Capital Market Authority amends IFR after public consultation
Riyadh - Arab Today
The board of Capital Market Authority (CMA) approved the final draft of the amended Investment Funds Regulations (IFR) after the draft was published on its website for 60 days for public consultation.
CMA explained that it studied carefully all the opinions, observations and recommendations received from investors and interested parties, including authorized persons.
The amended regulations include 104 articles covering fund management, custody, offering and selling units, merging funds and offering units of foreign funds in the Kingdom.
The amended regulations can be viewed at a dedicated link, CMA stated and explained that the purpose of these regulations is to develop the regulatory framework governing investment funds.
It also regulates the relationship between the funds and the funds' managers with the investors, which will create a suitable environment to diversify investment options and to increase the level of institutional investment.
Therefore, to achieve that, the regulations included several provisions to raise the level of disclosure to investors (unit holders) such as the periodic reports that a fund manager should send to the investors (unit holders).
The regulations also included detailed information on the participation of investors (unit holders) in the voting on specific decisions and procedures taken by the fund manager, and requirements to insure that investors' money and assets are dealt with in a manner that benefit the unit holders.
The fund manager should also disclose the voting policies in listed companies.
Furthermore, the regulations set specific provisions that govern fund managers, including custodians’ independence from the fund manager and setting the durations and procedures regarding the approvals of the establishment of public funds, in addition to the improvement of the requirements that govern private real estate funds.
The authority announced that the amended regulations will be entered into force starting from Nov. 6, 2016, while the current Investment Funds Regulations issued by the CMA Board Resolution No. 1-219-2006 dated Dec. 24, 2006 will still be effective until the amended regulations are entered into force.
It is important to note that the resolution referred to includes a grace period to the enforceability of a number of provisions of the regulation such as paragraphs ‘h’ and ‘I’ of article 17 of the amended regulations mandating requirements on assigning any third party to carry out tasks relating to the fund operations, or to assign any third party operating outside the Kingdom to carry out the fund operations in relation to fund's foreign investments, and it would not be in effect until April 1, 2018.
In addition, the resolution gave the current investment funds time to comply with paragraphs "a" and "b" of article 23 that relates to appointment of an independent custodian, and paragraph "b" of article 54 that requires the terms and conditions contain the basis of the contractual relation, article 55 that requires to produce the information memorandum and key information summery, paragraph "d" of Article 76 contractual form of organization of private fund that must be included in the terms and conditions, and paragraph "c" of article 93 of the amended IFRs that includes requirements on the distributor of units in a foreign fund in the Kingdom, and all of the previous provisions would not be enforced until April 1, 2018.
Finally, money market funds will also be given a grace period to comply with article 48 of the amended IFRs until July 1, 2017.
The CMA emphasizes that it is working on updating and amending a number of its rules and regulations as part of developing the capital market and increasing its efficiency and transparency and according to the tasks entrusted to it by the Capital Market Law and the Companies Law.