The Capital Market Authority (CMA) is inviting feedback from stakeholders on proposed changes to the Investment Funds Regulations. This public consultation period will last 15 days, ending on November 5, 2024.
The draft amendments aim to refine the rules governing the offering of private and foreign investment funds to retail clients, with a focus on enhancing investor protection.
One key proposal is to prohibit the sale of private fund units to retail clients unless the fund manager secures an equivalent or greater amount of cash subscriptions from qualified and institutional clients compared to retail clients.
Additionally, the amendments propose that securities from foreign funds should not be privately offered to retail investors unless similar conditions are met regarding cash subscriptions from qualified and institutional clients within the Kingdom.
Previously, in 2021, the CMA allowed retail clients to invest in private and foreign funds without specifying their subscription percentage, as long as individual investments did not exceed SAR 200,000. The current changes aim to set specific percentages for retail client subscriptions to mitigate risk exposure and enhance protection, given the fewer restrictions associated with private and foreign funds compared to public ones.
