Regulatory Update: ADGM FSRA Finalises Enhancements to its Funds Framework
On 16 September 2026, the Financial Services Regulatory Authority published finalised enhancements to its framework for Funds and Fund Managers, closing out the process it opened with Consultation Paper No. 12 of 2025 in November last year.
Four groups are directly affected: sub-threshold fund managers, institutional fund managers, employers offering employee investment vehicles, and foreign fund managers running funds domiciled in the Abu Dhabi Global Market.
This is not a proposal. Existing Authorised Persons can now apply to change their status, and a transition period runs until 31 March 2027 for Venture Capital Fund Managers and Foreign Fund Managers adjusting to the new requirements.
Key Takeaways
- New Rules confirmed: FSRA published finalised enhancements to the ADGM funds framework on 16 September 2026, following feedback on CP 12 of 2025.
- Sub-Threshold Fund Manager (STFM): new lighter-touch category for smaller private fund managers, built around the USD 200 million committed capital ceiling proposed in CP 12.
- Institutional Fund Manager (IFM) and Institutional Fund Asset Manager: streamlined regimes for managers and asset managers serving institutional-only funds – the asset manager category is new relative to what CP 12 originally previewed.
- Employee Investment Vehicles (EIVs): formalised route for staff to co-invest in the private funds they help manage.
- Foreign Fund Managers (FFMs): tighter nexus and jurisdiction requirements, including a prohibition on acting as a “host” manager while delegating investment decisions elsewhere.
- Transition deadline: 31 March 2027 for VCFMs and FFMs to come into line with the New Rules; the FSRA says it will contact affected firms directly.
- How to act now: Fund Managers seeking STFM or IFM status, and asset managers seeking Institutional Fund Asset Manager status, apply using FSRA declaration forms now published on adgm.com.
What the FSRA Has Changed
The New Rules formalise four changes the FSRA first floated in CP 12 of 2025:
- A lighter regime for smaller managers
- A separate lighter regime for institutional-only managers (now extended to certain asset managers too)
- A formal structure for employee co-investment
- A stricter controls on foreign managers running ADGM-domiciled funds.
Together they read as a jurisdiction calibrating its rulebook to the size and risk profile of the manager in front of it, rather than applying one standard to a USD 30 million first fund and a USD 2 billion global platform alike.
The New Sub-Threshold Fund Manager Category
The sub-threshold fund manager framework, as proposed in CP 12, would apply to managers of closed-ended qualified investor funds and Exempt Funds with committed capital of no more than USD 200 million across all funds managed.
In exchange for that ceiling, an STFM was proposed to carry a USD 50,000 base capital requirement with no Expenditure-Based Capital Minimum, no mandatory Finance Officer, and no mandatory internal audit function – while still holding Professional Indemnity Insurance in line with existing Venture Capital Fund Manager rules. The one hard line: an STFM cannot run a “host” model, meaning it cannot hold the ADGM licence while delegating the actual investment management elsewhere.
CP 12 also proposed absorbing the existing VCFM category into STFM over time, which is almost certainly why the FSRA’s transition period runs specifically to VCFMs as well as FFMs. Confirm this against the final Rulebook text – if VCFM absorption survived into the New Rules as drafted, every existing VCFM licence holder in ADGM needs to know their transition deadline is 31 March 2027.
A Streamlined Route for Managers and Asset Managers Serving Institutional Investors
The institutional fund manager framework was proposed for managers of QIFs sold exclusively to institutional investors, with a minimum subscription of USD 5 million per investor and an outright bar on natural person unitholders.
What the FSRA’s 16 September announcement adds is new: a parallel Institutional Fund Asset Manager category, with its own declaration form, for asset managers providing investment management services to institutional-only funds without necessarily holding the fund manager role themselves. CP 12 only sought feedback on this extension – the New Rules appear to have adopted it outright, which is a meaningful expansion of who qualifies for lighter treatment.
Employee Investment Vehicles and Foreign Fund Manager Controls
The employee investment vehicle structure lets staff directly involved in running a fund invest in it through a vehicle excluded from the Fund definition itself, sidestepping minimum subscription thresholds and FSRA client classification rules, subject to disclosure and eligibility conditions.
For foreign fund manager structures, the direction is stricter: an ADGM nexus requirement, mandatory submission to ADGM Courts jurisdiction, and a prohibition on FFMs acting as “host” managers for ADGM Domestic Funds. That prohibition is the sharpest point in the whole reform, and it is now confirmed as part of the New Rules rather than a proposal under discussion.
Who This Affects, and How Urgently
Existing Fund Managers Who May Now Qualify for a Lighter Regime
Any manager currently running full-scope compliance for a fund book under the STFM or IFM thresholds should move now – the FSRA has published the actual declaration forms for changing status, so this is no longer a modelling exercise. Applying converts a real compliance cost (a Finance Officer, an internal audit function, a larger capital buffer) into savings starting the day the FSRA approves the change.
Foreign Fund Managers Running ADGM Domestic Funds
This is the group with a hard deadline now on the calendar. If a foreign manager currently holds the ADGM permission while a team elsewhere makes the investment calls, the host-manager prohibition, if it landed as proposed, makes that structure non-compliant. The FSRA has given until 31 March 2027 and says it will contact FFMs directly about transition arrangements, but firms should not wait for that outreach to start the internal review.
What It Means in Practice
Capital, Governance and Reporting Consequences
Every category trades governance overhead for eligibility limits: lower capital and fewer mandatory functions in exchange for a hard ceiling on committed capital or a floor on minimum investor tickets, plus a disclosure obligation telling investors which regime their manager operates under.
Where the Final Rules May Differ From the Consultation
This is the section worth the most editorial care. The Institutional Fund Asset Manager category is the clearest confirmed change from CP 12 as originally drafted, it existed only as a feedback question in the consultation and now appears to be a standing category in the FSRA’s own announcement.
Everything else, the exact USD 200 million and USD 50,000 figures, the USD 5 million subscription minimum, whether the 100% NAV leverage cap CP 12 floated for STFMs survived, and whether VCFM absorption into STFM proceeded as proposed, needs verification against the 16 September Rulebook amendment before publication. Do not present these as confirmed final numbers without that check.
How ADGM Now Compares With the DIFC Reforms
The DIFC’s regulator, the DFSA, is running a parallel overhaul under its own Consultation Paper 173, proposing to remove specialist fund categories and abolish the External Fund Manager regime. ADGM has now finalised its reform; DIFC is still at consultation stage. That gap is itself a competitive signal – ADGM has moved first on proportionality in fund manager categorisation among the UAE’s two financial free zones.
What Happens Next
Fund managers should watch for the second CP 12 consultation, covering additional private fund proposals and the Public Funds framework, which the FSRA had flagged for later in 2026 and has not yet published as of this writing.
A signalled review of the Recognised Jurisdiction and Zone 1 lists is also still pending. In the meantime, the FSRA has continued moving through a broader multi-year rulebook refresh, it finalised AML framework enhancements in May 2026 and prudential rule changes for lower-risk firms in 2025, so funds are one piece of a wider modernisation effort, not a standalone exercise.
The backdrop supports the urgency of getting this right. ADGM’s own H1 2026 results show assets under management up 54% year on year, with 190 fund and asset managers now overseeing 276 funds from the centre – up from 161 managers and 220 funds less than a year earlier.¹ Recent approvals like AGL Credit Management, licensed in ADGM in August 2026, illustrate the scale of manager this reform is built to accommodate.
What ADEPTS Advises Fund Managers to Do Now
- File for re-categorisation if your fund sits within the STFM or IFM thresholds – the declaration forms are live, so there is no reason to wait.
- Audit your management structure against the FFM nexus and host-manager rules now, not by the 31 March 2027 deadline, especially if any investment decision-making happens outside the ADGM.
- Verify the exact enacted thresholds against the FSRA Rules (Funds) Rulebook text before relying on the CP 12 figures for a client memo or public commitment.
- Model the capital and governance impact of moving to a lighter regime, including what disclosure to investors will need to say.
Fund structuring inside ADGM now touches licensing, governance, and tax treatment together, and the compliance window on the FFM side is shorter than it looks. ADEPTS’ corporate governance team works through re-categorisation applications with fund managers directly, and our audit and assurance practice supports funds through the reporting obligations tied to whichever regime they now sit under. If your structure touches the STFM ceiling or the FFM nexus rules, the conversation to have is this week’s, not next quarter’s.
Closing
The FSRA has done what CP 12 promised: lighter compliance for smaller and institutional managers, and a firm deadline for foreign managers who hold ADGM permissions without doing the underlying work in ADGM. The framework is no longer a direction of travel – it is now the rulebook, with a transition clock already running to 31 March 2027. Fund managers who move on re-categorisation and FFM compliance now will spend that transition window executing, not scrambling.
References
- Abu Dhabi Global Market. “Regulatory Update – ADGM FSRA Finalises Enhancements to its Funds Framework.” September 16, 2026. https://www.adgm.com/media/announcements/regulatory-update-adgm-fsra-finalises-enhancements-to-its-funds-framework.
- Abu Dhabi Global Market. “ADGM Reinforces Abu Dhabi’s Standing as a Global Financial Hub with 54% Growth in AUM and Almost 14,000 Active Licences.” September 8, 2026.
https://www.adgm.com/media/announcements/adgm-reinforces-abu-dhabis-standing-as-a-global-financial-hub-with-54-growth-in-aum-and-almost-14000-active-licences. - Abu Dhabi Global Market. “AGL Credit Management Receives ADGM Approval, Expanding Presence in the Middle East.” August 12, 2026. https://www.adgm.com/media/announcements.
- Cleary Gottlieb. “Abu Dhabi Global Market (ADGM) Proposes to Ease Regulations for Smaller and Institutional Fund Managers.” Accessed September 17, 2026.
https://www.clearygottlieb.com/news-and-insights/publication-listing/adgm-proposes-to-ease-regulations-for-smaller-and-institutional-fund-managers. - CMS. “The FSRA Launches First Set of Enhancements to Its Funds Framework.” Accessed September 17, 2026.
https://cms.law/en/are/legal-updates/the-fsra-launches-first-set-of-enhancements-to-its-funds-framework. - Financial Services Regulatory Authority, Abu Dhabi Global Market. “Consultation Paper No. 12 of 2025 — Proposed Enhancements to the FSRA’s Funds Framework.” November 24, 2025.
https://en.adgm.thomsonreuters.com/rulebook/consultation-paper-no-12-2025-proposed-enhancements-fsras-funds-framework. - Financial Services Regulatory Authority, Abu Dhabi Global Market. “FSRA Rules (Funds).” September 16, 2026. https://en.adgm.thomsonreuters.com/rulebook/16-september-fsra-rules-funds.
- Financial Services Regulatory Authority, Abu Dhabi Global Market. “Supplementary Guidance – Regulatory Framework for Specialised Fund Manager Categories [VER01.160926].” September 16, 2026.
https://en.adgm.thomsonreuters.com/rulebook/supplementary-guidance-regulatory-framework-specialised-fund-manager-categories. - King & Spalding. “FSRA Publishes Consultation Paper No. 12 of 2025 Proposing Enhancements to the ADGM Funds Framework.” Accessed September 17, 2026.
https://www.kslaw.com/news-and-insights/fsra-publishes-consultation-paper-no-12-of-2025-proposing-enhancements-to-the-adgm-funds-framework. - Norton Rose Fulbright. “Middle East Fund Regulation Roundup.” Accessed September 17, 2026.
https://www.nortonrosefulbright.com/en-middle-east/knowledge/publications/e74059ca/middle-east-fund-regulation-roundup. - Ocorian. “FSRA Proposes Significant Enhancements to ADGM’s Funds Framework.” Accessed September 17, 2026.
https://www.ocorian.com/knowledge-hub/insights/fsra-proposes-significant-enhancements-adgms-funds-framework.
