The ADGM Exempt Fund is one of three main fund types under the FSRA Fund Rules — sitting alongside the Qualified Investor Fund (QIF) and the Public Fund. The Exempt Fund is designed for sophisticated professional investors with a meaningful minimum subscription threshold. It is the workhorse fund vehicle for mid-market ADGM-domiciled funds.
Investor base and structural limits.
- Open only to Professional Clients (institutional and high-net-worth individuals meeting the FSRA professional-client criteria).
- Minimum subscription of USD 50,000 per investor.
- Maximum 50 unit holders.
- Not retail-marketable.
The constitutional framework.
An Exempt Fund can be structured as an open-ended or closed-ended fund and can take a range of legal forms — investment company, investment partnership, protected-cell company. The constitutional documents (Prospectus, Articles, LPA depending on form) reflect the Exempt Fund's lighter disclosure obligations relative to the Public Fund.
The manager.
An Exempt Fund is managed by an FSRA-licensed fund manager. The manager's authorisation category depends on the manager's broader activity profile. For most institutional ADGM fund-management businesses the manager is licensed for managing collective investment funds (the FSRA equivalent of the DFSA Cat 3C licence).
Service providers.
An Exempt Fund typically appoints:
- Fund manager (FSRA-licensed).
- Fund administrator (FSRA-recognised or international).
- Custodian (FSRA-licensed Cat 3B equivalent or international with FSRA recognition).
- Auditor (recognised).
- Legal adviser.
Conduct and disclosure.
The Exempt Fund's disclosure obligation is materially lighter than the Public Fund's. The Prospectus must contain enough information for Professional Clients to make an informed decision, but is not subject to the line-by-line FSRA review applicable to Public Funds.
Exempt Fund versus QIF.
| Feature | Exempt Fund | QIF |
|---|---|---|
| Investor type | Professional Client | Professional Client |
| Min subscription | USD 50,000 | USD 500,000 |
| Max unit holders | 50 | 50 |
| Constitutional flexibility | High | Highest |
| FSRA review on launch | Standard | Notification-based |
Conclusion.
The ADGM Exempt Fund is the mid-market workhorse fund vehicle. For asset managers establishing an ADGM-domiciled fund targeting institutional and HNW investors, the Exempt Fund offers a balance of investor reach and operational simplicity. Neo Legal supports fund managers across the Exempt Fund structuring and the parallel FSRA manager licensing.
