A Private Financing Platform (“PFP”) enables peer to peer investment and is usually aimed at private companies, such as start-ups and small to medium enterprises (“SMEs”) to source alternative financing from private and institutional investors. PFP’s are becoming an important tool for economic growth, especially when the banking system is becoming ultra-conservative in relation to lending businesses capital to invest and grow. PFP’s, also known as Crowdfunding Platforms, are a relatively new addition to the financial sector and therefore regulations around these structures have been ad hoc, in fact, some jurisdictions provide no regulatory framework for this type of product yet.
PFP Regulations in the ADGM
The Financial Services Regulatory Authority ("FSRA"), the financial services regulator in the Abu Dhabi Global Market ("ADGM"), issued their “Regulatory Framework for Private Financing Platforms” back in September 2018 setting out the conditions to apply for a PFP Operator’s licence and have since then gone on to create regulatory frameworks for “new” alternative financial services sectors including Virtual Assets and Digital Investment Managers (also known as robo-advisors).
What are the FSRA Regulatory Requirements for PFPs?
When considering making an application to the FSRA, firms must consider their ongoing regulatory requirements as well as addressing the FSRA threshold conditions. There are several regulatory and non-regulatory factors to consider before going ahead with an application which would impact the firm's ability to actually “do” the business. These factors include opening a bank account, marketing your product and conduct requirements. There may be others relevant to your specific application which you will need to discuss with your consultant.
Download our helpful guide to Private Financing Platforms in the ADGM for details of:
- The seven scenarios which would amount to a PFP in the ADGM
- The risks involved in PFPs
- Marketing and Exempt Offers
- Conduct of Business
- Capital requirements and fees
Support with your PFP Application
If you are considering setting up a PFP in the UAE contact us to discuss what options are available to you. We can help you navigate the complexities of the regulatory application as well as provide practical advice on setting up your business.