CMA allows public offering and listing of financing investment funds

The Capital Market Authority (“CMA”) of Saudi Arabia has announced significant developments in the Saudi investment funds landscape, notably by allowing financing investment funds to be publicly offered, while they were previously restricted to private placements.

These developments follow the CMA Board’s adoption of an updated regulatory framework through the issuance of the Instructions on the Financing Investment Funds pursuant to Resolution Number 4-15-2026 dated 11 February 2026 (the “Instructions”). The revised framework is intended to support the development of financing investment funds by expanding the range of available financing products to meet investors’ needs and enhancing the overall regulatory environment. The Instructions operate alongside the Capital Market Law and its implementing regulations, including the Investment Funds Regulations.

The Instructions regulate the offering, management and operation of investment funds established for the purpose of conducting financing activities. Financing funds encompass, investment funds established for the purpose of carrying out either direct or indirect financing activities (“Financing Funds”). 

The amendments introduce updated definitions of both direct and indirect financing funds. A direct financing fund is an investment fund established for the purpose of conducting financing activities in favor of legal persons and investment funds (“Direct Financing Fund”). By contrast, an indirect financing fund is defined as an investment fund established for the purpose of carrying out indirect financing activities (“Indirect Financing Fund”). 

A central feature of the amendments is the introduction of public Financing Funds. The revised framework now allows such funds to be offered to the public and listed on either the Main Market or the Parallel Market. 

The amendments address the regulatory requirements applicable to both public and private Financing Funds including provisions relating to permitted investment areas, conditions for offering fund units of the Financing Funds as well and investment restrictions. 

In addition, a detailed regulatory framework is introduced to public Financing Funds. They establish specific investment and leverage restrictions, including a borrowing limit of 15% of the fund’s net asset value, which may be increased to up to 50% of the fund’s size for funds listed on the Parallel Market. For Direct Financing Funds, exposure to a single beneficiary, or to beneficiaries within the same group, must not reach or exceed 25% of the fund’s total size. 

Further, specific obligations apply to public Financing Funds, including enhanced disclosure requirements in their terms and conditions, specifically in relation to credit granting policies and, in the case of a public Indirect Financing Fund, the evaluation of financing portfolios, arrangements with licensed financing companies and the applicable investment decision-making framework.

The terms and conditions of public Indirect Financing Funds must also include certain specific disclosures, including the average number of days of default in the financing portfolio, the sectors in which the actual or potential beneficiaries of the financing portfolio operate, and the relevant exposure percentages, as well as the period elapsed since the financing was granted to the beneficiaries. 

They also introduce enhanced reporting requirements to unitholders, including periodic disclosures relating to financing performance, default levels and portfolio composition. 

Separate provisions are introduced for private Financing Funds, including a borrowing limit not exceeding 50% of the total size of the fund. The amendments also permit private Financing Funds to be structured as open-ended funds. 

Additional obligations also apply to managers of private Direct Financing Funds. The amendments extend to private Financing Funds the governance framework applicable to private real estate funds under the Investment Funds Regulations, including provisions relating to the board of directors and the responsibilities of its members. 

Taken together, these amendments represent a significant milestone in the development of financing investment funds within Saudi Arabia’s capital markets. By enabling public offerings and listings, the CMA has broadened the range of available fund structures and reinforced the framework for financing-based investment strategies. At the same time, the regime maintains a measured approach through defined investment limits, enhanced disclosure requirements and a structured governance framework. As a result, it is likely to support the development of financing investment funds as an established asset class, while maintaining an appropriate level of investor protection.