On January 1, 2026, the UAE's Securities and Commodities Authority became the Capital Market Authority, under Federal Decree-Law No. 32 of 2025 and Federal Decree-Law No. 33 of 2025. Firms the new law covers have until January 1, 2027 to bring their status into line, according to a Cleary Gottlieb client alert of January 20, 2026. That date is now less than three months away. For a U.S. sponsor that wants to raise capital from UAE investors, the provision that matters is Article 2(1)(d), which reaches any person targeting clients in the UAE, even from outside the country, as Dechert noted on February 3, 2026.
That reach changes the order of work. A sponsor seeking UAE capital has to satisfy two sets of rules at once. Regulation S governs how an offering made outside the United States stays outside it, and the guide to Regulation S offerings covers that half in depth. The UAE's promotion rules decide who may hear about a deal and through whom. The argument here is that the UAE half should be settled first, because it fixes which investors a sponsor can approach, which channel it must use and what its Regulation S paperwork has to support.
Three Regulators Stand Between a Sponsor and UAE Investors
The UAE is not one securities market but three. Onshore UAE falls under the Capital Market Authority, the successor to the Securities and Commodities Authority. The Dubai International Financial Centre has its own regulator, the Dubai Financial Services Authority, and Abu Dhabi Global Market has the Financial Services Regulatory Authority. Each financial free zone has its own laws and rulebooks, while the federal law applies to activity outside them.
The investor's location therefore decides which rulebook applies. A family office licensed in the DIFC and a business owner in onshore Dubai answer to different regulators. Dechert's reading is that Article 2(1)(d) still reaches the targeting of onshore clients from inside the free zones, so a free zone address alone does not take a conversation outside federal rules.
Who Counts as a Professional Investor in the UAE
Every route a sponsor is likely to use rests on the investor qualifying as a professional. Onshore, the rulebook issued under Board Decision No. 13 of 2021 still sets the test, because Cleary Gottlieb reports that earlier decisions stay in force where they do not conflict with the new laws. A professional investor declaration used by FAB Securities sets out the three routes for individuals. They are a net asset test that excludes the primary residence, current or recent employment at a regulator or regulated financial institution, and adequate knowledge and experience in investing in securities.
In the DIFC, DFSA Conduct of Business Rule 2.3.7 requires an individual to hold net assets of at least $1 million and to meet either an employment test or an experience test. ADGM sets its own test in its Conduct of Business Rulebook. None of these categories is U.S. accredited investor status. Regulation S does not ask whether an offshore buyer is accredited, so a sponsor runs the UAE test for UAE purposes and the Regulation S conditions for U.S. purposes.
How UAE Promotion Rules Shape the Raise
Onshore promotion has been tightly drawn since February 1, 2023. Morgan Lewis reported that foreign funds may be promoted onshore only to professional investors, only through a locally licensed promoter and only with the regulator's approval. A June 15, 2026 guide from Kayrouz & Associates adds that promotion to investors who are not professionals closed, with the grace period for existing arrangements ending on March 31, 2024. The same guide warns that "promotion is the regulated act, not the sale", so sending a deck or arranging a meeting can be enough.
Reverse solicitation, where the investor approaches the manager first, survives but in narrow form. The Kayrouz guide advises documenting the investor's first approach in writing, and Morgan Lewis noted that the exemption does not cover free zone funds whose managers target onshore investors. The stakes are real. Under Article 71 of the new law, unlicensed financial activity can bring imprisonment of at least one year and fines of up to AED 250 million, about $68 million, according to Dechert. Because the framework was written with funds in mind, whether a single property syndication counts as a fund in the UAE is a question for UAE counsel.
Where Regulation S Fits Alongside the UAE Rules
Once the UAE channel is settled, Regulation S does the U.S. work. Under Rule 903, an offer counts as made outside the United States when it is an offshore transaction and no directed selling efforts are made in the United States. A U.S. sponsor selling equity to investors abroad generally falls into Category 3, the strictest tier. That means a one year distribution compliance period and a certification from each buyer that it is not a U.S. person. Buyers agree to resell only under Regulation S, registration or an exemption, the securities carry a legend, and the issuer must refuse transfers that break those terms.
These conditions fit naturally with a licensed UAE promoter, because the promoter's materials go only to qualified investors abroad. The risk sits on the U.S. side, where a sponsor's own website or LinkedIn posts can become directed selling efforts under Regulation S if they condition the U.S. market for the offshore tranche. Sponsors running a parallel U.S. raise usually keep the two tracks apart, with Rule 506(c) verification governing the U.S. investors and Regulation S governing the UAE investors.
Tax and Reporting for UAE Investors
The United States has no income tax treaty with the UAE, according to the IRS list of treaty countries. The IRS says dividends paid to nonresident aliens are subject to withholding at 30 percent or a lower treaty rate. With no treaty to lower it, the statutory rate is the starting point for UAE investors. The sponsor's CPA confirms how that applies to each investor and each payment.
Structure decides which forms follow. When offshore investors invest through a U.S. C corporation blocker, the blocker holds the partnership interest, and the investors receive dividends rather than a K-1. Those dividends are reported on Form 1042-S, and the withholding agent files Form 1042. The guide to Forms 8804, 8805 and 1042-S explains how this differs from investors who hold the partnership interest directly.
What Sponsors Can Do Before Raising Capital from UAE Investors
Each step below settles a UAE question before the U.S. paperwork is written. That way the documents describe the channel the sponsor will actually use.
- Map where each prospective investor sits, onshore, in the DIFC or in ADGM, and note which regulator's professional investor test applies.
- Engage UAE counsel and confirm the route before any material is sent, whether a licensed promoter, a registration or a documented approach from the investor.
- Record how and when each investor first made contact, and keep that record with the subscription file.
- Prepare the offering documents and subscription forms to meet the Category 3 conditions, and keep U.S. marketing in its own lane.
- Collect Form W-8BEN or Form W-8BEN-E at onboarding and plan withholding with the CPA before the first distribution.
Raveum offers sponsors an investment management platform, fund administration, a global raise track under Regulation S and an operating partnership for selected sponsors. Offshore investors invest through a U.S. C corporation blocker, and sponsors keep their investor relationships, their property and their business plan. See how the Raveum Sponsor Program works.
Why the UAE Rules Come First
The handover from the Securities and Commodities Authority to the Capital Market Authority did not create the UAE's promotion limits, but it restated their reach and attached a deadline. A sponsor that settles the UAE questions first, meaning who qualifies, who may promote and how first contact is recorded, can then build its Regulation S file around facts rather than assumptions. One that starts with the U.S. paperwork risks documents that describe a channel it cannot lawfully use.
Neither set of rules changes what UAE investors take on. They face the same risks as any investor in a private real estate deal, including loss of capital, illiquidity, falling property values, tenants leaving and distributions not being paid. The offering documents need to say so plainly. The Regulation S guide for U.S. real estate sponsors sets out the U.S. framework those documents rest on.
Frequently Asked Questions
Can a U.S. Real Estate Sponsor Raise Capital from UAE Investors
Yes, provided both sets of rules are met. On the U.S. side, Regulation S allows an offering outside the United States when the sale is an offshore transaction with no directed selling efforts in the United States. On the UAE side, onshore promotion is generally limited to professional investors through a licensed promoter, and the DIFC and ADGM apply their own rules.
Who Qualifies as a Professional Investor in the UAE
It depends on where the investor sits. Onshore, individuals qualify through a net asset test that excludes the primary residence, recent work at a regulator or regulated financial institution, or adequate investment knowledge and experience. In the DIFC, DFSA Rule 2.3.7 requires net assets of at least $1 million plus an employment or experience test. ADGM sets its own test.
Does a Sponsor Need a Licensed Promoter to Market in the UAE
Onshore, generally yes. Since February 1, 2023, foreign funds may be promoted onshore only to professional investors, through a locally licensed promoter and with the regulator's approval. Sending a deck or arranging a meeting can count as promotion. Whether a particular syndication falls under the fund rules or other securities rules is a question for UAE counsel before any material goes out.
Is There a Tax Treaty Between the United States and the UAE
No. The UAE does not appear on the IRS list of countries with a U.S. income tax treaty. The IRS says dividends paid to nonresident aliens are withheld at 30 percent unless a treaty lowers the rate, so UAE investors start from the statutory rate. The sponsor's CPA should confirm how withholding applies to each investor and payment.
What Is Reverse Solicitation in the UAE
Reverse solicitation means the investor approached the manager on its own initiative, with no prior promotion. It can allow a deal to proceed without the usual promoter route, but it is narrow and must be documented, ideally with a written record of the first contact. Law firm guidance notes it does not cover free zone funds whose managers target onshore investors.
When Should a Sponsor Bring in UAE Counsel
Before any material reaches a UAE investor. Promotion itself is the regulated act, and penalties for unlicensed activity under the new UAE capital markets law include imprisonment and fines of up to AED 250 million, about $68 million. Counsel can confirm the investor's classification, the promotion route and whether the deal counts as a fund, while U.S. securities counsel handles the Regulation S conditions.
This article is for general education only and is not legal, tax or investment advice. Securities and tax rules change and depend on each sponsor's facts, so work with qualified securities counsel and tax advisors before launching an offering. Real estate investments involve risk, including loss of capital, illiquidity and changes in property values. Offerings on Raveum are available to eligible investors only and are not open to the general public.
