JEDDAH: Saudi Arabia’s Capital Market Authority has announced a package of regulatory enhancements aimed at strengthening the investment fund environment in the Kingdom, according to a press release issued on Wednesday.
The reforms, which involve amendments to the Investment Funds Regulations, Real Estate Investment Funds Regulations, and the glossary of terms used across CMA regulations, are designed to advance the regulatory framework governing investment funds.
The goal is to elevate the competitiveness of the asset management industry by identifying development opportunities, adopting international best practices, and enhancing transparency and governance.
The reforms reflect Saudi Arabia’s broader efforts to deepen its capital markets and attract more local and international investment, in line with Vision 2030 economic diversification goals.
According to a CMA board decision, the updated rules will help expand and develop the investment fund and REIT sectors, increase transparency for unitholders, and improve investor protection through more robust governance standards.
Key reforms
One of the major changes includes broadening the categories of entities allowed to distribute investment fund units. Under the new rules, fund units may now be distributed via licensed investment platforms and e-money institutions approved by the Saudi Central Bank, including through their websites and mobile apps.
Additional reforms cover the procedures for fund termination and the removal of fund managers, as well as new guidelines for voluntary withdrawal by managers of both public and private funds.
A key requirement is obtaining CMA approval for such withdrawals, and ensuring that the outgoing fund manager transfers all management responsibilities to a successor within 60 days. This is aimed at safeguarding investor rights and ensuring a smooth transition process.
REIT flexibility in parallel market
In a move to expand investment opportunities and increase potential returns for investors, the CMA will now allow traded real estate investment funds listed on the parallel market to invest in real estate development projects at the time of fund establishment.
These investments will not be bound by the standard asset allocation ratios and restrictions previously outlined in the Real Estate Investment Funds Regulations.
