The UAE established organized capital markets to safeguard the investors and guarantee an orderly conduct in the market. This is given the role of the SCA in the administration of securities-related undertakings in the UAE mainland. The regulatory body not only prescribes the manner in which market participants can operate in the market, but it also specifies how they speak to customers and present investment opportunities.
Especially over the course of recent years, Category 5 authorization has gained increasing interest within brokerage brands, referral-based firms, and technology-driven platforms. Its growth has been driven by the ability to set a presence in the UAE that is more focused on outreach and client guidance, without client execution or holding assets.
Those who usually explore this authorization include international brokerage groups, introducers, advisory-focused firms, and digital platforms that connect investors with external institutions.
Legal Structure Governing Capital Markets
The securities activity is regulated by federal laws in the UAE and depicts regulated behavior, including supervisory powers and application measures. These are followed by the rulebooks adopted by the SCA, which are quite comprehensive and contain official decisions classifying activities according to the risk and market impact involved.
In fact, the SCA’s framework classifies permissible activities into several categories. They range from 1 to 4, with each one progressively adding greater liabilities. This includes the execution of trades, asset custody, and portfolio management. On the weaker end of the spectrum lies Category 5 for entities less structured and serving only in the capacity of giving advice, recommendations, and introductions, nothing involving transactional aspects.
What Is SCA Category 5?
The formal name for Category 5 is Advisory and Arrangement. It legally provides for the structuring of advice to flow among entities and provision of investment possibilities while remaining outside the transaction chain. What this means at the very core is quite simple: to inform, promote, and introduce. This is without executing trades, safeguarding assets, or overseeing portfolios. In this way, the company may operate visibly in the UAE with all execution-related activities delegated to external counterparties.
Permitted Scope of Activity
Category 5 will allow such actions:
- The provision of investment advice;
- Promotion of securities and opportunities in the market;
- Introduction of clients to authorized institutions;
- Advising in relation to the raising of capital and the issuance of securities.
Moreover, very strict parameters are applied. Category 5 cannot include:
- Principal trading;
- Receiving and holding client money;
- Exercise of investment portfolio control;
- Order execution.
It is equally important to observe this separation for the continued approval.
Who Is Category 5 Suitable For?
This authorization is usually preferred by:
- Forex and CFD brokerages with dealing desks located in jurisdictions outside the United Arab Emirates;
- Introducing brokers that operate based on a referral basis;
- Wealth advisory and consulting firms;
- Technology platforms that focus on investment outreach;
- Family offices that work with an advisory-only investment model.
These structures benefit from local presence without assuming execution-related exposure.
Core Conditions for Approval
- Capital Threshold. Applicants are generally expected to maintain paid-up capital of around AED 500,000, subject to assessment under current SCA rules.
- Local Presence. Entities must establish a company incorporated in the UAE mainland and physical office premises suitable for daily operations. Remote-only structures are not accepted.
Key Individuals
Each Category 5 entity must appoint:
- A Senior Executive Officer;
- A Compliance Officer;
- A Money Laundering Reporting Officer.
All individuals are reviewed by the SCA to confirm suitability, experience, and integrity.
Internal Frameworks
One of the key points is proper documentation inside during the review process.
Applicants must maintain written frameworks. These include:
- Control over AML and CFT;
- Risk management oversight procedures;
- Internal behavior and surveillance guidelines;
- Third-party delegation arrangements, where used.
Authorization Process
The process usually involves these stages:
- Company incorporation and structuring within UAE;
- Preparation of the internal documentation;
- Submission of all documents to the SCA;
- Review of ownership and senior personnel;
- Obtaining of a preliminary approval;
- Completion of outstanding conditions which include the capital deposit, office setup, and staffing.
- Issuance of final authorization.
The average time it takes for this procedure is 3-6 months, although this depends on the readiness of the business and the existing feedback loop in place.
Practical Limitations and Risk Areas
Entities belonging to Category 5 should exercise extreme caution regarding the following very sensitive areas:
- Complete prohibition on fund acceptance from clients;
- Involvement in execution of trades limited;
- Review of promotional material in advance;
- Transparency and disclosure obligations toward clients;
- Ongoing supervision by SCA.
Not adhering to these parameters could lead to sanctions or approval withdrawal by the SCA.
Why Category 5 Is Often Chosen
People often choose this Category because it offers the following:
- Simplicity in structure;
- A high level of credibility under UAE mainland supervision;
- An immediate path to local investors;
- Flexibility for referral-driven growth;
- Compatibility with international execution structures.
These features make it ideal for scalable outreach models.
Other UAE Oversight Environments
The UAE also has different market environments that are governed by different regulators, such as the Dubai International Financial Centre, regulated by the Dubai Financial Services Authority, and Abu Dhabi Global Market, regulated by the Financial Services Regulatory Authority. These are often preferred if mainland presence, broader market reach, and federal oversight are key priorities.
Existing Entity Purchase vs. Fresh Application
While the acquisition of an already-approved entity reduces time to market, it entails:
- Approval for changes in ownership;
- Detailed legal and operational review.
A new application allows for full structural control. In this regard, it requires a longer preparation and review period.
Our Assistance
Eternity Law International provides support to large multinational companies seeking to receive SCA Category 5 certification by navigating them through the full circle of advisory, regulatory, legal, and operational procedures. Our approach is not just about getting approval, but also ensuring that the recognized structure will be able to work sustainably within mainland regulatory expectations.
Conclusion
Category 5 authorization fits right into the proper positioning within the UAE capital market framework. It allows firms to have a visible role in the area of promotion, guidance, and maintaining client connections, without execution responsibilities and asset control.
Long-term viability rests on the respect of activity limits, strong internal discipline, and the alignment of real-world behavior with approved scope.
For most multinationals, Category 5 is a very realistic and applicable point of entry to the UAE market.