The Capital Market Authority (“CMA's") Board approved enabling the establishment of Simplified Investment Funds through the publication of the Instructions of Simplified Investment Funds.
The approved Instructions aim to establish the regulatory framework for the formation of highly flexible investment funds characterized by lower costs associated with establishment and management, and greater flexibility in fund structuring and in regulating the contractual relationship between the fund manager and investors, thereby contributing to meeting the investment needs of the target client segment for these funds.
The Instructions of Simplified Investment Funds address a number of challenges faced by investment funds in the Kingdom, and contribute to enhancing alignment between the provisions of the Investment Funds Regulations and the practices proposed by fund managers, as the approved Instructions introduce a higher degree of flexibility, which constitutes their most notable feature.
The key provisions of the approved Instructions include regulating the offering of units of Simplified Investment Funds to institutional clients, provided that they are managed by a fund manager licensed by the CMA to conduct Investment Management or Investment Management and Fund Operation activities.
The approved Instructions also remove the requirement to review the offering application within 15 days, which was one of the requirements under the Investment Funds Regulations, provided that the CMA must be notified prior to the proposed date for offering the fund. The Instructions also remove the requirement to appoint a custodian for this type of fund where it takes the form of a Special Purpose Entity.
The regulatory framework also introduces greater flexibility in determining the key provisions governing the contractual relationship between the fund manager and unitholders (for example, the rules for the fund's termination and liquidation, the characteristics of the issued unit classes, the mechanism and content of reporting to unitholders, the policies and authorities for amending the fund's terms and conditions, as well as the policy for unitholders' meetings).
The adopted provisions have been designed to align with relevant international best practices and draw on models applied in alternative investment funds in a number of countries, in a manner that keeps pace with the development of the financial sector and the diverse needs of investors.
The solutions introduced by the approved Instructions will contribute to diversifying investment products in the Saudi capital market by providing a new investment channel that supports the needs of institutional clients to establish investment funds. This is expected to have a positive impact on the growth of assets under management, particularly private equity and venture capital funds, in light of the flexibility granted to this type of investment fund.
It is worth noting that the value of investment fund assets in the Saudi market reached SAR 884.45 billion by the end of Q4 2025, recording a growth of 26.5% compared to SAR 699.06 billion in Q4 2024.
The CMA had previously published, on 7 October 2025, the “Draft Instructions of Simplified Investment Funds and Amendments of the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority" on the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform) affiliated with the National Competitiveness Center and the CMA's website.
The Instructions of Simplified Investment Funds and the amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority can be accessed through the following links:
The Instructions of Simplified Investment Funds
The Amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority
