The Capital Market Authority (CMA) has approved the Instructions of Simplified Investment Funds, introducing a new regulatory framework designed to create highly flexible, lower‑cost investment vehicles. This represents a structural shift in how funds may be formed, managed, and operated in Saudi Arabia.
Key Provisions
- Eligible Investors: Units of Simplified Investment Funds may only be offered to institutional clients and must be managed by a CMA‑licensed fund manager.
- Notification Process: The former 15‑day offering application review requirement has been replaced with a streamlined pre‑offering notification to the CMA.
- Custodian Requirement: Funds structured as Special Purpose Entities are no longer required to appoint a custodian.
- Contractual Flexibility: Fund managers are granted expanded flexibility to determine key terms, including termination rights, unit class characteristics, reporting, amendments to fund term, and unitholder meeting requirements.
This framework draws from international best practices and aligns closely with alternative fund models used in other developed jurisdictions.
Why This Matters
The CMA’s objective is clear: reduce friction, remove unnecessary regulatory barriers, and empower fund managers to design structures that genuinely meet institutional investor needs—particularly in private equity and venture capital.
Removing the 15‑day review period and eliminating the custodian requirement for SPE‑based funds reduces time and cost, without sacrificing investor protection in an institutional‑only environment. The enhanced contractual flexibility brings Saudi fund structuring closer to global alternative investment standards.
By the end of Q4 2025, investment fund assets in Saudi Arabia reached SAR 884.45 billion, representing growth of 26.5% from SAR 699.06 billion in Q4 2024. The Simplified Investment Fund framework is poised to accelerate this momentum by unlocking new structures and attracting sophisticated capital.
Takeaway
Fund managers, institutional investors, and advisers should examine the Instructions closely. While the framework offers significant flexibility, it places corresponding emphasis on strong governance, robust documentation, and informed investor engagement.