The Capital Market Authority (CMA) called upon relevant and interested persons participating in the capital market to share their feedback on the Draft regarding enabling the establishment of simplified investment funds. The consultation period will last for 30 calendar days, ending on 15/05/1447H, corresponding to 06/11/2025.
The Draft aims to establish a regulatory framework for the creation of investment funds with high flexibility, characterized by lower costs related to establishment and management, greater flexibility in structuring the fund and regulating the contractual relationship between the fund manager and investors, in a way that contributes to meeting the investment needs of the client categories targeted by these funds.
It was taken into consideration when proposing the provisions of these funds that they resemble the key flexibility features of the Limited Partnership (LP/GP) structure, a model applied in several countries which divides roles between a general partner and a limited partner, and is commonly used in alternative investment funds. This was done by drawing on relevant global practices and in a manner consistent with the development of the financial sector and the diverse needs of investors.
This draft comes as part of the CMA's initiatives to enhance the attractiveness of the asset management sector in the Kingdom, by strengthening the role of investment funds through the adoption of leading international practices adopted in global capital markets, with the aim of developing an efficient financial sector capable of creating more investment opportunities for all investors.
The main elements of the proposed draft include limiting the offering of these funds to categories of clients eligible to invest in such funds in accordance with the provisions of these instructions, in addition to waiving the requirement to appoint a custodian for this type of fund in cases where it is established as a special purpose entity.
The proposed draft also stipulates that the offering of fund units may be made to non-resident foreign investors, the Government of Saudi Arabia, government entities, and any public legal entity in accordance with the applicable regulatory provisions, by a fund manager holding the Offshore Securities Business License.
According to the draft, it is proposed to grant the fund manager greater flexibility regarding the timeframe for notifying the CMA of the establishment of the fund, provided that the CMA is notified prior to the proposed launch date of the fund.
Once adopted, the draft will provide flexibility in determining the key provisions governing the contractual relationship between the fund manager and the unitholders. These include (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).
It is expected that allowing the establishment of this type of fund will contribute to developing the regulatory environment for investment funds in the Kingdom and enhancing their attractiveness.
This proposed draft, together with the regulatory framework for the Offshore Securities Business License, which the CMA published for public consultation at the end of May 2025, represents, once approved, a strategic step aimed at moving the asset management sector in the Kingdom from a local scope to broader regional and global horizons. This integration between the two frameworks reflects a pivotal role in enhancing the attractiveness of the Saudi market and expanding the scope of investments, thereby contributing to consolidating the Kingdom's position as a leading financial hub for attracting international capital and offering competitive investment opportunities at the global level.
It is worth noting that the asset management sector recorded significant leaps during 2024, as its value surpassed the threshold of one trillion Saudi Riyals, achieving a growth rate of 20.9% compared to 2023, when assets amounted to more than SAR 871 billion. Investment funds accounted for the largest share with more than SAR 700 billion, marking a growth rate of 25.2% over the previous year. Private investment funds represented 75% of the total assets of investment funds, while the number of subscribers in these funds rose by 64.9% to reach 152,405 subscribers by the end of 2024.
The CMA emphasized that the comments of relevant and interested persons shall be taken into full consideration for the purpose of approving the final Proposed Amendments, which in turn shall contribute to the aim of enhancing and developing the regulatory environment.
Opinions and comments can be received through any of the following: