As part of the Capital Market Authority's ("CMA") strategic objectives to develop the capital market, and based on the Capital Market Law issued by Royal Decree No. (M/30) dated 2/6/1424 H, the CMA Board issued its Resolution to publish the draft amendments to Rules for Special Purposes Entities ("Draft Amendments") for public consultation for a period of (60) calendar days ending on 08/12/1441H corresponding to 29/07/2020G.
Capital Market Authority aims to build an advanced capital market that is open to the world and capable of attracting local and international capital as well as playing an active and central role in meeting the economy’s financial needs. This aim highlights the importance of enhancing the Market’s role as a channel to finance the establishment and sustainability of the economy’s institutions, and providing more investment opportunities for all investors.
The main elements of the Draft Amendments are:
a) Providing fund managers with an additional option to establish a special purpose entity to grant the investment fund a legal personality, while having the option of carrying on the current contractual relationships between fund managers and unitholders.
b) Amending the structure of the special purpose entity that offers debt instruments by registering its shares in the name of the trustee instead of the Shareholders, where the trustee will be responsible for protecting the entity’s assets, appointing the members of the board of directors, determining their remuneration, and appointing the auditor for the special purposes entity, which will enhance the protection of the assets of the special purpose entity and the interests of the holders of debt instruments, in line with the best international practices.
c) In addition to Saudi joint stock companies, authorised Persons, local banks and finance companies, limited liability companies were enabled to be a sponsor of the special purpose entity that issues asset-backed debt instruments, as the sponsor is responsible for applying for a license for the special purpose entity to the CMA and sponsoring all of its financing transactions, in addition to complying with all the rights and claims of the holders of debt instruments related to the financing transaction according to the type of the debt instrument, and complying with disclosure requirements as applicable.
The CMA, with full gratitude, would receive the opinions and comments of relevant and interested persons through the prescribed form via the following email (Laws.Regulations@cma.org.sa).
All comments will be taken into full consideration for the purpose of finalizing the Draft Amendments.
The Draft Amendments and the prescribed form for providing comments can be viewed via the following link:
Draft Amendments to the Rules for Special Purposes Entities
prescribed form for providing comments
