On 7 October 2025, the Saudi Capital Market Authority (CMA) published for public consultation draft Instructions of Simplified Investment Funds (Instructions) that would enable the establishment of simplified investment funds for specific categories of investors. The consultation period runs for thirty calendar days and ends on 6 November 2025. The Instructions, together with the draft regulatory framework for the Offshore Securities Business License (OSBL), published for public consultation at the end of May 2025, represent, once approved, a strategic step aimed at developing the regulatory environment for investment funds in the Kingdom that will contribute to meeting the investment needs of the client categories targeted by these funds.
Scope of Application:
The Instructions, once approved, aim to enhance the capital market by introducing a new fund type tailored for institutional clients and would allow capital market institutions holding the OSBL to establish and offer Simplified Investment Funds (Fund) in KSA.
Key Provisions:
Simplified Investment Fund: The Instructions will allow a new fund type with enhanced flexibility in structuring the contractual arrangements between the fund manager and unitholders. The Simplified Investment Fund will follow the contractual form as generally contemplated for other funds under the Investment Funds Regulations; however, the framework will provide flexibility in structuring and application of the key provisions governing the contractual relationship between the fund manager and unitholders.
Contractual flexibility: The managers and investors will have flexibility to opt out of the provisions of the Investment Funds Regulations that apply to private funds, including those related to termination and liquidation, reporting to unitholders, amendment authorities, and unitholder meetings.
Eligible investors: Where the manager is licensed to manage investments or the activity of managing investments and operating funds, offerings will be limited to institutional clients. Where the manager holds the OSBL, offerings will be limited to non-resident foreign investors, the Government of Saudi Arabia, government and public entities, capital market institutions, local banks and insurance companies. Secondary transfers will follow the same categories.
Custody: The fund manager must appoint a custodian in the Kingdom. However, a Simplified Investment Fund that takes the form of a Special Purpose Entity will be exempt from the requirement to appoint a custodian.
Manager Duties: Duties include acting for the benefit of unitholders, accurate disclosure, valuation, implementing compliance monitoring programs, maintaining books and records, financial statements, and cooperation with service providers.
Offering mechanics: The manager must notify the CMA prior to the proposed date of offering, submit the required declaration, pay the registration fee, and provide fund terms and offering documents and any information the CMA requires. The Instructions will provide the manager with greater flexibility regarding the timing of notification, provided such notification is issued prior to the proposed launch date of the fund. The CMA may make enquiries, request confirmations, suspend or prohibit the offering. The manager must report results after the offering and notify operation and termination as specified.
Implications for Market Participants:
If adopted, the framework is intended to provide a lower cost and more flexible fund option for the targeted investor categories and support managers, including those using the OSBL pathway.
How Al Tamimi can help?
If you have any questions or require further information on the new law or its implications for your business, please contact Rafiq Jaffer, Partner, Banking & Finance (Bahrain, KSA & UAE) Head – Debt Capital Markets, r.jaffer@tamimi.com and Ambreen Bidiwal, Senior Counsel, A.bidiwala@tamimi.com