Below are the key challenges facing private equity sponsors and fund managers in the region today:
1. Regulatory Complexity and Compliance Burden
The DIFC and ADGM offer world-class regulatory environments tailored to global financial services, but operating within them requires strict adherence to evolving rules. Both jurisdictions have introduced increasingly sophisticated frameworks for funds and fund managers, with detailed requirements for licensing, disclosure, AML/CFT compliance, governance, and investor protection.
Whether you are launching a Qualified Investor Fund (QIF), Exempt Fund, or Public Fund, getting the regulatory filing right from day one is crucial. Missteps in fund manager licensing, prospectus drafting, or investor onboarding can derail an otherwise viable strategy.
We support fund sponsors and investment managers in:
- Fund and manager licensing (DFSA and FSRA)
- Drafting of private placement memoranda (PPMs)
- AML/CTF compliance frameworks
- Liaison with regulators during application and ongoing supervision
- Independent directors, governance, and compliance oversight
2. DIFC and ADGM Structures: A Legal Edge in a Global Marketplace
Both the DIFC and ADGM have developed robust ecosystems for private capital, combining legal predictability with tax efficiency. These jurisdictions offer English common law frameworks, 0% corporate tax environments (subject to recent corporate tax reforms), and access to a growing investor base within the Gulf Cooperation Council (GCC), Asia, and Europe.
We routinely assist in setting up:
- DIFC Investment Companies and GP/LP structures
- ADGM Incorporated and Segregated Portfolio Companies
- Fund Platforms and Umbrella Funds
- Co-investment vehicles and sidecar arrangements
We provide tailored advice on the comparative benefits of the DIFC versus ADGM, including regulator expectations, operational costs, flexibility, and investor preferences.
3. Cross-Border Capital Raising
Raising capital from international LPs while domiciled in the UAE presents unique regulatory and tax challenges. From European AIFMD considerations to US SEC rules (e.g., Reg D, Reg S), fund sponsors must be conscious of outbound marketing limitations and inbound tax exposures.
We advise on:
- Investor marketing restrictions in foreign jurisdictions
- Pre-marketing and reverse solicitation strategies
- FATCA and CRS compliance
- Structuring for tax neutrality and minimising withholding tax leakage
4. Fund Formation and Investment Structuring
Each fund strategy—whether buyout, growth equity, venture, distressed, or real estate—requires a bespoke legal structure to reflect the risk profile, asset class, and investor base.
We work with clients to:
- Structure GP/LP entities, carry vehicles, and management companies
- Draft and negotiate LPAs, side letters, subscription agreements, and advisory board terms
- Design waterfall models, hurdle rate provisions, and clawback mechanisms
- Advise on key person events, change of control provisions, and fund wind-down scenarios
5. Operational and Tax Considerations
The UAE's zero-tax environment has long made it attractive for fund domiciliation, but with the introduction of UAE Corporate Tax and the global Pillar Two regime, tax structuring is more nuanced than ever.
We assist with:
- Economic substance compliance
- International tax planning and treaty analysis
- Structuring for management fee and carry income
- Re-domiciliation of existing funds into DIFC or ADGM
We work closely with tax advisors and administrators to ensure alignment between legal structure, fund economics, and reporting requirements.
6. M&A and Portfolio Transactions
Private equity funds operate in fast-paced, deal-driven environments where execution risk, legal diligence, and post-deal integration are critical. Our M&A team is experienced in cross-border buyouts, bolt-on acquisitions, divestitures, and corporate reorganisations.
Our services include:
- Target due diligence and risk assessment
- SPA negotiation, warranty and indemnity protection
- Structuring of acquisition vehicles
- Post-acquisition integration support
- Exit strategy planning and dual-track processes
7. Dispute Management and Investor Relations
As funds scale and institutionalise, they face increased exposure to legal disputes, whether with portfolio companies, investors, regulators, or counterparties. Proactive legal risk management and dispute resolution frameworks are vital.
We support clients with:
- LP dispute mitigation and arbitration planning
- Regulatory investigations and compliance reviews
- GP removal, replacement, and succession planning
- Portfolio company litigation support
