On 16 September 2026 the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market published a finalised regulatory update to the Funds Framework — closing Consultation Paper No. 12 of 2025. Three new Fund Manager categories with streamlined regulation are introduced (Sub-Threshold Fund Manager, Institutional Fund Manager, Institutional Fund Asset Manager), the Foreign Fund Manager framework has been revised, and employees are now allowed to invest into private funds managed by their employer. A transition window until 31 March 2027 applies to existing VCFMs and FFMs. Here is what actually changed and what managers and family offices should be doing now.
What has been published
The final FSRA package consists of two linked documents: an updated FSRA Rules (Funds) as at 16.09.2026 and an accompanying Supplementary Guidance on Specialised Fund Manager Categories [VER01.160926]. Formally, this closes the process opened by Consultation Paper No. 12 of 2025 back in November 2025 — FSRA has worked through the industry feedback and issued the final rules. In legal weight this is a binding regulatory layer applicable to every Authorised Person operating in ADGM's fund management space.
The design logic is proportionality. The classic Fund Manager regime was built with large managers and retail investors in mind; for emerging managers, family offices and institutional boutiques it proved operationally heavy. The new categories close that gap by removing some requirements for profiles that carry a naturally lower investor risk.
Three new categories — what each one means
The core substance of the reform sits in three specialised categories:
- Sub-Threshold Fund Manager (STFM) — a lighter regime for managers of smaller private funds. Cap: up to $200 million committed capital across all funds under management. It echoes sub-threshold approaches in the EU (AIFMD sub-threshold) and the UK (Small AIFM), tailored to ADGM. Target profile: a first fund out of a family office, a VC/PE solo-GP, an emerging manager.
- Institutional Fund Manager (IFM) — a regime for managers of Qualified Investor Funds serving institutional investors only. Eligibility: minimum subscription of $5 million per investor and a ban on natural persons as unitholders. Prudential minimum — the higher of $50,000 base capital or 6/52 of annual audited expenditure; a Finance Officer and internal audit function are not mandatory, with prudential compliance vested in the SEO.
- Institutional Fund Asset Manager (IFAM) — the third new category, for asset managers providing investment management to institutional-only funds. Separate application form, streamlined regulation.
ADGM's logic: lower operational and capital overhead where there is no retail investor by design, and where professional LPs are capable of bearing higher counterparty risk themselves.
Foreign Fund Manager: framework revised
Alongside the new categories FSRA has also revised the Foreign Fund Manager (FFM) regime — managers whose main regulatory home sits outside ADGM but who serve ADGM investors or funds. The revision closes some ambiguity that had built up since 2015: the boundaries of FFM activity, the substance expected in ADGM and the interface with home-regulator standards are now sharper. Existing FFMs should re-check the perimeter of their ADGM activity and, if needed, adjust their operating model.
Employee investment into private funds — a new option
A separate strand of the reform expands employee co-investment options. Employees of a Fund Manager can now invest into private funds managed by their employer. This aligns ADGM with standard international practice on alignment of interest between the management team and LPs, removing previous restrictions. For family offices and boutique fund managers this is an additional tool for retention packages and for structuring carry / co-invest positions.
Transition until 31 March 2027
Existing managers get a hard deadline of 31 March 2027 — first and foremost the Venture Capital Fund Managers and Foreign Fund Managers. FSRA has stated it will contact affected managers about transition arrangements, but relying on that passively is risky — early submissions leave far more room to negotiate any non-standard structures with FSRA's authorization team. Firms already authorised in other categories can submit an application form to change status — a distinct process, with a priority track for existing players.
What this means for the market
Three practical takeaways.
- Lower entry barrier for family offices and emerging managers. A family office that previously saw ADGM as «too heavy» for managing capital for a narrow LP base now has two realistic options — IFM or STFM. Both deliver a legitimate ADGM licence with lighter operational and capital overhead. For those already weighing DIFC versus ADGM, the reform tilts the balance towards Abu Dhabi, especially in private wealth.
- Regulatory optimisation — not a tax one. The changes touch authorisation and prudential requirements, but they do not alter the UAE's overall tax regime: a Fund Manager remains a UAE Corporate Tax taxpayer on general terms (9% above AED 375,000), except in Qualifying Free Zone Person cases with strictly qualifying income. We covered who falls in scope and on what terms in our piece on UAE Corporate Tax at 9% above AED 375,000.
- Existing managers — do not drag it to the deadline. Until 31 March 2027 VCFMs and FFMs have a window for a legal memo, gap analysis and transition — but the authorization team's queue will grow closer to the deadline. Any non-standard structure (multi-manager platform, cross-border sub-advisory, employee co-invest vehicle) is worth budgeting 6–9 months with buffer time. The broader mechanics of running corporate structure changes and the related regulatory steps in the UAE are laid out in our guide on changing your UAE company structure.
A practical plan for managers
Step-by-step checklist for the next 3–6 months, both for existing FM/VCFM/FFM and for family offices considering registration:
- Pick the target category. A legal memo from an ADGM-focused advisor: STFM (if committed capital <$200M), IFM (if the LP base is institutional-only with $5M+ subscription), IFAM (if the model is asset management to institutional-only funds), classic FM (if retail or AUM above the caps).
- Gap analysis. Reconcile existing systems, controls, capital position and staffing with the target category's requirements. Separately — governance roles (Finance Officer, SEO, MLRO), if the category allows simplification.
- Application form and submission. Assemble the pack: application form for the status change, updated Rulebook Chapter compliance manuals, evidence of capital, business plan under the new category.
- Employee co-invest framework. If the new employee investment option into private funds is planned, put the internal policy and procedures in place before submission so FSRA sees a finished construction.
- Monitor FSRA outreach. Keep official channels open so as not to miss FSRA outreach on transition arrangements — especially for VCFMs and FFMs.
What next
Key monitoring points: publication of FSRA statistics on status-change applications, additional guidance on the finer application points of the new categories, potential technical amendments after the first authorisation cases. Updates land on adgm.com under Media / Announcements — we will keep tracking and updating this piece.
