The Capital Market Authority (CMA) has called upon interested parties, stakeholders, and market participants to provide their views on a draft amendment to the Investment Funds Regulations.

The public consultation period will last for 15 calendar days, ending on 03/05/1446H (corresponding to 05/11/2024).

The proposed amendment aims to develop the regulations governing the offering of private and foreign investment funds to retail clients, in an effort to enhance investor protection.

The draft includes a provision that prohibits the offering of units in a private fund to retail clients unless the fund manager collects cash subscriptions from qualified and institutional clients equal to or exceeding the total cash subscriptions intended to be collected from retail clients.

Additionally, the amendment proposes a provision that prohibits the private offering of securities issued by a foreign fund to retail clients unless the fund manager collects cash subscriptions from qualified and institutional clients in the Kingdom equal to or exceeding the total cash subscriptions intended to be collected from retail clients.

In 2021, the CMA allowed retail clients to subscribe to private and foreign funds without specifying their subscription ratio compared to qualified and institutional clients, subject to a maximum subscription of SAR 200,000 (or equivalent) per retail client.

The current proposed amendment aims to set a ratio for retail clients’ cash subscriptions in these funds to enhance their protection and mitigate risks, as private and foreign funds have fewer regulatory requirements compared to public funds.

The CMA has stated that all comments and feedback received from interested parties and stakeholders will be carefully considered and studied before finalising the amendment.

Comments can be submitted through the Unified Electronic Platform for Public and Government Entities Consultation (Istitlaa) at istitlaa.ncc.gov.sa or via email to Laws.Regulations@cma.org.sa.

The draft amendment is available for review at the provided electronic link.

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