The Capital Market Authority (“CMA") called all relevant and interested persons and participants in the capital market on the Draft Instructions on Offering of Real Estate Contributions Certificates (“Draft Instructions") for Public Consultation for a period of fifteen (15) calendar days ending on 06/05/1445AH, corresponding to 20/11/2023.
The Draft Instructions aim to regulate the offering of real estate contributions certificates in the in the Kingdom, in a way that keeps pace with the development witnessed by the sector, based on the roles of CMA determined by the roles stipulated by the Real Estate Contributions Law and in accordance with its authority over the capital market institutions, as granted by the Capital Market Law.
The Draft Instructions stipulated that the applicant for the offering of real estate contributions certificates must be a capital market institution authorized by CMA. The proposed Instructions also determined the requirements to be met to obtain the CMA's approval on the offering of real estate contributions certificates and the requirements and obligations of the capital market institution, as well as regulating the shareholders' record, and maintaining records.
Furthermore, the Instructions obligated the capital market institution to ensure providing investors in the real estate contribution with enough information that shall enable them to make an insightful and informed investment decision and ensure that the said information is comprehensive, clear, correct, and not misleading. Additionally, capital market institution is required to obtain approval from CMA before offering real estate contribution certificates publicly or privately. Subsequently, the authorized party must obtain a license for the real estate contribution from the Real Estate General Authority (REGA).
It is noteworthy that the Real Estate Contributions Law was issued by Royal Decree No. (M/203) dated 28/12/1444 H, which granted CMA the authority to regulate the collection of funds for real estate contributions in agreement with REGA.
The instructions for offering real estate contribution certificates are expected to reflect positively on the regulation of the issuance process. This should enhance investor confidence and create a new financial and investment channel for real estate developers and investors in the Kingdom.
The CMA reported that the opinions and comments of relevant and interested persons will be taken into full consideration for the purpose of approving the final text of the Draft. Opinions and comments can be received through any of the following:
