​As part of the Capital Market Authority's ("CMA") strategic objectives to develop the capital market, and based on the Capital Market Law issued by Royal Decree No. (M/30) dated 2/6/1424 H, the CMA Board issued its Resolution approving the amendments to the Rules for Special Purposes Entities.

These amendments, approved by the CMA, aim to further regulate and develop the Capital Market and build an advanced capital market that is open to the world and capable of attracting local and international capitals. In addition to playing an active and pivotal role as a channel to satisfy the financing needs to support the growth of the financial sector in the Kingdom, enhancing the role of the Capital Market as a channel to finance the establishment and sustainability of the economy’s institutions, improving the level of services provided to the investors, and continuing to regulate and develop entities under the CMA's supervision in line with the international best practices and standards.

The main elements of the amendments are:

a) Providing fund managers with an additional option to establish a special purposes entity to grant the investment fund a legal personality, while having the option of carrying on the current contractual relationships between fund managers and unitholders.

b) Amending the structure of the special purposes entity that offers debt instruments by registering its shares in the name of the trustee of the special purposes entity instead of the shareholders, where the trustee of the special purposes entity will be responsible for protecting the entity’s assets, appointing the members of the board of directors, determining their remuneration, and appointing the auditor for the special purposes entity, which will enhance the protection of the assets of the special purposes entity and the interests of the holders of debt instruments, in line with the best international practices.

c) In addition to Saudi joint stock companies, capital market institutions, local banks and finance companies, Saudi limited liability companies were enabled to be a sponsor of the special purposes entity when issuing any type of debt instruments, provided that this is in the case of a private placement of debt securities.

The CMA Board Resolution included that the amendments to be effective as of the date of their publication.

This comes after the CMA published the draft amendments to the Rules for Special Purposes Entities on its website for public consultation for (60) calendar days. The number of comments received by CMA during the public consultation period reached (88), and CMA has made several amendments based on what was received. One of these amendments is enabling limited liability companies to be a sponsor of the special purposes entity when issuing any type of debt instruments provided that this is in the case of a private placement, and adding more clarification to the term Trustee, its roles and responsibilities towards the special purposes entity.

The amended Rules for Special Purposes Entities and amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority can be viewed via the following links:

The Rules for Special Purposes Entities

The Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority