فريق إنت عربي
- Saudi CMA issues new regulations to organize financing investment funds
- The new rules enable public offerings of financing funds and allow their listing on both the main and parallel markets.
- They also enhance fund efficiency and alignment with best practices, supporting the Saudi economy and investors.
The Board of the Saudi Capital Market Authority (CMA) has approved new regulations governing financing investment funds, aiming to enhance their role as key financing channels in the Saudi capital market and introduce additional funding products that support economic growth and meet investor needs.
According to the CMA, the new amendments will enable financing investment funds to be publicly offered—where previously they were limited to private placements—and allow their listing on both the main and parallel markets.
This move is expected to diversify investment products and increase total assets under management in the capital market.
The updates also focus on consolidating all regulatory provisions related to financing investment funds into a single framework, enhancing clarity and unifying the legislative structure. Additionally, the term “Direct Financing Investment Funds Instructions” has been updated to “Financing Investment Funds Instructions.”
The revised framework covers both direct and indirect financing funds, reflecting the expanded scope of activities and the updated regulatory environment.
It also introduces enhanced operational and governance requirements to improve efficiency and align with best practices.
New risk management rules have been introduced, including a cap on borrowing for public financing funds at 15% of net asset value, while funds listed on the parallel market may borrow up to 50% of total fund size.
Moreover, indirect public financing funds are restricted from having exposure of 25% or more to a single beneficiary or related group, in line with rules applied to direct financing funds.
The amendments also define permissible investment areas to limit exposure to highly volatile or low-liquidity assets, ensuring effective liquidity management until suitable financing opportunities arise.
In addition, private financing funds are now allowed to operate as open-ended funds under specific regulatory conditions, while public financing funds are classified as specialized public funds.
The framework further includes updated definitions for direct and indirect financing funds, additional responsibilities for fund managers, and enhanced disclosure requirements in quarterly and annual reports to improve transparency and governance.
The CMA noted that these reforms are part of its broader efforts to develop the regulatory infrastructure of the capital market, open new financing channels, and strengthen Saudi Arabia’s position as an attractive destination for both local and international investors.
