The Capital Market Authority's (“CMA's") Board approved the Amendments to the Capital Market Institutions Regulations (“Amendments to the Regulations") and the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, which comprise developing the provisions regulating capital market institutions bankruptcy, which shall be effective as of the date of their publications. This is in order to enhance the protection of clients' funds and assets and the confidence of participants in the capital market, thus promoting stability in the capital market and supporting its growth and prosperity.
The CMA reported that the Regulations have specified the provisions regulating capital market institutions in case of bankruptcy according to two paths. The first is for the capital market institutions that hold clients' money or assets or manage investment funds. These institutions must obtain the CMA's approval along with a written acknowledgment from an auditor registered with the CMA that there is no deficit in clients' money and assets that the capital market institution holds, before filing a petition for the initiation of any of the bankruptcy procedures or judicial depository with the competent court.
The second path is for the capital market institutions that do not hold clients' money or assets nor manage investment funds. These institutions must notify the CMA at least (30) days in advance of filing a petition before the competent court and accompanying a written acknowledgment from an auditor registered with the CMA that the Capital Market Institution does not hold clients' money or assets nor manage investment funds. The CMA, during this period, may direct the capital market institutions to take any appropriate procedure that is necessary to protect clients' rights.
The approved Amendments to the Regulations clarified the CMA's authority to direct the capital market institution to take any measures, as the CMA deems necessary, by virtue of the Capital Market Law, its Implementing Regulations, and the Bankruptcy Law, to boost the protection of clients' rights and the transfer of their money and assets including completing any outstanding business or transferring it to another capital market institution.
The CMA has published the Draft Amendments to the Capital Market Institutions Regulations on the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform) affiliated to the National Competitiveness Center and the CMA's website for public consultation for a period of (30) calendar days. The CMA aims to develop and raise investment efficiency and boost investor protection, in addition to enhancing the Saudi capital market attractiveness to foreign and local investment in line with the CMA's strategic plan that comes in line with the objectives of the Kingdom Vision 2030.
The new Amendments to the Regulations that have been approved in the Capital Market Institutions Regulations and the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority can be viewed via the following link:
The Capital Market Institutions Regulations
The Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority
