Is there a special notification form with regards to the ownership in listed companies?
Yes, the notification shall be in accordance with a form prepared by the CMA, which may be viewed through the following link:
https://cma.org.sa/en/RulesRegulations/FormsSite/Pages/default.aspx
Can a QFI become a client of another capital market institution for the purpose of investing in listed securities?
Yes, a QFI can be a client of any other AP when investing in listed securities.
Can QFIs receive financing from local banks to fund their investments?
Yes, pursuant to the applicable procedures set forth by the CMA and the Saudi Arabian Monetary Agency, QFIs can receive financing from local banks to fund their investments.
Does the CMA's approval on the fund's terms and conditions constitute an exemption to the fund manager from complying with the provisions of the relevant Law and implementing regulations?
No, the fund manager shall continuously comply with the provisions of the relevant Law and implementing regulations even after the CMA's issuance of its approval on the fund's terms and conditions. Complying with the provisions of the relevant Law and implementing regulations is the fund manager's responsibility
Will exempting a fund manager from some provisions of the Regulation by the CMA result in exempting the fund manager of complying with the fund's terms and conditions before the unitholders?
No, unless the fund manager updates the fund's terms and conditions to reflect the content of CMA's exemption.
Who are the addresses in the Capital Market Institutions Regulations? What are its objectives?
The Authorised Persons Regulations addresses all of the persons authorised by the Authority to carry out securities businesses, and the registered persons of registrable functions who intend to apply for a license to carry out securities businesses and for registrable functions.
The Regulations aims to regulate the authorised persons and the registered persons who intend to obtain a license or a registration as well as specifying the procedures and conditions for obtaining the license or the registration, and the conditions for the maintenance of the license or the registration, to provide for the rules of conduct that authorised and registered persons must comply with when conducting their business, as well as the rules and provisions governing the conduct of business, and to set the systems and controls as well as the provisions relating to clients' money and assets.
What does carrying out securities business means?
A security business shall mean engaging in any of the activities of dealing, arranging, managing, advising, and custody by any person acting by way of business. The above mentioned activities are defined as follows:
Dealing: to deal insecurities as principal or agent including buying, selling, managing securities subscription and underwriting. Dealings are divided into three types:
- As principal.
- As agent.
- Underwriting.
Arranging: a person introduces persons in relation to securities business, provides consultations in corporate financing business or act in any form to execute a deal on securities.
Managing: a person manages securities belong to another person in cases require acting at discretion; it is divided into two activities:
- Managing investment funds.
- Managing clients' portfolios.
Providing consultations: a person provides consultation to another person on the advantages and risks of dealing in securities or exercising any rights resulted by securities.
Custody: a person takes custody of assets belong to another person including securities, or makes arrangements for other person to do so. This includes taking the necessary administrative procedures.
Is it required to obtain an authorisation for the management activity to offer investment fund units incorporated outside Saudi Arabia?
No need for an authorization for the management activity to offer investment fund shares incorporated outside Saudi Arabia, and it is required to obtain a authorized to practice the activity of dealing as agent.
In case the applicant is under establishment, in what capacity shall the application for the authorization be submitted to the Authority?
In this case, the authorisation application may be submitted by the founders or the controlling shareholders of the applicant if not yet incorporated.
When does the applicant subject to the provisions of the Authorised Persons Regulation?
Founders and controlling shareholders are subject to the provisions applicable to the applicant starting from the date of submitting the application.
Does an authorised person have to comply with the provisions set forth in the Authorised Persons Regulation?
Yes, an authorised person must comply to the provisions set forth in Authorised Persons Regulations, unless the Authority waives a provision of these Regulations in whole or in part as it applies to an authorised person either on the authorised person's request or on its own initiative.
Dose the Capital Market Institution -licensed in carrying out securities business- have to work in accordance with certain principles or obligations?
An authorised person must comply with the following principles:
1) Integrity, by conducting its business with integrity.
2) Skill, care and diligence, by conducting its business with due skill, care and diligence.
3) Efficiency of management and control, by taking reasonable care to organise its affairs responsibly and effectively, with adequate risk management policies and systems.
4) Financial prudence, by maintaining adequate financial resources in accordance with the Rules issued by the Authority.
5) Proper market conduct, by observing proper standards of market conduct.
6) Protection of Clients’ assets, by arranging for adequate protection of its clients’ assets.
7) Co-operation with regulators, including disclosing to the Authority any material event or change in the authorised person’s business operations or organization.
8) Communications with clients, by communicating information to them in a way which is clear, fair and not misleading.
9) Paying due regard to customers’ interests, by treating them fairly and paying due regard to their interests.
10) No conflicts of interest, by managing conflicts of interest fairly, both between itself and its customers and between a customer and another client.
11) Customers’ suitability, by taking reasonable care to ensure the suitability of its advice and discretionary managing decisions for any customer to whom it provides those services.
Is there any required paid up capital when for carrying on securities business?
Yes, the paid up capital of the applicant must not be less than the following:
• dealing, custody and managing: SR 50 million;
• arranging: SR 2 million; and
• advising: SR 400,000.
• All activities SR 50 million.
Where is the management and head office of the Capital Market Institution required to be in?
An authorised person must have its management and head office in the Kingdom.
What are the registerable functions? Who prescribes them?
The Authority shall prescribe the registrable functions. The following functions are considered functions that must be performed by registered persons:
1) CEO or Managing Director;
2) finance manager;
3) a director or partner;
4) senior officers or managers;
5) compliance officer;
6) MLRO;
7) client functions, including sales representatives, investment advisors, portfolio managers and corporate finance professionals as defined by the Authority.
