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Instructions of Simplified Investment Funds and Amendments of the Glossary of Defined Terms Used in The Regulations and Rules of The Capital Market Authority

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Article 1: Preliminary Provisions

Article 2: Definitions

Article 3: Compliance with the Instructions

Article 4: Waivers

Article 5: Fees

Article 6: Right of Appeal

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Article 7: Eligibility Requirements

Article 8: Fund Management and Duties of the Fund Manager

a. The fund manager must act for the benefit of unitholders in accordance with these Instructions, the Capital Market Institutions Regulations or the Offshore Securities Business License Regulations (as applicable) and the Fund’s Terms and Conditions. The fund manager shall be responsible toward unitholders for losses incurred by the fund, which are caused by fraud or wilful negligence, misconduct or default of the fund manager.

b. The fund manager shall comply with the laws and regulations related to his duties and responsibilities, and with all principles and duties required under the Capital Market Institutions Regulations and the Offshore Securities Business License Regulations (as applicable) and shall have the primary responsibility for compliance with these Instructions, whether it directly performs its responsibilities and duties or delegated them to an external party.

c. The fund manager’s responsibilities shall include:

1) Fund management, and Offering of fund units.

2) Ensuring the accuracy of the Fund’s Terms and Conditions and all disclosures by the fund, and verify that they are complete, clear, accurate, and not misleading.

3) Valuing the fund’s assets, as well as pricing and dealing in the units of the fund in accordance with a clear policy.

4) Developing policies and procedures that detect risks effecting the fund's investments and ensure treatment of these risks as soon as possible. These policies and procedures must include conducting risks assessment, at least, once a year.

5) Implementing a compliance monitoring program for every fund under its management. The fund manager must provide the Authority with the results of the implementation of the program upon its request.

6) Cooperating with all persons concerned with the performance of tasks for the fund, including the custodian (where applicable) and the auditor, and the fund manager must provide them with whatever necessary to perform their duties and tasks.

7) Documenting all amendments to the Fund’s Terms and Conditions.

8) Complying with the provisions of Annex (3) of these Instructions when or notifying the Authority.

Article 9: Books and Records Keeping

Article 10

Article 11: Register of Unitholders

a. The fund manager must establish a register of unitholders and must maintain it in the Kingdom.

b. A fund manager may delegate a third party to establish and maintain a register of unitholders referred to in Paragraph (a) of this Article, provided that the following must be fulfilled:

1) The appointment must be pursuant to a written agreement.

2) The delegate must be one of the following categories:

a) A capital market institution licensed to carry out the activity of managing investments and operating funds.

b) A capital market institution holding the offshore securities business license that its permitted business profile includes the activity of managing, must be delegated by a fund manager holding the offshore securities business license.

c. The register shall be conclusive evidence as to the persons entitled to units

entered on the register.

d. The fund manager must maintain at least the following information in the register:

1) The name, address and contact numbers of each unitholder;

2) The national identification number, residence number (Iqama), passport number or commercial registration number of the unitholder when applicable, or any other identification as determined by the Authority;

3) The nationality of the unitholder;

4) The date on which the unitholder was registered in the register;

5) Details of all transactions in relation to units conducted by each unitholder; and

6) The current balance of the number of units (including fractions of a unit) held by each unitholder.

7) Any restriction or right attached to units owned by the unitholder.

e. The register of unitholders must be made available for inspection by the Authority at its request. A summary must be provided by the fund manager to any unitholder free of charge upon request, such summary must show all the information that is relevant to the requesting unitholder only.

f. The fund manager must update the register of unitholders immediately to reflect changes to information referred to in Paragraph (d) of this Article.

Article 12: Conflicts of Interest

Article 13: Investment Policies and Practices

Article 14: Fund’s Subscriptions

Article 15: Delegation by the Fund Manager

a. The Fund Manager may delegate one or more third parties or any of its affiliates to act as a Sub-Fund Manager for managing the Fund’s investments within the Kingdom, the following must be fulfilled:

1. The delegate must be appointed pursuant to a written agreement.

2. The delegate must be one of the following categories:

a) A capital market Institution licensed to carry out the activity of managing Investments and operating funds.

b) A capital market institution licensed to carry out the activity of managing investments.

c) A capital market institution holding the offshore securities business license that its permitted business profile includes the activity of managing, must be delegated by a fund manager holding the offshore securities business license.

b. The fund manager may delegate one or more third parties or any of its affiliates to act as a fund operator, or may delegate one or more third parties to carry out fund operations, including administrative services of the fund, the following must be fulfilled:

1. The delegate must be appointed pursuant to a written agreement.

2. The fund operator or delegate must be one of the following categories:

a) A capital market institution licensed to carry out the activity of managing investments and operating funds.

c. A sub-fund manager operating outside the Kingdom may be delegated to manage the Fund’s foreign investments, or one or more third parties may be delegated to carry out Fund operations outside the Kingdom in relation to the Fund’s foreign investments, provided that such delegate is duly established, licensed, and subject to the supervision of a regulatory authority that applies regulatory standards and requirements at least equivalent to those of the Authority. The delegate must be appointed pursuant to a written agreement. The Authority shall, at its sole discretion, assess whether the regulatory standards and requirements applicable to the sub-fund manager outside the Kingdom or to the third party delegated to carry out Fund operations outside the Kingdom are at least equivalent to those of the Authority.

d. The fund manager may delegate one or more third parties or any of its affiliates to act as a distributor of the Fund’s units. The distributor must be appointed pursuant to a written agreement, and any distributor delegated within the Kingdom must be a capital market institution licensed to carry out the activity of dealing or the activity of advising; and the fund manager may delegate a party outside the Kingdom to undertake distribution activities outside the Kingdom.

e. The fund manager may rely on the distributor delegated pursuant to paragraph (d) of this Article to carry out customer due diligence measures in accordance with the relevant provisions of the anti-money laundering law and its implementing regulations.

Article 16: Services, Commissions and Management Fees

Article 17: the removal, replacement and the voluntary withdrawal of the fund manager

Article 18: Termination and Liquidation of the Fund

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Article 21: Fund Offering, Its Category, and Investor Eligibility

Article 22: Fund Offering Requirements

a) The Fund Manager may not offer units of a Fund unless the following are fulfilled:

1) notifies the Authority in writing prior to the proposed date of the offering;

2) submits to the Authority a declaration in the form set out in Annex (1) of these Instructions;

3) submits to the Authority copies of the Fund’s Terms and Conditions and the offering documents, which must include a statement in the form set out in Annex (2) of these Instructions;

4) pays the registration fee as determined by the Authority; and

5) provides any other information required by the Authority.

b) If the Authority, after receiving the offering notification and the relevant information and documents pursuant to paragraph (a) of this Article, considers that the proposed offering of units may not be commensurate with the fund manager’s ability or may result in a breach of the Capital Market Law or its Implementing Regulations, it may take any of the following actions:

1) carry out any enquiries it considers appropriate, including requiring the concerned person or its representative to appear before the Authority to answer the Authority’s questions and to explain any matters the Authority considers relevant to the offering; or

2) require the concerned person or others to provide additional information, or to confirm the accuracy of the information provided in such manner as the Authority may specify.

c) The Authority may suspend the offering until the completion of the procedures taken pursuant to paragraph (b) of this Article.

d) If the Authority determines that the offering may not be commensurate with the Fund Manager’s ability or may result in a breach of the Capital Market Law or its Implementing Regulations, it may issue a “Notification” to the Fund Manager stating that the offering is not to be made, or publish a “Notice” prohibiting the offering.

e) If the Authority has not taken any of the procedures stated in paragraph (b) of this Article, it shall, at the request of the Fund Manager, issue a notice stating that it has no objection to the offering of the Fund’s units.

f) The Fund Manager must provide the Authority within (10) days from the end of the Fund’s offering period with a statement of the results of the offering in the form set out in Annex (3) of these Instructions.

g) If the offering is not completed, the Fund Manager must provide the Authority within (10) days from the end of the offering period with a written notification signed by it confirming that the offering has not been completed, and must return to the unitholders their subscription monies together with any returns generated from investing such monies without any deductions.

h) The Fund Manager must notify the Authority within (10) days from the date of the Fund’s operation.

i) If the Fund takes the form of a special purposes entity, the Fund Manager must have the by-laws certified by the relevant authority before offering the Fund’s units.

Article 23: Fund Advertisement

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Article 26: Units

Article 27: Ownership of Fund Units and Claims on the Fund Assets

Article 28: Meetings of Unitholders

Article 29: Consent of Unitholders to Changes

Article 30: Reporting to Unitholders

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FUND’S DECLARATION TO THE AUTHORITY

STATEMENT TO BE INCLUDED IN THE PRIVATE PLACEMENT OFFERING DOCUMENTS

NOTIFICATION REQUESTS PROVIDED TO THE AUTHORITY

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Terms

Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority
Clarification	Current Provision	Proposed Provision
The proposed amendments include adding the definition of “Simplified Investment Fund” to the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	-	Simplified Investment Fund: an investment fund established in the Kingdom, the units of which may be offered to specified categories of investors in accordance with the Simplified Investment Funds Instructions.	1.
The proposed amendments include amending the definition of “Private Fund” in the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	Private Fund: an investment fund which is established in the Kingdom and which is not a public fund, and the units in which may be offered by the fund manager, in accordance with Part Five of the Investment Funds Regulations, to investors in the Kingdom.	Private Fund: an investment fund which is established in the Kingdom and which is not a public fund or a simplified investment fund, and the units in which may be offered by the fund manager, in accordance with Part Five of the Investment Funds Regulations, to investors in the Kingdom.	2.
The proposed amendments include amending the definition of “Fund Manager” in the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	Fund Manager: the capital market institution that carries out the management of the assets of an investment fund or a real estate investment fund, and the management of its business and offering of its units in accordance with the Investment Funds Regulations, the Real Estate Investment Funds Regulations and the Rules for Special Purposes Entities.	Fund Manager: the capital market institution that carries out the management of the assets of an investment fund or a real estate investment fund, and the management of its business and offering of its units in accordance with the Investment Funds Regulations, the Real Estate Investment Funds Regulations and the Rules for Special Purposes Entities and the Instructions of Simplified Investment Funds.	3.
The proposed amendments include amending the definition of “Fund Sub-Manager” in the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	Fund Sub-Manager: a third party contracted by a fund manager, under a contract, in accordance with the Investment Funds Regulations and the Real Estate Investment Funds Regulations, and takes on the fund manager’s behalf all or part of the investment decisions for an investment fund managed by the fund manager.	Fund Sub-Manager: a third party contracted by a fund manager, under a contract, in accordance with the Investment Funds Regulations and the Real Estate Investment Funds Regulations and the Instructions of Simplified Investment Funds, and takes on the fund manager’s behalf all or part of the investment decisions for an investment fund managed by the fund manager.	4.
The proposed amendments include amending the definition of “Termination of the Fund” in the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	Termination of the Fund: means wherever mentioned in the Investment Funds Regulations and the Real Estate Investment Funds Regulations, the date on which the fund expires, as per its term end or the occurrence of the event determined on the fund’s terms and conditions, including the stage of sale of assets and the distribution of the unitholders’ dues among them.	Termination of the Fund: means wherever mentioned in the Investment Funds Regulations and the Real Estate Investment Funds Regulations and Instructions of Simplified Investment Funds, the date on which the fund expires, as per its term end or the occurrence of the event determined on the fund’s terms and conditions, including the stage of sale of assets and the distribution of the unitholders’ dues among them.	5.
The proposed amendments include amending the definition of “Fund’s Terms and Conditions” in the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	Fund’s Terms and Conditions: the contracts containing those disclosures and provisions required under the Investment Funds Regulations and the Real Estate Investment Funds Regulations, signed between the fund manager and the unitholder.	Fund’s Terms and Conditions: the contracts containing those disclosures and provisions required under the Investment Funds Regulations and the Real Estate Investment Funds Regulations and the Instructions of Simplified Investment Funds, signed between the fund manager and the unitholder.	6.
The proposed amendments include amending the definition of “Distributor” in the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	Distributor: for the purposes of the Investment Funds Regulations and the Real Estate Investment Funds Regulations, means; a person that is assigned to offer of units of an investment fund in the Kingdom.	Distributor: for the purposes of the Investment Funds Regulations and the Real Estate Investment Funds Regulations and the Instructions of Simplified Investment Funds, means; a person that is assigned to offer of units of an investment fund in the Kingdom.	7.
The proposed amendments include amending the definition of “Unitholder” in the list of terms used in the Regulations and Rules of the Capital Market Authority, in light of the proposed provisions in the Instructions of Simplified Investment Funds.	Unitholder: a person who owns units in an investment fund or a real estate investment fund, which represents a common share in the net assets of the Fund.	Unitholder: a person who owns units in an investment fund or a real estate investment fund or a simplified investment fund, which represents a common share in the net assets of the Fund.	8.

Last update: 04 October 2025

Instructions of Simplified Investment Funds and Amendments of the Glossary of Defined Terms Used in The Regulations and Rules of The Capital Market Authority

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Article 1: Preliminary Provisions

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Article 2: Definitions

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Article 3: Compliance with the Instructions

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Article 4: Waivers

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Article 5: Fees

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Article 6: Right of Appeal

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Article 7: Eligibility Requirements

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Article 8: Fund Management and Duties of the Fund Manager

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Article 9: Books and Records Keeping

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Article 10

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Article 11: Register of Unitholders

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Article 12: Conflicts of Interest

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Article 13: Investment Policies and Practices

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Article 14: Fund’s Subscriptions

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Article 15: Delegation by the Fund Manager

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​​Article 16: Services, Commissions and Management Fees

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Article 17: the removal, replacement and the voluntary withdrawal of the fund manager

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Article 18: Termination and Liquidation of the Fund

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Article 19: Appointment of the Custodian

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Article 20: Segregation of Fund Assets and Responsibilities of the Custodian or the Fund Manager

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Article 21: Fund Offering, Its Category, and Investor Eligibility

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Article 22: Fund Offering Requirements

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Article 23: Fund Advertisement

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Article 24: Contractual Form of the Fund

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Article 25: Fund Documents

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Article 26: Units

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Article 27: Ownership of Fund Units and Claims on the Fund Assets

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Article 28: Meetings of Unitholders

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Article 29: Consent of Unitholders to Changes

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Article 30: Reporting to Unitholders

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Article 31: Entry into Force

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FUND’S DECLARATION TO THE AUTHORITY

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STATEMENT TO BE INCLUDED IN THE PRIVATE PLACEMENT OFFERING DOCUMENTS

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NOTIFICATION REQUESTS PROVIDED TO THE AUTHORITY

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Terms

Article 16: Services, Commissions and Management Fees