Saudi Gazette report

RIYADH — The Capital Market Authority (CMA) has invited public consultation on a new draft proposal that would open Saudi Arabia’s main market to all categories of non-resident foreign investors and introduce a flexible framework for establishing simplified investment funds.

The consultation period will remain open for 30 days, ending on Nov. 6, 2025 (15/05/1447H).

The CMA called on all relevant and interested parties in the capital market to share their feedback through its official channels.

According to the CMA, the draft aims to develop a regulatory framework that enables the creation of investment funds characterized by lower establishment and management costs and greater structural flexibility.

The initiative seeks to strengthen the asset management sector’s competitiveness by aligning with leading international practices and expanding investment opportunities for both local and foreign investors.

The proposed framework draws inspiration from the Limited Partnership (LP/GP) structure, widely used in alternative investment funds globally, where roles are divided between general and limited partners.

The CMA said this model was adapted in line with Saudi Arabia’s financial sector development goals and the diverse needs of investors.

Key provisions of the draft include limiting the offering of such funds to eligible client categories, waiving the requirement for a custodian when the fund is established as a special purpose entity, and allowing offerings to non-resident foreign investors, Saudi government entities, and public legal bodies through fund managers licensed for offshore securities business.

The proposal also grants fund managers more flexibility regarding the timing of notifying the CMA prior to a fund’s launch and provides room for tailored contractual arrangements between fund managers and unitholders, covering matters such as fund termination, liquidation, unit classifications, and reporting obligations.

The CMA expects that the adoption of this framework, combined with the forthcoming Offshore Securities Business License regulations, will mark a major step in transforming Saudi Arabia’s asset management industry from a local to a regional and global player.

The integration of these two frameworks is seen as pivotal in enhancing the Saudi capital market’s global appeal and solidifying the Kingdom’s position as a leading international financial hub.

The CMA highlighted that Saudi Arabia’s asset management sector recorded substantial growth in 2024, surpassing SR1 trillion in total assets, up 20.9% from 2023’s SR871 billion.

Investment funds represented more than SR700 billion of the total, with private investment funds comprising 75% of that value.

The number of fund subscribers surged by 64.9% to reach 152,405 by year-end.

The CMA reaffirmed that all feedback received during the consultation will be carefully reviewed and considered before approving the final amendments to further strengthen and enhance the Kingdom’s capital market regulatory environment.