FAQs for Implementing Regulations

CMA is responsible of issuing the instructions, rules and regulations as well as applying the provisions of the Capital Market Law. In order to do that, CMA does the following:

1. Regulate and develop the capital market and promote appropriate standards and techniques for all sections and entities involved in Securities Trade Operations in addition to develop procedures to reduce the risks associated with securities exchange.
2. Regulate and monitor issuing the securities.
3. Regulate and monitor the activities of entities working under CMA.
4. Protect investors and the public from unfair and unsound practices involving fraud, deceit, cheating, manipulation, and inside information trading.
5. Maintain fairness, efficiency, and transparency in transactions of securities.
6. Regulate and monitor full disclosure of information related to securities and issuers in addition to insider trading, big shareholders and investors, identify and provide information that should be disclosed by the participants in the market to shareholders and the public.
7. Organize the requests for representation, buying and public offering of shares.

Pursuant to Article (30) of the Capital Market Law, CRSD shall have jurisdiction over the following cases: a. Public actions,   which are brought against violators of the Capital Market Law and its implementing regulations, and the regulations, rules and instructions of the Authority, the Exchange, the Depository Center, the Clearing Center. b. Private actions, which are brought by investors in securities against Capital Market Institutions or between capital market institutions, c. Grievance claims against decisions and procedures issued by the Authority, the Exchange, the Depository Center, or the Clearing Center. d. Actions of emergent nature that are brought before CRSD for issuing  temporary decisions within the scope of the Law and its Implementing Regulations. e) All civil and criminal lawsuits and disputes arising from the application of the provisions of the Companies Law and its regulations, and the imposition of penalties on violators, with regard to listed joint stock companies.
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To file an appeal, it is required that: a. The appeal should be deposited within 30 days from the date of receiving a copy of CRSD decision. b. A letter should be addressed to the chairman of ACRSC specifying the names of the appellant and appellee; CRSD decision number and date; reasons for the appeal; and requests. . c. In case  the appeal was filed by a representative,   the power of attorney should indicate the representative’s right to file the appeal.
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The fund manager –upon your request- must provide you with the quarter statement and annual reports (including the audited financial statements), prepared in accordance with the requirements of Annex (3) and (4) of the Investment Funds Regulations.
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​CRSD and ACRSC are fully independent to discharge their duties, and the head of each circuit and its members are appointed by a Royal Order. Thus, pursuant to the provisions of the Capital Market Law, CRSD and ACRSC became the competent litigating authority for resolving disputes that fall within the scope of the provisions of this Law and its Implementing Regulations, the regulations of the Authority, the Exchange, the Depository Center, or the Clearing Center and its rules and instructions in the public right and the private right. It shall have all necessary powers to investigate and settle the claims, including the power to issue subpoenas to witnesses, order the production of evidence and documents, issue decisions, and impose sanctions. Furthermore, with regard to joint-stock companies listed in the capital market, the Committee for Resolution of Securities Disputes shall review and decide appeals against the Authority decisions and all civil and criminal lawsuits and disputes arising from the application of the provisions of Companies Law and its Regulations, and shall also impose the penalties prescribed for violating such provisions...

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​​Y​es, the notification shall be in accordance with a form prepared by the Exchange, which may be viewed through the following link:  Disclosure Forms.​

​Yes, the paid up capital of the applicant must not be less than the following:

• Dealing and Custody: SR 50 million;
• Managing: SR 20 million for managing investments and operating funds; and a capital that covers the expected expenses for a year for managing investments;  
• Arranging and Advising: a capital that covers the expected expenses for a year.

Tier 1 capital is the most loss-absorbing form of capital, which includes the capital items listed in Article (5) of Prudential Rules as follow: (1)paid-up capital, (2) Paid-up share premium, (3) Retained earnings, (4) Accumulated other comprehensive income and other disclosed reserves, (5) Non-controlling interests, and (6) Regulatory adjustments to Tier 1 capital pursuant to Articles (10) and (11) of these Rules.​

The Merger and Acquisition Regulations shall apply to any purchase or sale of shares with voting rights of listed companies, resulting in an ownership or control of a person, individually or collectively by acting in concert, to ten percent (10%) or more of the relevant offeree company or any offer to purchase shares with voting rights of listed companies, if the percentage of shares sought to be acquired by the offeror would increase its ownership, individually or collectively by acting in concert, or the shares under their Control, to ten percent (10%) or more of the shares of the relevant offeree company, and of that same shares class.  The provisions of the Merger and Acquisition Regulations shall apply to the following: a) the Exchange participants, including issuers, shareholders, Capital Market Institutions , and any person involved directly or indirectly in participating, or giving an advice on any transaction regulated by these Regulations; b) Directors of companies which are subject to these Regulations; and c) any person who seek the acquisition of, or increase of its shares in, any company subject to this Regulation.
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These Regulations aim to regulate the registration, offering and management of investment funds and associated activities in the Kingdom. These regulations shall have no prejudice to the provisions of the Capital Market Law and its implementing Regulations, including the Market Conduct Regulations, the Capital Market Institutions Regulations, the Securities Business Regulations and the Rules for Special Purposes Entities. 
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A fund manager is a Capital Market institution that carries out the management of the assets of an investment fund or real estate investment fund, and the management of its businesses and offering its units in accordance with the Investment Funds Regulations, Real Estate Investment Funds Regulations, and the Rules for Special Purposes Entities.
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The fund manager must be a capital market institution licensed to carry out the activity of managing investments and operating funds or the activity of managing investments, and where the fund manager was licensed to carry out managing investments activity, without the license to carry out operating funds activity, it must appoint a capital market institution licensed to carry out managing investments and operating funds activity to operate the investment fund under its management. As for the fund manager of the private real estate investment funds, it must be a capital market institution licensed to carry out the activity of managing investments and operating funds.
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Closed- ended real estate investment funds, which operate according to the following objectives: (1) Initial Development then Selling: This is achieved by owning a piece of raw land, developing it, dividing it into residential or commercial plots, then selling it and terminating the Fund. (2) Constructional Development then Selling: This is achieved by owning a piece of raw or developed land with the purpose of constructing residential or commercial units, then selling it and terminating the Fund. (3) Initial or Constructional Development with the intention of leasing it for a certain period of time then selling it and terminating the Fund. (4) Owning real states that are constructionally developed with the intention of leasing it for a certain period of time then selling it and terminating the fund. (5) investing in constructionally developed real estate, able to generate periodic and rental income. Funds with other types or purposes, other than those specified above, may be established after fulfilling the conditions and requirements that the Authority deems necessary  
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​In the event that one of the objectives of the fund includes the initial development or constructional development the fund manager must appoint a developer and an engineering office independent from any of the related parties, after ensuring that they obtained the approvals and licenses required to carry out their business and activities from the relevant government entities. The engineering office shall - at minimum - oversee the implementation of the fund’s business plan​​​.

Without prejudice to the Law of Real Estate Ownership and investment by Non-Saudis, subscription in the Fund is open to any Saudi, GCC citizens or foreigners residents or non-residents in the Kingdom.​

A potential investor can subscribe to the fund by visiting a fund manager's branch or via electronic channels as per the fund's terms and conditions.
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The following actions shall be among those considered as manipulative or deceptive acts or practices:
1) making a fictitious trade;
2) promoting the purchase of a security for the purpose of selling that security, or arranging for another person to sell it; or
3) promoting the sale of a security for the purpose of purchasing that security, or arranging for another person to purchase it.
Additionally, the following acts are among those considered as manipulative or deceptive acts or practices when committed for the purpose of creating a false or misleading impression of trading activity in a security or interest in the purchase or sale of the security, or for the purpose of creating an artificial bid price, ask price or trade price for a security:
1) effecting a trade in a security that involves no change in its beneficial ownership.
2) entering an order or orders for the purchase of a security with the prior knowledge that an order or orders of substantially the same size, time and price for the sale of that security, has been or will be entered;
3) entering an order or orders for the sale of a security with the prior knowledge that an order or orders of substantially the same size, time and price for the purchase of that security, has been or will be entered;
4) purchasing or making offers to purchase, a security at successively higher prices or in a pattern of successively higher prices;
5) selling or making offers to sell a security at successively lower prices or in a pattern of successively lower prices; or
6) entering an order or orders for the purchase or sale of a security in order to:
• establish a predetermined sale price, ask price or bid price;
• effect a high or low opening or closing sale price, ask price or bid price;
• affect the theoretical price of volatility auction;
• maintain the sale price, ask price or bid price within a predetermined range;
• entering an order or a series of orders for a security that are not intended to be executed; or
• affect the price of another security.

The Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority defines "Qualified Investor" stipulated in Part (8) of the Rules on the Offer of Securities and Continuing Obligations, articles (46) and (47) of the Investment Funds Regulations and article (45) of the Real Estate Investment Funds Regulation  as any of the following: 1) Capital Market Institutions acting for their own account. 2) Clients of a Capital Market Institution authorised by the Authority to conduct managing activities provided that this  Capital Market Institution  has been appointed as an investment manager on terms which enable it  to make decisions concerning the acceptance of an offer and investment in the Parallel Market on the client’s behalf without obtaining prior approval from the client. 3) The Government of the Kingdom, any government body, any supranational authority recognized by the Authority or the Exchange, and any other stock exchange recognized by the Authority or the Securities Depository Center. 4) Government-owned companies, either directly or through a portfolio managed by a Capital Market Institution authorised to carry out managing activities. 5) Companies and funds established in a member state of the Cooperation Council for the Arab States of the Gulf. 6) Investment Funds. 7)

It means the fund's assets deposited with a custodian in favor of the fund including securities available in the fund's Center account.​

A sophisticated investor is any person with  master's degree in finance, accounting or any other specialization related to the field of securities. Also, A sophisticated investor is any person  who passes level one of the qualification tests to obtain the certificate of "Chartered Financial Analyst" (CFA), or any person  who  holds one of the following certificates:

• Saudi Organization for Certified Public Accountants (SOCPA)
• Certified Public Accountant (CPA)
• Certified Management Accountant (CMA)
• Chartered Alternative Investment Analyst (CAIA)
• Certificate in Investment Performance Measurement (CIPM)
• Certified Financial Planner (CFP) 
• Financial Risk Manger (FRM)

​The Authority's Board resolution approving the prospectus includes the timeframe that the Issuer must comply with to complete the offering process. The Authority's Board approval is generally valid for a period of six months from the date of such resolution, and the approval shall be deemed canceled if the  offering and listing of the company's shares are not completed during this timeframe.

​The financial advisor of an issuer must be licensed by the Authority to conduct Arrangement activities.

​The scope of information that a company may share with its current and potential investors include, but not limited to, any of the following information:

1. Information contained in the reports made by the Company. For example, the sustainability report and social responsibility report etc.
2. Information prepared by entities authorised to prepare and share such information (For example, credit rating agencies and studies and research centers).
3. Information already disclosed to the Authority and the public in accordance with relevant laws and regulations.

In the event where a company shares with its current or potential investors some information that is required to be disclosed in accordance with relevant laws and regulations, weather in its quarterly or annual meetings held after announcing its financial results or by any other means, and such information has not been disclosed yet, the company must immediately disclose such information to all investors in accordance with relevant laws and regulations.

​​​​The Fund Manager may apply for an exception from the specified concentration percentage and the Authority may approve such application if it considers that no conflict with the interest of investors exists, taking into account the fulfillment of certain conditions- not limited to- the following:

1. The rented property shall be, in its nature, serving the activity of the lessee, and that the property is fully rented by an entity specialized in operating this type of real estate which includes, but not limited to; hospitals, airports, seaports, factories, schools and educational buildings.
2. The lessee shall have a credit rating from an authorised credit rating agency.
3. The lessee shall be a government entity, or a state-owned company​.
   

​The documents, data or information that are issued or authenticated by the government entities, courts or persons licensed as notaries.

Yes, the electronic signature (in accordance with the Electronic Transactions Law) fulfills the requirement of signing the investment account opening agreement.

​No, a company incorporated under the Saudi Companies Law is considered as a Saudi company and its  head office  shall be in the Kingdom with the exception of  partnership company according to article 4 stipulated in the Saudi Companies Law.​

​​No, foreign investor ownership through the QFI account and the ultimate beneficiary swap account shall not exceed 10% of the shares of any issuer whose shares are listed or convertible debt instrument of the issuer for both accounts aggregated. Foreign investor must comply with the investment limitations provisions in the Capital Market Law and its Implementing Regulations, as well as the Rules and Regulations of the Exchange and other relevant laws. ​

​There are number of factors that a registered certified public accountant may take into consideration when determining the sufficient amount of the working hours to fulfill the requirement of Article 16 of the Rules for Registering Auditors of Entities Subject to the Authority's Supervision; which include:

1. The registered certified public accountant 's previous knowledge of the client.
2. The legal structure of the client, its business nature and sector.
3. The effectiveness of the internal control system of the client.
4. The experience and efficiency of the auditing team.
5. ​The effectiveness of the quality control system of the registered accounting firm.​

​In the event where a shareholder exercises his right to nominate others for a  membership in the Board and elect them in the General Assembly, he/she shall not be considered as a  Board member and the restrictions applicable on the Board  members shall not apply to such shareholder.

In accordance with the Board resolution issued in this regard, trading of listed securities of an issuer with accumulated loss reaching 50% or more of its paid- in capital shall be suspended upon registering the application for the commencement of a financial restructuring procedure with the court in accordance with the Bankruptcy Law. The suspension of trading shall be lifted upon the issuance of the court's decision ordering the commencement of the financial restructuring procedure for the issuer in accordance with the Bankruptcy Law, unless the issuer is banned from carrying out its activities by the relevant competent authority. However, where the court issues its decision rejecting the commencement of the financial restructuring procedure for the issuer, the suspension of trading shall continue until the expiry of the period specified in Article (132) of the Companies Law, or, prior to that, upon reduction of accumulated losses of the issuer to become below 50% of its paid- in capital. 
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​​​​In accordance with the Board resolution issued in this regard, the issuer’s securities will be delisted upon the issuance of the court decision terminating the financial restructuring procedure and commencing the liquidation or administrative liquidation procedure for the issuer in accordance with the Bankruptcy Law.​​​​

​​The strategic foreign investor may own Strategic Shareholdings in listed companies in any of the methods of ownership available under the Capital Market Law and its Implementing Regulations, including but not limited to the following:

1. Buying through the market directly.
2. Through a private transaction.
3. Proposing an offer for the acquisition of shares.
4. Participating in the initial public offerings according to the relevant prospectus.
   

​​The foreign strategic investor shall comply with all disclosure requirements provided in the Capital Market Law and its Implementing Regulations and related laws, especially the Rules on the Offer of Securities and Continuing Obligations, where applicable.

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​Under the CMA Board resolution issued on 19/2/2018 G, financial institutions that are located in one of the GCC countries, and autherised to practice the securities management activities by one of the Ministerial Committee of Chairpersons of GCC Capital Markets Regulators Board of Directors, are exempted from the requirement to obtain the Authority's autherisation to practice the clients' portfolios management activities to manage the portfolios of their clients, who hold the citizenship of one of the GCC countries (as per the definition of this category in the Rules for Qualified Foreign Financial Institutions Investment in Listed Securities), in relation to the securities issued and listed in the Kingdom. However, this exception shall not include their Saudi clients.

​Yes, a member of the Board of Directors may be a member of more than one committee, taking into account the following:
1.The Chairmen of the Remuneration and Nomination Committees shall be of the Board of Directors independent members.
2.The Chairman of the Board of Directors shall not be a member of the Audit Committee and shall not serve as a Chairman in the committees stipulated in the Corporate Governance Regulations.

​Yes, there is a difference between them. The term "day" is defined in the Corporate Governance Regulations as "a calendar day, whether it is a business day or not." The term "day" is defined in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority as "a business day in the Kingdom in accordance with the official working days of the Authority". The difference between the two definitions is due to the fact that the Corporate Governance Regulations are issued in implementation of the Companies Law. Thus the term "day" has been defined in the Regulations in accordance with the Companies Law.

​With regard to a special purposes entity issued or intends to issue debt instruments, the requirements of Article (7) of the Rules for Special Purposes Entities must be fulfilled, and the sponsor must fill out the forms; "Application to Establish and License a Special Purposes Entity" and "Application to Register a Director of a Special Purposes Entity" for each director, and attach all the required documents in the forms,   in addition to filling out the By-laws standard form prescribed by the Authority for the special purposes entity issued or intends to issue debt instruments by adding details required to be included, or selections required to be made and sign it by the Sponsor, and submitting them to the Special Purposes Entities Department in the Authority.

With regard to an investment fund that takes the form of a special purposes entity: in addition to fulfilling the requirements of the Investment Funds Regulations or the Real Estate Investment Funds Regulations – whichever applies –, the manager of an investment fund that intends to issue investment units via a special purposes entity must fill out the By-laws standard form prescribed by the Authority for the investment fund issued or intends to issue investment units via a special purposes entity by adding details required to be included, or selections required to be made  and sign it by the fund manager, and submitting it to the  Investment Products Issuance Department in the Authority.

The forms mentioned above can be found on the Authority's website: Forms page.

In accordance with paragraph (d) of Article (35) of the Rules for Special Purposes Entities, the requirement to prepare the annual financial statements and audit them by an auditor does not apply to a special purposes entity which all debt instruments issued by it are debt-based recourse debt instruments.

The trustee of a special purposes entity that issues debt instruments must appoint a custodian in the event of issuing asset-linked recourse debt instruments or asset-backed debt instruments, where such assets include securities or real estate assets.

​The Committee for the Resolution of Securities Disputes shall be the competent judicial authority for hearing disputes falling under the provisions of the Capital Market Law and its Implementing Regulations, including disputes relating to debt instruments and investment units issued by the special purposes entity.

​The Authority may approve the request to allow the public ownership of the class of shares subject to the request be less than 30% upon listing on the Main Market, after considering the request in light of its internal standards, including but not limited to; the expected total market value for the shares offered to the public and the expected total market value for the company's shares.

Upon notifying the Authority in accordance with the requirements of subparagraph (2) of paragraph (a) of Article 10 of Rules on the Offer of Securities and Continuing Obligations, the offeror must submit copies of any offering documents that would be used for advertising the offer containing the statement required to be included as stipulated in Annex (6) of the Rules on the Offer of Securities and Continuing Obligations.​

​If there is a material change to the offering documents after the date of submitting the notification to the Authority and prior to the start of the offer or after the start of the offer and before its end, the offeror must notify the Authority immediately upon his knowledge of the material change.

​No, the issuer may have been carrying on, either by itself or through one or more of its subsidiaries, a main activity for at least during the last three financial years.

​​​​​​The Capital Market Authority has issued a booklet containing examples of some of the trading conducts violating the Capital Market Law and its Implementing Regulations, to help increase investors' awareness. The booklet can be viewed on the CMA's website via the link:

​No, but the prospectus  submitted for the registration and offer of shares must contain recognition declaration from the issuer’s board of directors that the issuer on its own or with its subsidiaries (if any) - has working capital sufficient for at least 12 months immediately following the publication date of the prospectus.

​For the purpose of measuring the substantiality of a subsidiary of the issuer, the issuer and its  financial advisors  must consider its impact on the investment decision in the securities and its price, including but not limited to,  a subsidiary is considered substantial if it constitutes 5% or more of the total assets, liabilities, revenues or profits of the issuer or any potential obligations on it.

​Yes, the Issuer may assign its employees part of its shares in accordance with the provisions of the relevant laws and regulations.

​The issuer is not required to issue a prospectus if all the shares to be issued are intended for employee share schemes.

​Yes, unlisted joint stock companies may deposit their shares in the Securities Depository Center according to the rules of the Securities Depository Center approved by the Authority’s Board. For more information, please visit the following link:

https://bit.ly/2Bq5EV9

​Such conduct is not considered as a violation on its own, unless it involves manipulative or deceptive acts or practices, in which entering an order or a series of orders for a security that are not intended to be executed.

The capital market institution and the registered person are prohibited from accepting or executing a client order if any of them has reasonable grounds to believe that the client is engaging in market manipulation or insider trading.

Yes, it is considered a violation, as Paragraph (a) of Article 8 of the Market Conduct Regulations stated that: "a. A person is prohibited from circulating, directly or indirectly, an untrue statement of material fact or a statement of opinion for the purpose of influencing the price or value of a security or for any manipulative or deceptive purpose."

The fund's unitholder may exercise all the rights associated with the units, including but not limited to, the right to vote at the unitholders' meetings, and any rights which set out in the Fund’s terms and conditions.​

​The competent authority for complaints concerning investment funds is the Capital Market Authority - (Investors Protection Department), and the competent judicial authority to hear cases related to these funds is the Committee for the Resolution of Securities Disputes.

​Such cases are identified according the following criteria:
1- All the invested assets of the Fund are located outside the Kingdom.
2- The custodian in the Kingdom is not imposing any additional fees on the Fund.
3- Appointing a Sub-custodian operating in  a jurisdiction other than the Kingdom to take custody of the Fund's foreign investments, provided that it is established, authorised and supervised in a jurisdiction that employs  regulatory standards and requirements at least equivalent to those of the Authority, and provided that such sub-custodian must be appointed pursuant to a contract in writing.

The Investment Funds Regulations does not require that, except for private real estate funds in accordance with paragraph (a) of Article 11 and Article 93 of the Investment Funds Regulations.​​​

Yes, if this is in accordance with the terms and conditions of the Fund, with emphasis on the need to comply with the Investment Funds Regulations and the other relevant laws, rules and regulations.​

In accordance with sub-paragraph (5) of paragraph (e) of Article 41 of the Investment Fund Regulations, 10% of the net asset value of the public fund or more may be invested in shares listed on the Exchange or in any other regulated exchange for a single issuer in a sector that the public fund aims to invest in, provided that the market value of the issue percentage  shall  not exceed the total market value of that particular field or sector. That is for the public fund whose terms and conditions, stipulate that its investment objective is specifies in a particular field or sector of listed shares, provided that the investment shall not, at any event, exceed 20% of the fund's net asset value, Moreover, more than 10% of the issued securities of any single issuer may not be held for the benefit of the public fund, in accordance with paragraph (c) of Article 41.​​

The Real Estate Investment Traded Funds may own constructionally developed real estate which is the real estates that are developed and ready for use and which fulfills the regulatory requirements, including residential, commercial, industrial and agricultural real estates and other types of real estates, provided that the fund’s investments value in consructionally developed real estates, and qualified to generate periodic rental income must be not less than (75%) of the fund’s total assets value according to the last audited financial statements. Also, the fund manager may not invest in white lands. The fund manager is allowed to invest up to25% of the fund’s total assets value, according to the last audited financial statements, in many areas, including real estate development, whether the real estate is owned by the fund manager or not, renovation and re-development of real estate, real estate re-purchase agreements and in case of RIETs traded in the Main market, Usufruct rights. The fund can also invest in real estate outside the Kingdome, provided that these  investments shall not exceed 25% of the fund’s total assets value, according to the last audited financial statements​.

The Financial Academy provides and manages the Capital Market Examinations. For registration or additional information about the Capital Market Examinations, kindly contact the Financial Academy on the following address:

- FA Website

​Anyone who has obtained a minimum of high school diploma or any equivalent certificate can register for the Capital Market Examinations.

​​​​You can find all related information by visiting the "Smart Investor " website via the following link: Magazine Issues

​The Authority has announced its Strategic Plan , and it can be viewed on the Authority website: www.cma.org.sa​​

The Authority receives complaints falling within the scope of the provisions of the Capital Market Law and its Implementing Regulations, and the regulations, rules and instructions of the Authority, the Exchange, the Depository Center and the Clearing Center, if the matter relates to the following -including but not limited to-:
• Receiving complaints of securities ownership registration.
• Investors’ complaints against Capital Market Institutions  (Brokerage Firms).
• Complaints related to listing securities in the market.
• Complaints related to executing deals that do not include violation penalties.
• Complaints related to companies’ profits and shares’ certificates.
• Complaints related to investment funds.
•  Compensation requests related to a violation of the provisions of the Capital Market Law and its Implementing Regulations. 
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​The foreign issuer must prepare its interim and annual financial statements in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board, and its interim and annual financial statements shall include  settlement  clarification of the material differences on assets and liabilities, net assets and net income between the standards upon which its interim and annual financial statements have been prepared and the International Financial Reporting Standards endorsed in the Kingdom in addition to any other requirements determined by the Authority.

​Yes, there are cases where the issuer's board members, employees, and subsidiaries can subscribe to the issuer's shares, subject to the requirements and conditions stipulated in the Capital Market Law and its implementing regulations. This includes, but is not limited to, the requirements stipulated in the Rules for the Offer of Securities and Continuing Obligations, and the liquidity requirements stipulated in the Listing Rules.

​Yes, it is permissible for the issuer to provide a shareholder with the consolidation package for the purpose of preparing consolidated financial statements after the issuer publishes its financial statements.

​The Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority defines the contractually based securities, as any of the following:
1) options;
2) futures;
3) contracts for differences;
4) long term insurance contracts;
5) any right to or interest in anything which is specified by any of the previous sub-paragraphs.

​Yes, all companies that fulfill the relevant regulatory requirements, including newly established or emerging companies, can offer contractually based securities.

​The offering of contractually based securities is one of the exempted offers according to Article 6 of the Rules on the Offer of Securities and Continuing Obligations. Thus, the issuer is not required to submit a prospectus for offering contractually based securities.

​Yes, the Committee for the Resolution of Securities Disputes has jurisdiction over disputes arising from contractually based securities.

​No, the disclosure related provisions stipulated in the Rules on the Offer of Securities and Continuing Obligations do not apply to the issuer of contractually based securities.

Yes, it is possible to establish and offer investment funds that target community service activities by capital market institutions in accordance with the provisions of the Investment Funds Regulations​

​Yes, the primary goal of establishing investment funds targeting community service activities is to enhance the role of the capital market in supporting community service activities through entities subject to the supervision of the Ministry of Human Resources and Social Development in accordance with the Grassroots Organizations and Societies’ Rules and Regulations.

​Yes, after collecting contributions from unitholders, these monies are invested by the fund manager in various investment fields according to the Investment Funds Regulations, for the benefit of the unitholders and the targeted community service.

​If the investment fund targeting community service activities is open-ended, the unitholder can redeem its money on the trading days stipulated in the fund terms and conditions.

​The fund manager can direct the returns of the investment fund that targets community service activities to more than one beneficiary entity subject to the supervision of the Ministry of Human Resources and Social Development in accordance with the Grassroots Organizations and Societies’ Rules and Regulations.

​The mere inconsistency of the transaction risks with the client’s risk tolerance disclosed in the “Know Your Client Form” is not considered a violation of the provisions of Article 43 of the Capital Market Institutions Regulations. Rather, it is taken into consideration the consistency of the total risks at the level of the client’s investment portfolio with the client’s risk tolerance and the other facts disclosed by the client in accordance with the provisions of the referenced Article. In addition to any other facts related to him, which the capital market institution knows, or must be, reasonably, aware of.

​In accordance with Article 43 of the Capital Market Institutions Regulations, the capital market institution is obligated - prior to dealing, providing advice or managing for a client - to ensure that the advice or transaction is suitable for the client, not the attorney-in-fact or the authorised signatory to operate the investment account.

​The senior executives and departments managers; directly related to the securities business, include but not limited to, executive vice president, the asset management department manager, the brokerage department manager, the arranging department manager, the advising department manager and the corporate finance department manager.
Moreover, taking into account the size and nature of the work of the capital market institution and the degree of complexity of its organizational structure, such institution must determine the extent of any direct relation of some departments to the securities business, such as information technology department, legal affairs department and the like.

​The provisions of Article 33 of the Capital Market Institutions Regulations do not apply to the announcements required to be published by the capital market institution under the Capital Market Law and its implementing regulations, including, but not limited to, investment funds announcements required to be published by the capital market institution under the Instructions for Investment Funds Announcements and the prospectus or shareholders’ circular that the capital market institution is obligated to publish in accordance with the Rules on the Offer of Securities and Continuing Obligations.

​No. However it must obtain the information required under the Capital Market Institutions Regulations, either by using the "Investment Information Form” contained in the annex (5.3) (b) of the aforementioned Regulations, or by using another form.

​Yes, the financial market institution may provide advice in financial planning and wealth management - in non-securities - in accordance with paragraph (e) of Article 10 of the Capital Market Institutions Regulations, provided that this does not violate any of the relevant regulatory requirements.

​In accordance with the CMA Board resolution issued in this regard, they are the member countries of the International Organization of Securities Commissions (IOSCO), which apply and are cooperating in the field of Combating Money Laundering and the Financing of Terrorism in accordance with the FATF standards, and without prejudice to the relevant applicable laws in the Kingdom and what is issued by the Anti-Money Laundering Permanent Committee.

​The number of independent members of the Board of Directors- in any case-may not be less than two members nor one-third of the members, even if the calculation of one-third results in the presence of a decimal fractional number.
For example: If the number of the Board of Directors members  is seven, the number of Independent Members must be at least three.

​Yes, the company must immediately notify the Exchange - according to the mechanism determined by the Exchange - of its transactions related to its shares buy-back in the Exchange and the purpose of its purchase, so that the Exchange publishes this information in its periodic report on the companies' shares buy-back.

​The chairman of the Shareholders' General Assembly shall announce the results of the assembly to the attending shareholders before the end of the assembly meeting.

​The Authority’s approval of the by-laws is required, and upon obtaining approval, the by-laws of the special purposes entity shall be signed by the sponsor or the manager of the investment fund that intends to issue investment units via a special purposes entity in the presence of a notary public or a notary certified in the Kingdom.

​A sponsor can be the trustee of a special purposes entity that issues debt instruments, where the sponsor is not the beneficiary of the special purposes entity.

​Yes, provided that; the trustee of the special purposes entity shall be a capital market institution duly authorized to carry on the activity of custody; and the trustee of the special purposes entity shall not be the sponsor, an affiliate of the sponsor or controlled by it, and without prejudice to the obligations prescribed to the custodian as per the provisions of the Rules for Special Purposes Entities.

​Other than the cases in which the sponsor is the trustee of a special purposes entity, the sponsor may change the trustee of the special purposes entity in the event of its failure to carry out its responsibilities in accordance with the provisions of the Rules for Special Purposes Entities, or upon its failure to fulfil any of its obligation toward the sponsor or the special purposes entity.

Yes, it is permissible; and capital market institutions must ensure compliance with the Law of Real Estate Ownership and Investment by Non-Saudis when managing the investments of investment funds in real estate located within the boundaries of the cities of Mecca and Medina and upon liquidation of those funds.
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Yes, it is permissible; and capital market institutions must ensure compliance with the Law of Real Estate Ownership and Investment by Non-Saudis when managing the investments of investment funds in real estate located within the boundaries of the cities of Mecca and Medina and upon liquidation of those funds.​

​Exiting of FinTech companies’ owners means in accordance of paragraph (f) of Section (8) of Financial Technology Experimental Permit Instructions, which stipulates that “Owners of FinTech companies are prohibited from fully or partially exiting the company during the validity period of the ExPermit, provided that the entry of new partners will be by increasing the FinTech company’s capital, after obtaining the approval from the Authority”;  any change in the sum of the total direct and indirect ownership of the owners of FinTech companies.

​Yes, the Capital Market Institution may open an investment account for a foreign natural person not residing in the Kingdom or a foreign legal person directly or by relying on a third party; in order to invest in the Saudi Capital Market according to the channels they are permitted to invest in, which are published on the CMA’s website at the following link:

 https://cma.org.sa/Market/QFI/Pages/default.aspx

• For financial years ended before January 1, 2017: Saudi Accounting Standards.
• For financial years ended after January 1, 2017: The full version of the International Financial Reporting Standards.​
  

​The purpose of this Regulation is to regulate the reporting of violations of the Capital Market Law and its implementing regulations, or violations of the regulations of the Exchange, the Depository Center, or the Clearing Center. This includes the determination of financial rewards for those who report such violations, the controls on granting such rewards, and the procedures that contribute to the protection of those who report violations

​The Authority shall receive reports through the following channels:
1- The Authority's website.
2- Registered mail.
3- The Authority's headquarters.
4- The Authority's phone number.
5- The investor protection mobile application.
6- Any other means determined by the Authority.

​The Report must contain the information specified by the Authority, including the following
1) The name of the Reported Individual and, if available, the Reported Individual's contact details.
2) A clear and comprehensive description of the incident that is the subject of the Report, as well as the evidence, information or documents pertaining to the acts or practices that constitute a violation of any provisions of the Law or its implementing regulations, or of the regulations of the Exchange, the Depository Center, or the Clearing Center.

​The Authority may grant the Reporting Individual a reward the value of which is determined by up to (20%) of the amount of the fines and financial penalties collected as a result of the reported violations, provided the following conditions are met:
1. The report includes the Reporting Individual's name and contact details, or those of his legal representative.
2. The Reporting Individual is a natural person and made the Report of his own volition.
3. That neither the Reporting Individual nor their Relatives is an employee of the Authority or of any similar supervisory body that has access to the Information that is the subject of the Report.
4. The Information contained in the report is not available to the Authority or has not been received beforehand by the Authority from others.
5.  The Reporting Individual does not disclose to others any Information related to the Report.
6.  The Report leads to the issuance of a final decision by the Authority or by the Committees for the Resolution of Securities Disputes imposing a fine or financial penalty.
7.  That the Authority collects the imposed fines and financial penalties, and that the total amount of the fines and financial penalties collected as a result of the reported violations exceeds one million (1,000,000) Saudi riyals.

​When determining the Reward amount, and the apportioning of the Reward amount between more than one Reporting Individual if applicable, the following shall be taken into consideration:
1.  The Reporting Individual's role in proving the violation.
2. The timing of the Report.
3. The weight, accuracy, completeness and reliability of the Information and evidence provided by the Reporting Individual.
4.  The extent to which the Information provided by the Reporting Individual contributed to the finding of a violation and issuance of a final decision of the same.
5.  Extent of the Reporting Individual's cooperation.
6.  The extent of the Reporting Individual’s contribution in persuading other parties to cooperate in relation to the Report.
7. The extent of the Reporting Individual's contribution in limiting the damages that would have resulted from the violation had it not been reported.
8.  The degree of risk the Reporting Individual faced because of the Report.
9. That the information in the Report was not available to the public; this includes information deduced by the Reporting Individual based on the Reporting Individual's independent analysis of information available to the public.

​The information of the Reporting Individual or any information obtained by the Authority under the provisions of the Regulation on the reporting of violations of the Capital Market Law is considered confidential. The Authority may provide legal support and assistance to whomever it deems to have been harmed as a result of his report. The Regulations affirmed that the Exchange, the Clearing Center, the Depository Center, Capital Market Institutions, and listed companies must not take disciplinary actions against Reporting Individuals employed by them or infringing upon their rights or employment benefits because of Reports submitted by them to the Authority.  The Authority may take into consideration when determining its decision on the reported violation whether the individual who committed or participated in committing the violation has, as an initiative by such individual, submitted a Report on the violation before the Authority is aware of such violation. And the Authority has the right to take whatever measures it deems appropriate against those who knowingly and in bad faith reported an untrue incident.

​​​​The accounting firm can satisfy the registration condition stipulated in subparagraph (b) of paragraph (2) of Article (7) of Rules for Registering Auditors of Entities Subject to the Authority's Supervision by concluding an insurance policy of professional  indemnity for  auditors of entities subject to the Authority's supervision  in accordance with the standard form issued by the  Saudi Central Bank in this regard, which can be viewed via the following link:(link​).

​It is worth noting that the list of documents contained in Annex (1) of the Investment Accounts Instructions is a guidance list of documents. However, in all cases, financial institutions must implement the due diligence measures contained in Article (7) of the Anti-Money Laundering Law issued by Royal Decree No. (M/20) dated 5/2/1439H. and its implementing regulations.

​The committees required to be formed by the company in accordance with the Corporate Governance Regulations (Audit Committee, Nomination Committee, Remuneration Committee) may perform the competencies of the committees stated in the guiding provisions of the Regulations (Risk Management Committee, Corporate Governance Committee). However, this does not mean satisfying the requirements of forming those committees stated in the guiding provisions in the Regulations.

​The specific percentages for the allocation of shares for public funds and retail subscribers in the initial public offerings are determined according to the financial advisor in coordination with the issuer - after obtaining the approval of the Capital Market Authority - and several matters are considered when allocating the percentages of the shares offered, such as market conditions, the nature and size of the offering, and any other relevant information. The Capital Market Authority aims that the shares will be allocated to retail subscribers directly and indirectly, through the allocation to public funds , in order to achieve the highest levels of efficiency in pricing the offering and in providing liquidity after the offering, while giving flexibility in the allocation between retail subscribers and public funds, Given that the ownership of public funds units are available to retail investors, on condition that the allocation percentage for retail subscribers is not less than (10%) of the total offered shares.

In terms of timing, the specific percentages for the allocation of shares for public funds and retail subscribers are initially determined with the submission of an application for registration and offering of shares, provided that the Capital Market Authority approves these percentages, and the final allocation percentage of the total shares offered  to retail subscribers is included in the initial prospectus published after the approval of the Capital Market Authority, and the before start of the book-building process, and  the final allocation percentage of the total shares offered  to public funds is included in the final prospectus published after the end of the book-building process, and determining the final price.   These percentages may be amended based on the size of the offering and market conditions, provided that the Capital Market Authority approve any amendments

​In this case, there is nothing to prevent the use of arbitration, provided that both parties to the dispute agree to refer the dispute to arbitration. In addition, the private fund’s terms and conditions may also include provisions on the use of arbitration, with consideration   to the relevant legal provisions.

​According to the provisions of Chapter (7) of the Capital Market Institutions Regulations, a capital market institution authorized to carry out arranging activity,  may keep  client's money in the course of carrying out securities crowdfunding, provided that it satisfies the following two requirements: (1) Client’s money kept by the institution must not exceed (SR. 40,000,000). (2) Retail client’s money kept by the institution must not exceed (SR. 100,000), as per paragraph (d) of Article (69) of the Capital Market Institutions Regulations. In addition, a capital market institution authorized to carry out arranging activity to keep clients’ money in the course of carrying out securities crowdfunding, which do not desire to abide by the requirements stated in paragraph (d) above, may apply  to the Authority for an authorization for custody, or appoint a custodian authorized by the Authority to conduct the securities activity of custody.

​A capital market institution authorized to carry out arranging activity in the course of carrying out securities crowdfunding, cannot exceed the limit on the total value for the offered shares of the same class through all securities crowdfunding platforms or a limited offering of the same issuer – during the (12) months following the end of the offering– which shall not exceed (SR. 10,000,000) or its equivalent, and that the offering through a securities crowdfunding platform shall not coincide with any other offering for the same issuer through another securities crowdfunding platform or a private placement. Should the capital market institution wish to arrange for an offering that exceeds the above limit, such offering shall not be treated as an Exempt Offer under subparagraph (9) of paragraph (A) of Article (6) of the ROSCO.

​In accordance with the CMA Board resolution issued on 08/07/1444H.  corresponding to 30/01/2023G, the capital market institutions authorised to carry out dealing business are exempted from the obligation contained in Paragraph (b) of Article (3) of the Investment Accounts Instructions relating to the obligation of signing an investment account opening agreement and opening an investment account for its client for dealing activity, who appoints an independent custodian.

​There are some cases exempted from the eligibility for trading in the Parallel Market conditions, in accordance to Article 40 of the Listing Rules, as the follow:

1- Owners of securities -other than the qualified investors- who held securities prior to being listed on Parallel Market are allowed to trade on the Parallel Market in respect of securities of that issuer as well as the rights issued by such issuer. The Capital Market Institution, through which securities are traded in the Parallel Market and the rights issue of these shares, is responsible for ensuring the compliance with this paragraph.

2- Owners of securities -other than the qualified investors- who held securities either by way, inheritance, or based on instructions issued by the Authority or regulatory body are allowed to sell the securities of that issuer and to trade the rights issued by such issuer. The Capital Market Institution, through which securities are traded in the Parallel Market and the rights issue of the shares, is responsible for ensuring the compliance with this paragraph.

​​​​To find the conditions for listing investment funds’ units , kindly find the Listing Rules via visiting the Saudi Exchange company website.
Listing Rules approved by the board of the Capital Market Authority.

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​​Yes, but a capital market institution may not effect a margined transaction with or for a client unless the client has entered into terms of business which are specified in Article (45) of the Capital Market Institutions Regulations.
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To find out the legal requirements to establish an investment fund, please see the following implementing regulations: the Investment Funds Regulations -  the Real Estate Investment Funds Regulations – the Capital Market Institutions Regulations, which can found through the following link: Implementing Regulations page​.
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For information on the procedures for obtaining a license, please see the Capital Market Institutions Regulations and the Securities Business Regulations at the following link: Implementing Regulations page.​​​

Article (50) of the Capital Market Institutions  Regulations includes several provisions in this regard, accordingly, you can view the Regulations through the following link: 

Capital Market Institutions Regulations.

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A fund manager is a Capital Market institution that carries out the management of the assets of an investment fund or real estate investment fund, and the management of its businesses and offering its units in accordance with the Investment Funds Regulations, Real Estate Investment Funds Regulations, and the Rules for Special Purposes Entities.​​​​

​​To find the conditions for listing investment funds’ units , kindly find the Listing Rules via visiting the Saudi Exchange company website.
Listing Rules approved by the board of the Capital Market Authority.​​​​

Excess exposures refer to the exposures in both the trading book and non-trading activities that exceed 25% of the capital market institution’s tier 1 capital.  A capital market institution must calculate the capital requirements for concentration risks for carrying the excess exposures other than the exempted exposures.​

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No, ​​ the foreign portfolio manager should not meet the conditions set out in paragraph (a) of Article 7 of the Rules, when managing the QFI assets in listed securities. ​​

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​Yes, in accordance with the Companies Law.​

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Yes, the legal person that the capital of which is majority owned by citizens or governments of the Cooperation Council for the Arab States of the Gulf (GCC) and who holds the citizenship of non-GCC nationality can submit the application to open an investment account as QFI if it satisfies the conditions prescribed by the Rules, because in this case, the definition of GCC citizens as referred to in paragraph (c) of Article 2 of the Rules, does not apply to the applicant. As the applicant must be a person that the capital of which is majority owned by citizens or governments of the GCC and also holds the citizenship of one of the GCC countries.​

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The settlement cycle for trading listed securities in the Saudi Stock Exchange is two business days after executing the transaction (T+2), and the prefunding condition is subject to the contractual arrangement with the concerned securities broker and is not a regulatory requirement.  ​

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​​​​The Authority reviews listed company’s exception requests from the legal restriction of the cap on the percentage of capital increase with the suspension of preemptive rights in light of regulatory requirements and quantitative and qualitative criteria that are included in the exception request. These criteria taken into consideration by the Authority includes but not limited to the nature of the targeted investors, pricing mechanism for the shares intended to be issued and offered, capital increase size and percentage, in addition to company’s justifications supporting the exception request.​​

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Not necessarily, as the protection of the capital invested by the unitholders in a capital protected fund shall be as disclosed in the fund’s terms and conditions.​

“low-risk” investment products such as government sukuk, money market funds and bank deposits with local banks.​

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​The concept of acting in concert does not apply to public funds -that hold shares in any class of the voting shares of a listed company- managed by a single capital market institution, unless the Authority determines otherwise.​

• Saudi Organization for Certified Public Accountants (SOCPA)
• Certified Public Accountant (CPA)
• ​Certified Management Accountant (CMA)
• Chartered Alternative Investment Analyst (CAIA)
• Certificate in Investment Performance Measurement (CIPM)
• Certified Financial Planner (CFP)
• Financial Risk Manger (FRM)
• Bachelor’s Degree in Finance or Investment or Accounting.

​​The concept of acting in concert does not apply to public funds -that hold shares in any class of the voting shares of a listed company- managed by a single capital market institution, unless the Authority determines otherwise.

Yes. A capital market institution licensed to conduct arranging activities in the course of carrying out securities crowdfunding, may also arrange other offerings outside the context of securities crowdfunding under its arranging license, in accordance with the regulatory requirements and conditi​ons set out in the Rules on the Offer of Securities and Continuing Obligations.

​As defined in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, ‘securities crowdfunding’ refers to the offering of securities through a securities crowdfunding platform to the subscribers of that platform, by a capital market institution authorized to carry out arranging activities. This activity includes share-based and debt-based securities crowdfunding services, in accordance with the requirements and conditions set out in sub-paragraphs (10) and (11) of paragraph (a) of Article Six of the Rules on the Offer of Securities and Continuing Obligations.​​

​As defined in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, ‘securities crowdfunding’ refers to the offering of securities through a securities crowdfunding platform to the subscribers of that platform, by a capital market institution authorized to carry out arranging activities. This activity includes share-based and debt-based securities crowdfunding services, in accordance with the requirements and conditions set out in sub-paragraphs (10) and (11) of paragraph (a) of Article Six of the Rules on the Offer of Securities and Continuing Obligations.​​

​As defined in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, ‘securities crowdfunding’ refers to the offering of securities through a securities crowdfunding platform to the subscribers of that platform, by a capital market institution authorized to carry out arranging activities. This activity includes share-based and debt-based securities crowdfunding services, in accordance with the requirements and conditions set out in sub-paragraphs (10) and (11) of paragraph (a) of Article Six of the Rules on the Offer of Securities and Continuing Obligations.​​