Saudi investment funds: New possibilities explored

Saudi Arabia is set to introduce new regulations for investment funds in the country.

The Capital Market Authority (CMA) in Saudi Arabia has initiated a public consultation regarding proposed changes to the regulatory framework for investment funds.

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The proposed regulations aim to enhance the regulatory framework by increasing transparency and disclosure for fund unit holders, ensuring governance standards that protect investor rights, and boosting the appeal of asset management in the country.

Additionally, the consultation outlines provisions for the voluntary withdrawal of public and private fund managers. Current fund managers will now be required to transfer their management responsibilities to a successor within 60 days of receiving approval.

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This regulatory mechanism would ensure:

• The protection of investors’ rights in public, private, and real estate investment funds
• A smooth transition of fund management
• Safeguarding unit holders’ interests
• Bolstering investor confidence in the capital market

Real estate investment funds

Funds listed on the Parallel Market (Nomu) would, upon establishment, be allowed to invest in real estate development projects. These funds will not be bound by the investment policy percentages and asset restrictions stipulated in the Real Estate Investment Funds Regulations.

Advantages for investors

• Expansion of investment opportunities for these funds
• Support for the diversification of assets
• Increased flexibility, enhancing potential returns for investors

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If approved, the project would also allow capital market institutions licensed to conduct investment management activities to distribute foreign funds and offer their securities in Saudi Arabia. This would enable clients in the country to invest in foreign funds.

Additionally, the CMA has proposed other regulatory provisions to encourage the growth of investment funds and real estate investment funds in Saudi Arabia.