​Pursuant to the Capital Market Authority's role in developing and regulating the capital market, and aiming to develop private equity and venture capital investments, and supporting the assets management industry in Saudi Arabia, and in line with the National Transformation Program and Saudi Arabia's Vision 2030, and based on the Capital Market Law issued by the Royal Decree Number (M/30) Dated 2/06/1424H, the CMA Board has issued its Resolution to:

1.Amend the term "sophisticated investor" in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority to read as follows:

"Sophisticated investor:

1. has the meaning specified in Article (11) of the Offers of Securities Regulations; and
2. for the purposes of the Investment Funds Regulations and the Authorised Persons Regulations, has the meaning specified in paragraph (b) of Article (74) of the Investment Funds Regulation".
    

2.Amend the term "professional investor" in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority to read as follows:
"professional investor: any natural person who fulfils at least one of the following criteria:

1. has carried out at least 10 transactions per quarter over the last 12 months of a minimum total amount of 40 million Saudi Riyals on securities markets;
2. has net assets of not less than 5 million Saudi Riyals;
3. works or has worked for at least three year in the financial sector in a professional position which requires knowledge of securities investment;
4. holds professional certificate that is related to securities business and accredited by an internationally recognized entity; or
5. holds the General Securities Qualification Certificate that is recognised by the Authority,  and  has an annual income that is not less than 600,000 Saudi Riyals in the two most recent years.

3.Amend the term "institution" in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority to read as follows:
"institution:

1. any company which owns, or which is a member of a group which owns, net assets of not less than 10 million Saudi Riyals;
2. any unincorporated body, partnership or other organisation which has net assets of not less than 10 million Saudi Riyals;
3. any person (“A") whilst acting in the capacity of director, officer or employee of a person (“B") falling within sub-paragraphs (1) or (2) where A is responsible for B undertaking any securities activity".

4.Amend the term " compliance officer" in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority to read as follows:
"Compliance Officer: the compliance officer of the authorised person appointed in accordance with paragraph (a) of Article (57) of the Authorised Persons Regulations, or the compliance officer of the external party delegated by the authorised person to function as a compliance officer, appointed in accordance with paragraph (e) of Article (20) of the Authorised Persons Regulations".

5.Amend the term " MLRO" in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority to read as follows:
"MLRO: the Money Laundering and Terrorism Financing Reporting Officer of the authorised person, appointed in accordance with Article (64) of the Authorised Persons Regulations, or the Money Laundering and Terrorism Financing Reporting Officer of the external party delegated by the authorised person to function as a Money Laundering and Terrorism Financing Reporting Officer, appointed in accordance with paragraph (e) of Article (20) of the Authorised Persons Regulations".

6.Add the term "assets under management" to the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority as follows:
"assets under management: for the purposes of the Authorised Persons Regulations, is deemed to include all assets of every kind and nature that are managed by the authorised person for his clients, including but not limited to:

1. cash or deposits including interest owing thereon;
2. dividends and distributions payable in stocks, cash or other property received by the investment fund or the sophisticated investor portfolio managed by such authorised person;
3. all investments and other assets owned by the investment fund or the sophisticated investor portfolio managed by such authorised person; and
4. any interest accrued on any such assets or investments". 

7.Amend paragraph (g) of Article (6) of the Authorised Persons Regulations to read as follows:
"(g) The paid up capital of the applicant must not be less than the following:

1. dealing and custody: SR 50 million;
2. managing: SR 20 million for managing investment funds and client portfolios; and SR 5 million for managing private non-real-estate investment funds and sophisticated investor portfolios;
3. arranging: SR 2 million; and
4. advising: SR 400,000".

8.Amend Article (10) of the Authorised Persons Regulations by adding paragraph (d) which states the following:
"(d) The value of assets under management by an authorised person shall not exceed SR (one) billion if his activity is limited to managing private non-real-estate investment funds or managing sophisticated investor portfolios, and he shall have a continuous control mechanism to ensure the value does not exceed the maximum limit stated in this paragraph. If the limit was exceeded, the authorised person must take the following steps:

1. Notify the Authority at occurrence immediately; and
2. submit a corrective plan to the Authority within a maximum period of one month from occurrence date, and refrain from receiving any additional funds or assets from clients from occurrence date until the situation is corrected.
   

9.Amend the business profile contained in paragraph (4) of Annex 3.1 of the Authorised Persons Regulations to read as follows:

10.Amend the introduction to Annex 3.1 of the Authorised Persons Regulations to read as follows:

"These authorisation requirements set out below apply to all types of securities business and the application of each requirement will differ depending on the nature, scope and complexity of the activities. Applicants whom the type of their activities will be limited to managing private non-real-estate investment funds, managing sophisticated investor portfolios, arranging and advising will be excluded from submitting the information and documents stated in the sub-paragraphs (1), (3), (4) and (5) of paragraph (8) and the paragraphs (9), (10), (11), (12), (13), (16) and (17) of this Annex, provided that the applicant undertakes to obtain the documents and information contained in sub-paragraphs (1), (3), (4) and (5) of paragraph (8) and paragraphs (10), (13), (16) And (17) of this Annex before commencing his activity".

11.Amend Article (20) of the Authorised Persons Regulations by adding paragraph (e) which states the following:
"(e) Except as provided in paragraph (a) of this Article, and without prejudice to the provisions of Article (59) of this regulations, an authorised person whose activity is limited to managing private non-real-estate investment funds or managing sophisticated investor portfolios, arranging or advising may delegate the function of finance officer, compliance officer or MLRO to an external party, if the following conditions are met:

1. The external party responsible for the function of finance officer shall be a certified accounting firm licensed by the Saudi Organization for Certified Public Accountants, where one of its employee is assigned as finance officer for the authorised person;
2. the external party responsible for the function of compliance officer or the MLRO shall be an authorised person, a certified accounting firm licensed by the Saudi Organization for Certified Public Accountants or a law firm authorised to practice law in Saudi Arabia, where one of its employee is assigned as compliance officer or MLRO for the authorised person;
3. the employees assigned by the delegated third parties, aforementioned in paragraph (1) and (2), must pass the qualification examinations required by the Authority, or secure an exemption from the Authority from such requirement; and
4. any other conditions that the Authority specifies.  

12.Amend Article (20) of the Authorised Persons Regulations by adding paragraph (f) which states the following:
"(f) Paragraph (b) of this Article does not apply where an authorised person activities are limited to managing private non-real-estate investment funds, managing sophisticated investor portfolios, arranging and advising, provided that he has two persons registered at all times one of which performs the functions of the Chief Executive Officer, and without prejudice to the provisions of paragraph (c) of this Article if one of their positions became vacant".

13.Amend paragraph (c) of Article (39) of the Authorised Persons Regulations to read as follows:
"(c) The authorised person must request an update of such information from each customer at least once every three years.

14.Not apply the provisions of Article (47), Article (48), Article (51), Article (60), and Article (61) of the Authorised Persons Regulations to an authorised person whose activity is limited to managing private non-real-estate investment funds, managing sophisticated investor portfolios, arranging or advising.

15.Not apply the provisions of paragraph (a) of Article (57) of the Authorised persons Regulations to an authorised person whose activity is limited to managing private non-real estate investment funds, managing sophisticated investor portfolios, arranging or advising, in the event of delegating a third party to function as a compliance officer.

16. Not apply the provisions of Article (64) of the Authorised Persons Regulations and paragraph (4) of Article (20) of the Anti-Money Laundering and Counter Terrorism Finance Rules, to an authorised person whose activity is limited to managing private non-real estate investment funds, managing sophisticated investor portfolios, arranging or advising, in the event of delegating a third party to function as a MLRO, provided that such authorised person shall issue instructions to all of its employees to immediately refer any transaction or deal that is complex, huge, irregular, suspicious, related to or suspected to be related to money laundering, terrorism operations finance, or financing terrorists or terrorist organizations, to the MLRO with the third party, who would deem it necessary to file a report to the Financial Investigation Unit. The third party shall also be responsible for ensuring the compliance with requirements stated in the Anti-money Laundering Law and its implementing regulation. Moreover, it has to notify the authorised person's administration of any issues related to money laundering of terrorism finance.

17. Prohibit the authorised person whose activity is limited to managing private non-real-estate investment funds or managing sophisticated investor portfolios from effecting a margined transaction, lending money or extending credit to his clients in relation to securities business.

18. Exempt the authorised person whose activity is limited to managing private non-real-estate investment funds or managing sophisticated investor portfolios from the provisions of paragraph (b) of Article (1) of the Prudential Rules, provided that the authorised person must at all times maintain owners’ equity of not less than half the paid up capital and six months working capital, and comply with all requirements set forth in Chapter 22 of the Prudential Rules except Article (71) thereof.

19. Exempt the authorised person whose activity is limited to managing private non-real-estate investment funds or managing sophisticated investor portfolios from the application of the provisions of Board Resolution No. (3-4-2011) dated 19/02/1432 H corresponding to 23/01/2011 G, Board Resolution No. (2-11-2012) dated 25/04/1433 H corresponding to 18/03/2012 G, and Board Resolution No. (1-107-2015) dated 17/3/1437 H corresponding to 28/12/2015G regarding the application of the standards of authorised persons governance.

20. Cancel the requirement of submitting the evidence of paid capital deposit in an under formation account or in escrow account, as stated in subparagraph (a) of Article (1) of the Board resolution no. (3-23-2007) dated 20/04/1428H corresponding to 07/05/2007 G.

• The amended Authorised Persons Regulations.
•  Thre amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market.