

6. The FSRA reserves the right to publish, including on its website, any
   comments you provide, unless you expressly request otherwise at the time of submitting those comments. Comments supported by reasoning and evidence will be given more weight by the FSRA. WHAT HAPPENS NEXT?
7. The deadline for providing comments on the proposed framework is
   22 October 2019. After receiving your comments, we shall consider whether any modifications are required to the proposals and the Board of ADGM and the FSRA will then proceed to enact the proposals in their final form.
8. You should not act on these proposals until final rules and guidance are
   issued by the FSRA. We shall issue a notice on our website when this happens. COMMENTS TO BE ADDRESSED TO:
   Consultation Paper No. 3 of 2019
   Financial Services Regulatory Authority
   Abu Dhabi Global Market Square
   Al Maryah Island
   PO Box 111999
   Abu Dhabi, UAE
   Email: consultation@adgm.com

BACKGROUND

1. The FSRA has, since its launch, set its fees competitively to encourage the
   establishment of both Fund Managers and Funds in ADGM, as well as to develop capital markets within ADGM. However, following a review of the administrative and supervisory work performed by the FSRA in this area, the FSRA is now proposing to revise current fee levels and introduce some new feesto better reflect the resources required. In addition, it is proposed that annual fees associated with non-passported Domestic Funds will be collected on a calendar year basis in order to reduce the administrative burden imposed upon both Fund Managers and the FSRA. PROPOSED AMENDMENTS - FUNDS
2. The proposed revisions to the fee structure related to Domestic Funds are
   summarized in the following table, where new fees are identified in green.
   Table 1 – current and proposed ADGM Domestic Fund and Prospectus related fees (USD)
   Type Fee designation
   Public Exempt / QIF
   Standalone Umbrella 1 Standalone Umbrella 1
   Initial
   Registration 2 3,000

• per additional sub fund
  if umbrella fund
  1,000 3
  Annual 4
  Fund/first sub fund 3,000 5 2,000
• per additional sub fund 1,000 3 1,000 3
  Ad Hoc 6 Prospectus amendment 3,000
  Notes

1. The proposed fee for an Umbrella Fund will also cover the first sub fund.
2. Payable in accordance with FUNDS Rule 9.3.2(1)(b) whether an application for registration is successful or not.
3. For second and subsequent sub funds in an Umbrella Fund.
4. Pro-rated for the period up to end of first calendar year, and thereafter payable at the beginning of each
   subsequent calendar year.
5. Effectively includes the existing annual “refresh” fee for a prospectus (FUNDS Rule 9.4.1(4)), currently levied as
   a standalone item.
6. The ad hoc prospectus fee would be payable upon the compulsory issuance of a Replacement Prospectus
   triggered by changes to the activities of a Public Fund which would render the existing Prospectus materially inaccurate prior to its expiry (FUNDS Rule 9.3.1(3)).

Public Funds
3. The proposals contained in Table 1 would not result in any fee increases at
the time of registration of a Public Fund. Annual fees of $3,000 per annum for each Domestic Public Fund (including the first sub fund of a Public Umbrella Fund, where applicable) would be introduced, along with a fee of $1,000 per annum for the second and subsequent sub funds of the Umbrella Fund. The proposed prospectus amendment fee of $3,000 would only be due when the FSRA would have to review out-of-cycle, material amendments that necessitated the reissuance of a filed prospectus. Exempt Funds / QIFs
4. A $2,000 annual fee would be introduced for each Domestic Exempt /
Qualified Investor Fund. Additionally, in the case of a Domestic Exempt / Qualified Investor Fund that is an Umbrella Fund, the second and subsequent sub funds would each attract incremental annual fees of $1,000. Timing of fee collection
5. The proposals also include a change to the timing of fee collection.
Registration fees for Public Funds will continue to be due at the time of submission of an application for registration by the FSRA. Annual fees will also be due at the time of registration of Public Funds and notification of Exempt / Qualified Investor Funds, but will be pro-rated for the remaining period of the first calendar year of operation, with annual fees to be collected on 1 January of each subsequent year. Treatment of existing Funds
6. There are currently a number of existing Exempt / Qualified Investor Funds
that are not subject to annual fees. It is proposed to waive the imposition of annual fees for all Exempt / Qualified Investor Funds in existence at the time of implementation of the proposed rule changes until the annual period commencing on 1 January 2021, in order to provide an orderly transition period for the Fund Managers in question.

Passported Funds
7. With the exception of fees charged in relation to the ad hoc replacement
of a Public Fund Prospectus, in accordance with FUNDS Rule 9.3.1(3), the fees proposed in Table 1 above will not apply if a Domestic Fund is registered in accordance with the Fund Passporting Rules. The timing of collection of initial and annual passporting fees will remain unchanged by the proposed amendments, with all annual passporting fees continuing to be due upon the anniversary of the registration of a FUND in accordance with the Fund Passporting Rules. Foreign Fund Managers
8. Foreign Fund Managers may, at the discretion of the FSRA, establish and
manage Domestic Funds. The mandatory notification to the FSRA by a Foreign Fund Manager of its intention to manage a Domestic Fund currently has no fee associated with it, despite such notification triggering a substantive review by the FSRA of the credentials and standing of the Foreign Fund Manager with other regulatory authorities.
9. The FSRA proposes introducing a new notification fee of $5,000 for Foreign
Fund Managers seeking to establish and manage Domestic Funds in order to reflect the work undertaken by the FSRA when reviewing such notifications. PROPOSED AMENDMENTS – REMOTE BODIES, REMOTE MEMBERS AND STRUCTURED PRODUCTS
10. Reflecting the work involved in granting a Recognition Order and
undertaking appropriate supervision, the FSRA is proposing that the application fee for a prospective Remote Body be increased from $5,000 to $10,000 and that an application fee of $1,000 be introducedfor prospective Remote Member applicants.
11. Both Remote Bodies and Remote Members would be subject to an annual
recognition fee of $1,000. Annual fees would be due immediately after the approval of an application, prorated for the remaining period of the first year operation and thereafter due on 1 January of each subsequent year.

Structured Products
12. Additionally, the FSRA proposes that a filing fee of $10,000 be introduced
in relation to a Prospectus for a Structured Product. This is consistent with the filing fees levied in connection with the review and filing of a prospectus prepared for the offer of Debentures, Certificates over Debentures or Warrants over Debentures. ISSUES FOR CONSIDERATION Q1. DO YOU HAVE ANY COMMENTS ON THE PROPOSALS FOR THE REVISION OF EXISTING FEES OR THE INTRODUCTION OF NEW ONES? Q2. IS THE COLLECTION OF AN ANNUAL FEE AT THE START OF EACH CALENDAR YEAR PREFERABLE TO ITS COLLECTION ON THE ANNIVERSARY OF EACH FUND’S LAUNCH?

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Appendix 1 - Fees Amendments

Appendix 1
Fees Rules (FEES)
*In this Appendix, underlining indicates new text and strikethrough indicates deleted text, unless otherwise indicated.

Appendix 1. INTRODUCTION
1.1 Application
1.1.1 These Rules apply to a Person in relation to:
(a) an application for a Financial Services Permission; (b) an application to amend the scope of a Financial Services Permission; (c) an application for approval as an Approved Person to perform a Controlled Function; (d) an application for the amendment of an approval as an Approved Person to perform a Controlled Function; (e) an application for recognition as a Recognised Body, Remote Body or Remote Member; (f) an application to register a Public Fund; (g) a notification of intent to manage an Exempt Fund or a Qualified Investor Fund; (h) a notification of intent by a Foreign Fund Manager to manage a Domestic Fund pursuant to FUNDS Rule 7.1.1; (gi) an application by an Authorised Fund Manager to manage a Foreign Fund pursuant to FUND Rule 7.2.1; (hj) filing a Prospectus pursuant to MKT Rule 4.6.1(1)(b); (jk) filing a Replacement Prospectus for a Public Fund pursuant to FUND Rule 9.3.1(3)2(1)(b) or FUND Rule 9.4.2(1)(b); and (jl) an application for admittance of Securities to the Official List of Securities.
1.1.2 These Rules This Rulebook also applyiesto a Person who is an Authorised Person, a Recognised
Body or a Listed Entity.
….
1.2.4 Nothing in this rRule limits the right of the Regulator to take any other action.
….
1.2.6 (a) The Regulator may require a Person to pay to the Regulator a supplementary fee in
circumstances where it expects to incur substantial additional costs in dealing with an application, authorisation, filing or conducting on-going supervision. (b) In such cases the Regulator will notify the Person as soon as reasonably possible of the amount of the supplementary fee. (c) Such a supplementary fee may be applicable in respect of any fee payable under Chapters 2 or 3 other than a fee under Rule 3.7.

Appendix 1
….
2. GENERAL AUTHORISATION AND SUPERVISION FEES
2.1 General authorisation and supervision fees for deposit-taking institutions
2.1.1 (a) An aApplicant for a Financial Services Permission to carry on the Regulated Activities
of either Accepting Deposits or Managing a Profit Sharing Investment Account must pay to the Regulator an initial authorisation fee of $30,000. (b) The aApplicant referred to in (a) must pay to the Regulator an additional authorisation fee of $5,000 for each additional Regulated Activity for which it seeks a Financial Services Permission.
2.1.2 (a) An Authorised Person with a Financial Services Permission to carry on the Regulated
Activities of either Accepting Deposits or Managing a Profit Sharing Investment Account must pay to the Regulator an annual supervision fee of $30,000. (b) The Authorised Person referred to in (a) shall pay an additional annual supervision fee of $5,000 for each additional Regulated Activity for which it has a Financial Services Permission. (c) In the first year of supervision, the relevant Authorised Person referred to in (a) will be required to pay a portion of the annual supervision fee based on the number of months remaining until the end of the financial calendar year.
2.2 General authorisation and supervision fees for non-deposit-taking institutions
2.2.1 Save for as provided for in Chapter 3:
(a) a non-deposit-taking institution applying for a Financial Services Permission to carry on one Regulated Activity must pay to the Regulator an initial authorisation fee of $5,000; and (b) the aApplicant referred to in (a) must pay to the Regulator an additional authorisation fee of $5,000 for each additional Regulated Activity for which it seeks a Financial Services Permission. ….
2.2.3 In the first year of supervision, the Authorised Person referred to in Rule 2.2.2 will be required
to pay a portion of the annual supervision fee based on the number of months remaining until the end of the financial calendar year.
3. SPECIFIC AUTHORISATION AND SUPERVISION FEES
3.1 Introduction
3.1.1 This Chapter outlines the specific authorisation and supervision fees payable by aApplicants,
Authorised Persons, and Recognised Bodies and Approved Persons, as applicable, who wish or are authorised to perform particular Regulated Activities.

Appendix 1
3.1.2 In all instances in the first year of supervision, the aApplicants, Authorised Persons, and
Recognised Bodies and Approved Persons below, as applicable, will be required to pay a portion of the annual supervision fee based on the number of months remaining until the end of the financial calendar year.
3.2 Effecting Contracts of Insurance or Carrying Out Contracts of Insurance as Principal
3.2.1 An aApplicant for a Financial Services Permission to carry on either one or both of the
Regulated Activities of Effecting Contracts of Insurance or Carrying Out Contracts of Insurance as Principal must pay to the Regulator an initial authorisation fee of $30,000.
3.2.2 The aApplicant referred to in Rule 3.2.1 must pay to the Regulator an additional authorisation
fee of $5,000 for each additional Regulated Activity for which it seeks a Financial Services Permission. …..
3.2.4 An aApplicant for a Financial Services Permission to carry on the Regulated Activities of
Effecting or Carrying Out Contracts of Insurance as a Captive Insurer (as a Class 1, Class 2, Class 3 or Class 4 Captive Insurer) must pay to the Regulator an initial authorisation fee of $5,000.
3.2.5 An aApplicant for a Financial Services Permission to carry on the Regulated Activities of
Effecting or Carrying Out Contracts of Insurance as a Captive Insurer being a Cell Company must pay to the Regulator an initial authorisation fee of:
(a) $5,000 for each Cell Company; and
(b) $1,000 for each individual Cell of a Cell Company.
3.2.6 The aApplicant referred to in paragraph 3.2.4 must also pay an annual supervision fee of
$5,000 for each Regulated Activity for which it has obtained a Financial Services Permission. ….
3.3 Operating a Representative Office
3.3.1 An aApplicant for a Financial Services Permission to carry on the Regulated Activity of
Operating a Representative Office must pay to the Regulator an initial authorisation fee of $3,000. ….
3.4.2 (a) An aApplicant for a Financial Services Permission to carry on the Regulated Activity of
Providing Credit must pay to the Regulator an initial authorisation fee of $15,000. (b) The aApplicant referred to in (a) must pay to the Regulator an additional authorisation fee of $5,000 for each additional Regulated Activity for which it seeks a Financial Services Permission. …..

Appendix 1
3.5.2 (a) An aApplicant for a Financial Services Permission to carry on the Regulated Activity of
Dealing in Investments as Agent or Dealing in Investments as Principal, must pay to the Regulator an initial authorisation fee of $15,000. (b) The aApplicant referred to in (a) must pay to the Regulator an additional authorisation fee of $5,000 for each additional Regulated Activity for which it seeks a Financial Services Permission. …..
3.6 Operating a Credit Rating Agency
3.6.1 An aApplicant for a Financial Services Permission to carry on the Regulated Activity of
Operating a Credit Rating Agency must pay to the Regulator an initial authorisation fee of $5,000.
3.6.2 The aApplicant referred to in Rule 3.6.1 must pay to the Regulator an additional authorisation
fee of $5,000 for each additional Regulated Activity for which it seeks a Financial Services Permission. ….
3.7 Recognition as a Recognised Body, or Remote Body or Remote Member
3.7.1 (a) An aApplicant for recognition as either a Recognised Investment Exchange or a
Recognised Clearing House must pay to the Regulator an application fee of $125,000. ….
3.7.2 (a) An aApplicant for recognition as both a Recognised Investment Exchange and a
Recognised Clearing House must pay to the Regulator an application fee of $250,000. …
3.7.3 (a) An Applicant for recognition as a Remote Body either a Remote Investment Exchange
or a Remote Clearing House must pay to the Regulator an application fee of $510,000. (b) A Remote Body Investment Exchange or a Remote Clearing House is not required to pay to the Regulator an annual recognition supervision fee to the Regulator of $1,000.
3.7.4 (a) An Applicant for recognition as a Remote Member must pay to the Regulator an
application fee of $1,000.
(b) A Remote Member is required to pay to the Regulator an annual recognition fee of $1,000. ….
3.8 Amending the scope of a Financial Services Permission
3.8.1 An aApplicant applying to amend the scope of an existing Financial Services Permission by
adding one or more Regulated Activities to the permission, must pay to the Regulator an initial

Appendix 1
authorisation fee for each additional Regulated Activity for which it seeks to add to its Financial Services Permission and which is equal to:
(a) the initial authorisation fee applicable to that Regulated Activity; or (b) $5,000, whichever is greater.
3.9 Application for admission of Securities to the Official List of Securities
3.9.1 An aApplicant for admission of Securities to the Official List of Securities must pay to the
Regulator an application fee of $3,000.
3.9.2 ….
3.10 Application to register a Public Fund or provide notification for an Exempt Fund or a
Qualified Investor Fund
3.10.1 Rules 3.10.2 to 3.10.9 do not apply to a Fund Manager, or the Person proposing to be the Fund
Manager, of a Domestic Fund that is a Passported Fund.
3.10.2 In the initial year of the Fund’s registration or notification, as applicable, the fee due in
accordance with Rules 3.10.3, 3.10.5, 3.10.7 or 3.10.8 shall be prorated, based on the number of months remaining from the date of such registration or notification, as applicable, until the end of the calendar year.
3.10.13 The Fund Manager, or the Person proposing to be the Fund Manager, of a Domestic Fund
which is a Public Fund but is not an Umbrella Fund, who is applying to register the Public Fund, must pay to the Regulator an application a registration fee of $3,000, subject to any required adjustment in accordance with Rule 3.10.2.
3.10.24 The Fund Manager, or the Person proposing to be the Fund Manager, of a Domestic Fund
which is a Public Fund but is not an Umbrella Fund, who registered the Fund following an application under Rule 3.10.1 is not required to must pay an annual supervision registration renewal fee to the Regulator of $3,000, due at the commencement of each calendar year following the date of registration of the Public Fund.
3.10.35 The Fund Manager, or the Person proposing to be the Fund Manager, of a Public Fund which
that is an Umbrella Fund, who is applying to register the Fund, must pay to the Regulator:
(a) an initial application registration fee of $3,000 in respect of the Umbrella Fund and its first Sub-Fund; and (b) an additional application registration fee of $1,000 for each of the additional Sub￾Funds of the Umbrella Fund which it seeks to register; subject to any required adjustment in accordance with Rule 3.10.2.
3.10.46 The Fund Manager of a Public Fund which is an Umbrella Fund or the Person making an
application under Rule 3.10.3 is not required to pay an annual supervision registration renewal fee of $3,000 to the Regulator in respect of the Umbrella Fund and its first Sub-Fund and an

Appendix 1
additional annual registration renewal fee of $1,000 for each additional Sub-Fund of the Umbrella Fund that it has registered.
3.10.5 A Fund Manager of a Domestic Passported Fund is not required to pay the Regulator the
application fee required in accordance to Rule 3.10.1.
3.10.7 The Fund Manager, or the Person proposing to be the Fund Manager, of an Exempt Fund, or
a Qualified Investor Fund, that is an Umbrella Fund, must pay to the Regulator:
(a) an initial notification fee of $2,000 in respect of the Umbrella Fund and its first Sub￾Fund; and (b) an additional initial notification fee of $1,000 for each additional Sub-Fund of the Umbrella Fund subject to any required adjustment in accordance with Rule 3.10.2.
3.10.8 The Fund Manager of a Domestic Fund which is an Exempt Fund, or a Qualified Investor Fund,
but is not an Umbrella Fund, must pay an annual notification renewal fee to the Regulator of $2,000, due at the commencement of each calendar year following the date of notification of the Exempt Fund, or Qualified Investor Fund, as applicable.
3.10.9 The Fund Manager of an Exempt Fund, or a Qualified Investor Fund, that is an Umbrella Fund,
is required to pay an annual notification renewal fee of $2,000 to the Regulator in respect of the Umbrella Fund and its first Sub-Fund and an additional annual notification renewal fee of $1,000 for each additional Sub-Fund of the Umbrella Fund.
3.11 Application by an Authorised Fund Manager to manage a Foreign Fund pursuant to FUND
Rule 7.2.1
3.11.1 A Fund Manager applying to manage a Foreign Fund must pay to Regulator an application fee
of $1,000.
3.11.2 A Fund Manager managing a Foreign Fund is not required to pay an annual supervision fee to
the Regulator.
3.11A Management of a Domestic Fund by a Foreign Fund Manager 3.11A.1 A Foreign Fund Manager providing a declaration to the Regulator of its intention to manage a Domestic Fund in accordance with FUND Rule 7.1.1 must pay to Regulator a fee of $5,000. …..
3.13 Providing Financial Technology Services
3.13.1 An aApplicant for a Financial Services Permission to carry on the Regulated Activity of
Developing Financial Technology Services within the RegLab must pay to the Regulator an initial authorisation fee of $1,000. …

Appendix 1
3.14 Operating a Crypto Asset Business
3.14.1 An aApplicant for a Financial Services Permission to carry on the Regulated Activity of
Operating a Crypto Asset Business must pay to the Regulator an initial authorisation fee of (as applicable):
(a) $20,000; or
(b) $125,000 if the Regulated Activity is Operating a Crypto Asset Exchange. …
4. OTHER FEES
4.1 Filing a Prospectus pursuant to MKT Rule 4.6.1(1)(b)
4.1.1 A Person filing a Prospectus with the Regulator in accordance with MKT Rule 4.6.1(1)(b) as
either one or more documents, must pay to the Regulator a filing fee of:
(a) $20,000, where the Prospectus to be filed in either one or more documents relates to Shares, Certificates over Shares and Warrants over Shares; or (b) $10,000, where the Prospectus to be filed in either one or more documents relates to Structured Products, Debentures, Certificates over Debentures and Warrants over Debentures.
4.2 Filing a Prospectus pursuant to FUND Rules 9.3.2(1)(b) or FUND Rule 9.4.2(1)(b)
4.2.1 An Authorised Person Fund Manager filing a Prospectus with the Regulator, in accordance
with FUND Rule 9.2.1(b) must pay to the Regulator a filing fee of $3,000 unless the Prospectus has previously been registered with the Regulator in respect of each such Prospectus filed.
4.2.2 A Fund Manager filing a Supplementary Prospectus with the Regulator, in relation to a Public
Fund in accordance with FUND Rule 9.4.2(1)(b), must pay to the Regulator a filing fee of $13,000 in respect of each such Prospectus filed. …..