The Draft to Develop the Provisions for Offering Private and Foreign Funds to Retail Clients

Amending the requirements for offering private fund units to retail clients; by adding a new paragraph designated as (b) to Article (80) of the Investment Funds Regulations.

Article 80: Private Placement of a Private Fund and Eligibility of Investors

a.   An offer of units in a private fund is a private placement where the offerees are investors under the categories of institutional and qualified clients and if the maximum amount payable per offeree (from investors of the retail clients’ category) is not more than (200) thousand Saudi Riyals or an equivalent amount.

b.   Units in a private fund may not be offered through a private placement to retail clients, unless the fund manager collects total cash subscriptions from qualified clients and institutional clients' that is greater than or equal to the total cash subscriptions intended to be collected from retail clients.

c.   The Authority may, in circumstances other than those described in Paragraph (a) of this Article and upon application of a capital market institution seeking to make an offer of units in a private fund, determine that such an offer shall be treated as a private placement subject to compliance with such limitation as the Authority may impose.

d.   If the units are offered in a private real estate fund, the fund must be a closed-ended investment fund.

Article 80: Private Placement of a Private Fund and Eligibility of Investors

a.   An offer of units in a private fund is a private placement where the offerees are investors under the categories of institutional and qualified clients and if the maximum amount payable per offeree (from investors of the retail clients’ category) is not more than (200) thousand Saudi Riyals or an equivalent amount.

b.   The Authority may, in circumstances other than those described in Paragraph (a) of this Article and upon application of a capital market institution seeking to make an offer of units in a private fund, determine that such an offer shall be treated as a private placement subject to compliance with such limitation as the Authority may impose.

c.   If the units are offered in a private real estate fund, the fund must be a closed-ended investment fund.​

Amending the requirements for offering securities issued by a foreign fund through a private placement to retail clients; by adding a new paragraph designated as (b) to Article (98) of the Investment Funds Regulations.

Article 98: Private Placement of a Foreign Fund and Eligibility of Investors

a.   An offer of securities issued by a foreign fund is a private placement where the offerees are investors under the categories of institutional and qualified clients, and if the maximum amount payable per offeree (from investors of the retail clients’ category) is not more than (200) thousand Saudi Riyals, or an equivalent amount. 

b.   Securities issued by a foreign fund may not be offered through a private placement to retail clients, unless the fund manager collects total cash subscriptions from investors in the Kingdom under the categories of qualified clients and institutional clients that is greater than or equal to the total cash subscriptions intended to be collected from retail clients.

c.   The Authority may, in circumstances other than those described in Paragraph (a) of this Article and upon a request from a distributor seeking to make an offer of securities issued by a foreign fund, determine that such an offer shall be treated as a private placement subject to compliance with such limitation as the Authority may impose.

Article 98: Private Placement of a Foreign Fund and Eligibility of Investors

a.   An offer of securities issued by a foreign fund is a private placement where the offerees are investors under the categories of institutional and qualified clients, and if the maximum amount payable per offeree (from investors of the retail clients’ category) is not more than (200) thousand Saudi Riyals, or an equivalent amount. 

b.   The Authority may, in circumstances other than those described in Paragraph (a) of this Article and upon a request from a distributor seeking to make an offer of securities issued by a foreign fund, determine that such an offer shall be treated as a private placement subject to compliance with such limitation as the Authority may impose.​