A manager raising a first closed-ended fund of USD 60 million has, until now, been authorised on roughly the same terms as one running USD 2 billion. Same capital maths, same Finance Officer, same internal audit function. Abu Dhabi Global Market changed that on 16 September 2026, and the saving is real enough to be worth a morning of your time.
TL;DR: ADGM's FSRA created a Sub-Threshold Fund Manager category, effective 16 September 2026. If committed capital across all your funds stays at or below USD 200 million, every fund is closed-ended and none is open to retail clients, you hold USD 50,000 base capital with no expenditure-based top-up, and you drop the mandatory Finance Officer and internal audit function.
What ADGM Changed on 16 September 2026
The FSRA published final amendments to its funds rulebooks, and they took effect the same day (White & Case, 2026). The headline is a new licence tier sitting below the standard fund manager permission, built for managers whose funds are small enough that full-scope prudential rules were never a sensible fit.
Three things arrived together: the Sub-Threshold Fund Manager category, an Institutional Fund Manager category for institutional-only strategies, and tighter conditions on foreign managers. ADGM was running 161 fund and asset managers overseeing 220 funds as of Q3 2025, with assets under management up 48% year on year (ADGM, 2025). A lot of that growth sits at the smaller end, which is why the tier exists. The same package also added a framework for employee investment vehicles, letting staff participate in the private funds their firm manages.
Who Qualifies as a Sub-Threshold Fund Manager?
Four tests, and you need all four. Committed capital across every fund you manage must not exceed USD 200 million. Every fund must be closed-ended. None may be open to retail clients, so you are limited to Exempt Funds and Qualified Investor Funds. And you cannot run a host model, lending your licence so a third-party sponsor manages the strategy (White & Case, 2026).
The committed capital test is aggregate, not per fund. Three funds at USD 80 million each puts you outside the category even though no single fund is close to the ceiling. That catches managers who think in individual vehicles rather than across the platform.
If your strategy needs an open-ended vehicle, or you want retail money, the standard permission is still the only route.
What Does the Lighter Licence Actually Save?
Capital and two appointments. A standard ADGM fund manager holds the higher of USD 50,000 or an expenditure-based capital requirement set at 13/52 of annual audited expenditure (Cleary Gottlieb, 2026). A Sub-Threshold manager holds a flat USD 50,000 with no expenditure-based element at all.
Run that through a manager spending USD 400,000 a year. Thirteen weeks of that is USD 100,000, so the standard route locks away twice what the new tier asks. The mandatory Finance Officer appointment and the internal audit function both fall away too, which for a small team is the larger saving in practice.
Professional indemnity insurance stays. So do the Senior Executive Officer, licensed director, Compliance Officer and Money Laundering Reporting Officer roles. What we see most often is a founder reading "lighter regime" as "fewer people", then discovering the appointed-function list is still four deep.
Audited Accounts and Corporate Tax Still Apply
Nothing in the FSRA package touches your tax position, and this is where the saving gets misread. Fund management supervised by the FSRA is a Qualifying Activity, so an ADGM manager can earn 0% corporate tax on qualifying income as a Qualifying Free Zone Person. Keeping that status needs adequate substance in the zone, transfer pricing compliance, IFRS audited financial statements, and non-qualifying income held inside the de-minimis limit of the lower of 5% of total revenue or AED 5 million (Federal Tax Authority, 2024).
Dropping the internal audit function does not drop the external audit. One question clients always ask is whether the lighter prudential tier shortens the accounts timetable. It does not, and our comparison of DIFC, ADGM and DMCC audited accounts deadlines sets out what you are still filing and when.
What Happens If You Cross USD 200 Million?
You notify the FSRA and move to full-scope status. Eligibility is a continuing condition, so exceeding the ceiling pulls back the standard prudential obligations: rebuilding the expenditure-based capital calculation, appointing a Finance Officer and standing up an internal audit function.
Treat that as a fundraising planning point, not a compliance afterthought. A final close that takes you from USD 190 million to USD 230 million carries a licence upgrade, a bigger locked capital figure and at least one new hire. Model the cost before you accept the commitment, because the step is not gradual.
Managers must also tell investors which regime they operate under, so the marketing pack needs updating before you raise again. If you are weighing where to sit at all, our note on how UAE free zone businesses lose their 0% tax rate covers the substance side of that decision, and the qualifying income rules explain what management and performance fees need to look like.
Do Existing Venture Capital Managers Need to Act?
Yes, and there is a date. The FSRA revised the Venture Capital Fund Manager framework at the same time, replacing the old USD 100 million total subscription cap with an aggregate committed capital cap of USD 200 million across all funds managed, and capping VCFM authorisation and supervision fees at USD 10,000 (White & Case, 2026). Existing VCFMs and foreign fund managers have until 31 March 2027 to meet the new rules, and the FSRA says it will contact affected firms directly.
Do not wait for that letter if you already know your structure has moved. Existing authorised firms wanting to switch to Sub-Threshold, Institutional Fund Manager or Institutional Fund Asset Manager status apply to the FSRA on its prescribed change-of-status forms; new entrants apply through the normal ADGM authorisation route, which has historically run three to four months for a well-prepared file.
Frequently Asked Questions
Does a Sub-Threshold Fund Manager still need professional indemnity insurance?
Yes. The Sub-Threshold tier removes the expenditure-based capital requirement, the mandatory Finance Officer and the internal audit function, but professional indemnity cover remains in line with the requirements applying to other ADGM fund managers. Budget for it as a fixed annual cost.
Can a Sub-Threshold Fund Manager run an open-ended fund?
No. Every fund under management must be closed-ended, and none may be offered to retail clients. A single open-ended vehicle or retail offering takes you out of the category entirely, regardless of how small the committed capital is.
How do you move an existing ADGM licence onto the new tier?
Apply to the FSRA using its prescribed forms for a change of authorised status. The regulator confirmed existing authorised persons can switch to Sub-Threshold, Institutional Fund Manager or Institutional Fund Asset Manager status this way, so it is a variation of permission rather than a fresh licence application.
What is the Institutional Fund Manager category for?
Managers whose funds take institutional money only. Investors must subscribe at least USD 5 million each and natural persons cannot hold units. Capital is the higher of USD 50,000 or 6/52 of annual audited expenditure, so it sits between the Sub-Threshold tier and the standard permission.
Thinking about an ADGM fund manager licence, or holding capital you may no longer need to lock away? Get in touch and we will run the committed capital test across your funds, check whether the Sub-Threshold conditions hold, and map what it changes for your audit and corporate tax position.