In continuation to the Capital Market Authority's efforts to develop the Capital Market, protect investors, maintain a stable Capital Market environment and in line with Saudi Arabia’s Vision 2030, and based on the Capital Market Law issued pursuant to the Royal Decree No. (M/30) Dated 02/06/1424 H, the CMA Board issued its Resolution to publish the amended draft of the instructions on Real Estate Investment Traded Funds (REITs) on the Authority’s website, to obtain the public, specialists and interested parties' views for a period of two weeks ending on 21/06/1439 H corresponding to 09/03/2018G. These proposed amendments aim to enhance the principals of investors protection, regulate the aspects that shall boost investments in these funds, to enable specialists, and set out the rules that will limit the risks related to investing in real estate investment traded funds.
The most prominent proposed amendments are found in: prohibiting persons whom their names, upon establishment, are listed in the terms and conditions of the fund as unitholders in the Fund, from disposing of their units during the first year of its trade commencement, determining the method for increasing the fund's capital, and conditioning that the assets of the funds to be possessed by a real estate investment traded fund are generating net rental revenues in the last 3 years. In addition to that, the amendments also addressed the fund manager's disclosure of all expenses of establishing and offering the fund units and the increase in the of the minimum amount for fund establishment changing it from (100) million Saudi Riyals to become (500) million Saudi Riyals. It's worth mentioning that the real estate investment traded funds became allowed to invest a percentage not exceeding 25% of its total asset value in usufruct rights and the renovation redevelopment of such real-estate, the real estate repurchase agreements and the units of money markets funds, real estate companies, fixed income funds and funds that invests real estate investment traded fund. Beside other proposed amendments as demonstrated in the link below.
Moreover, the Authority, with full gratitude, would like to receive these opinions and remarks through any of the following channels:
- Email (Laws.Regulations@cma.org.sa);
- Fax number (+966114906460); or
- Mail address (P.O. Box 87171 Riyadh 11642, CMA Deputy for Legal Affairs and Enforcement – Laws and Regulations Department).
To be submitted no later than 21/06/1439H corresponding to 09/03/2018G. All opinions and remarks will be taken into full consideration in order to finalize the instructions draft.
And The draft Instructions can be viewed via the following link:
Amended Draft of The Instructions on Real Estate Investment Traded Funds