The Capital Market Authority Board approved the final draft of the amended Investment Funds Regulations after the draft was published on its website for 60 days for public consultation. CMA explained that it studied carefully all the opinions, observations and recommendations received from investors and interested parties including Authorised Persons.
The amended regulations include 104 Articles covering fund management, custody, offering and selling units, merging funds and offering units of foreign funds in the Kingdom. The amended Regulations can be viewed on the following link:
https://cma.org.sa/en/Market/NEWS/Pages/CMA_N_2066.aspx
CMA explained that the purpose of these regulations is to develop the regulatory framework governing investment funds. It also regulates the relationship between the funds and the funds' managers with the investors which would create a suitable environment to diversify investment options and to increase the level of institutional investment. Therefore, to achieve that, the regulations included several provisions to raise the level of disclosure to investors (unit holders) such as the periodic reports that a fund manager should send to the investors (unit holders). The regulations also included detailed information on the participation of investors (unit holders) in the voting on specific decisions and procedures taken by the fund manager, and requirements to insure that investors' money and assets are dealt with in a manner that benefit the unit holders. The fund manager should also disclose the voting policies in listed companies. Furthermore, the regulations set specific provisions that govern fund managers including custodians independence from the fund manager and setting the durations and procedures regarding the approvals of the establishment of public funds, in addition to the improvement of the requirements that govern private real estate funds
The Authority announced that the amended regulations will be entered into force starting from 6/2/1438H corresponding to 6/11/2016 while the current Investment Funds Regulations issued by the CMA Board Resolution number (1-219-2006) and dated 3/12/1427 corresponding 24/12/2006 will still be effective until the amended Regulations are entered into force. It is important to note that the resolution referred to includes a grace period to the enforceability of a number of provisions of the regulation such as; paragraphs (h) and (i) of Article (17) of the amended regulations mandating requirements on assigning any third party to carry out tasks relating to the fund operations, or to assign any third party operating outside the Kingdom to carry out the fund operations in relation to fund's foreign investments, and it would not be in effect until 15/7/1439H corresponding to 1/4/2018. In addition the resolution gave the current investment funds time to comply with paragraphs (a) and (b) of Article (23) that relates to appointment an independent custodian, and paragraph (b) of Article (54) that requires the terms and conditions contain the basis of the contractual relation, Article (55) requirement to produce the information memorandum and key information summery, paragraph (d) of Article (76) contractual form of organization of private fund that must be included in the terms and conditions, and paragraph (c) of Article (93) of the amended Investment Funds Regulations that includes requirements on the distributer of units in a foreign fund in the Kingdom, and all of the previous provisions would not be enforced until 15/7/1439H corresponding to 1/4/2018. Finally money market funds will also be given a grace period to comply with Article (48) of the amended Investment Funds Regulations until 7/10/1438H corresponding to 1/7/2017.
The Capital Market Authority emphasizes that it is working on updating and amending a number of its rules and regulations as part of developing the capital market and increasing its efficiency and transparency and according to the tasks appointed to it by the Capital Market Law and the Companies Law.
