The Dubai International Financial Centre has unveiled the world’s first venture studio regulations as Dubai seeks to further develop its start-up infrastructure and promote itself as a centre for innovation.
DIFC, one of the fastest-growing financial centres in the Middle East, Africa and South Asia region, is seeking to promote the growth of innovative start-ups and scale-ups in the region, according to a statement on Thursday.
Venture studios build start-ups, starting from idea conceptualisation to launch, while also providing capital and guidance. It also supports their growth using internal capabilities and external support.
“The regulations provide the first legislative framework for venture building globally, forming a tailored ecosystem for venture building, entrepreneurs, start-ups and investors to operate from the DIFC,” Jacques Visser, chief legal officer at DIFC, said.
Dubai has introduced regulatory changes such as golden visas, green visas, and freelancer and entrepreneur visas to support the ecosystem as the emirate seeks to become a global centre for start-ups and scale-ups.
The emirate, which is home to 39 per cent of the Middle East and North Africa’s scale-ups, accounted for almost 57 per cent of the scale-up funding in the region last year, a report, developed by Dubai Chamber of Digital Economy with Mind the Bridge and Crunchbase, showed.
The DIFC launched a venture studio platform exclusively focused on “ubiquitous finance and digital asset technologies” in April 2022.
The DIFC’s new Studio Launchpad will be supported by an international group of venture building experts, digital asset operators and emerging technology strategists, and it aims to attract a consortium of start-up and corporate venture studios.
Over the next five years, more than 20 venture building studios are expected to set up in the DIFC and launch more than 200 ventures, including more than 100 scale-ups (a company with 10 or more employees that has an average annual growth of 20 per cent over the past three years) and 10 that will be valued at more than $1 billion.
These companies are expected to create more than 8,000 innovation-focused jobs in Dubai, the DIFC said at the time.
The financial hub has already broken ground on a new 13,935 square metre purpose-built facility that will house the Studio Launchpad team.
The DIFC also entered into pacts with banks and venture companies that will help to attract more than Dh2 billion in venture capital. It signed corporate partnership agreements for its DIFC Launchpad with Mashreq, Commercial Bank of Dubai and global payments company Mastercard in March this year.
Following a 30-day public consultation period in February, the board of directors of the DIFC Authority enacted the Venture Studio Regulations, which supports the DIFC Studio Launchpad initiative by providing a legislative framework for venture building.
The regulations will establish legal certainty around the venture building model and clarify how venture studios, entrepreneurs and start-ups interact with each other and the wider market, the DIFC said.
It will also make it easier to do business within the venture studio model by implementing specific operational measures to enable the incubation of new business ideas, sponsorship of entrepreneurs and reduced costs for scaling new businesses.
The regulations came into effect on April 26.
The DIFC recently announced proposed amendments to the Data Protection Regulations to enhance the current data protection framework within the financial free zone.
The proposed regulations have been posted for a 30-day public consultation period with the deadline for providing comments ending on May 17.
The DIFC also made minor amendments to the Prescribed Companies Regulations to align the definition of “family”, in the context of family-operated businesses that benefit under the regime, with the recently enacted DIFC Family Arrangements Regulations.
The regulatory framework will govern how UAE, regional and global family-owned businesses, and ultra-high net worth individuals and private wealth offices operate from the DIFC.
FA Cup fifth round draw
Sheffield Wednesday v Manchester City
Reading/Cardiff City v Sheffield United
Chelsea v Shrewsbury Town/Liverpool
West Bromwich Albion v Newcastle United/Oxford United
Leicester City v Coventry City/Birmingham City
Northampton Town/Derby County v Manchester United
Southampton/Tottenham Hotspur v Norwich City
Portsmouth v Arsenal
In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
- Energy engineer: Dh25,000 to Dh30,000
- Production engineer: Dh30,000 to Dh40,000
- Data-driven supply chain management professional: Dh30,000 to Dh50,000
- HR leader: Dh40,000 to Dh60,000
- Engineering leader: Dh30,000 to Dh55,000
- Project manager: Dh55,000 to Dh65,000
- Senior reservoir engineer: Dh40,000 to Dh55,000
- Senior drilling engineer: Dh38,000 to Dh46,000
- Senior process engineer: Dh28,000 to Dh38,000
- Senior maintenance engineer: Dh22,000 to Dh34,000
- Field engineer: Dh6,500 to Dh7,500
- Field supervisor: Dh9,000 to Dh12,000
- Field operator: Dh5,000 to Dh7,000
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
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The struggle is on for active managers
David Einhorn closed out 2018 with his biggest annual loss ever for the 22-year-old Greenlight Capital.
The firm’s main hedge fund fell 9 per cent in December, extending this year’s decline to 34 percent, according to an investor update viewed by Bloomberg.
Greenlight posted some of the industry’s best returns in its early years, but has stumbled since losing more than 20 per cent in 2015.
Other value-investing managers have also struggled, as a decade of historically low interest rates and the rise of passive investing and quant trading pushed growth stocks past their inexpensive brethren. Three Bays Capital and SPO Partners & Co., which sought to make wagers on undervalued stocks, closed in 2018. Mr Einhorn has repeatedly expressed his frustration with the poor performance this year, while remaining steadfast in his commitment to value investing.
Greenlight, which posted gains only in May and October, underperformed both the broader market and its peers in 2018. The S&P 500 Index dropped 4.4 per cent, including dividends, while the HFRX Global Hedge Fund Index, an early indicator of industry performance, fell 7 per cent through December. 28.
At the start of the year, Greenlight managed $6.3 billion in assets, according to a regulatory filing. By May, the firm was down to $5.5bn.
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
