Regulation, licensing and registrationPrincipal regulatory bodies
What are the principal regulatory bodies that would have authority over a private equity fund and its manager in your jurisdiction, and what are the regulators’ audit and inspection rights and managers’ regulatory reporting requirements to investors or regulators?
The CMA is the regulatory authority that oversees the financial services and asset management industry in Saudi Arabia. In addition to conducting regular audits on fund managers, the CMA has the right to inspect the books and records of a fund at any time upon request.
The fund manager must provide unitholders with annual reports (including audited financial statements) and short-form annual reports upon request and without charge.
The fund manager must also annual reports available no later than 70 calendar days from the end of the year and provide a copy of the report to the CMA within five days after delivering it to unitholders.Governmental requirements
What are the governmental approval, licensing or registration requirements applicable to a private equity fund in your jurisdiction? Does it make a difference whether there are significant investment activities in your jurisdiction?
A fund manager must be licensed by the CMA, as must the custodian and any third-party advisers appointed to by the fund (eg, administrator). However, if the fund is investing outside of Saudi Arabia the fund may appoint custodians or advisers licensed in the appropriate jurisdictions.
Prior to establishing the fund, the fund manager must submit the terms and conditions and any other offering documents for the CMA’s approval. The IFRs stipulate that the CMA has 15 business days to review the fund’s application and offering documents. Should the CMA have no comments on the application or the offering documents, the fund manager may proceed with the offer to investors. However, in the event the CMA has comments, the 15 business-day review period will reset from the date the fund manager resubmits the application.Registration of investment adviser
Is a private equity fund’s manager, or any of its officers, directors or control persons, required to register as an investment adviser in your jurisdiction?
There is no requirement for a fund manager or any of its officers, directors or control persons to register as an investment adviser in Saudi Arabia.Fund manager requirements
Are there any specific qualifications or other requirements imposed on a private equity fund’s manager, or any of its officers, directors or control persons, in your jurisdiction?
The fund manager must be licensed by the CMA as an authorised person to engage in management activities. Authorised persons are governed by the APRs. Pursuant to the recently amended APRs, the minimum capital of a fund manager conducting management activities is 20 million Saudi riyals.
The following employees of a fund manager must be registered with the CMA:
- chief executive officer or managing director;
- finance manager;
- directors or partners;
- senior officers or managers;
- compliance officer;
- money laundering reporting officer;
- client functions, including sales representatives, investment advisers; and
- portfolio managers and corporate finance professionals.
Describe any rules - or policies of public pension plans or other governmental entities - in your jurisdiction that restrict, or require disclosure of, political contributions by a private equity fund’s manager or investment adviser or their employees.
All contributions in Saudi Arabia are subject to the Saudi Anti-Bribery Law. That being said, there are no specific disclosure requirements or restrictions regarding political contributions.Use of intermediaries and lobbyist registration
Describe any rules - or policies of public pension plans or other governmental entities - in your jurisdiction that restrict, or require disclosure by a private equity fund’s manager or investment adviser of, the engagement of placement agents, lobbyists or other intermediaries in the marketing of the fund to public pension plans and other governmental entities. Describe any rules that require a fund’s investment adviser or its employees and agents to register as lobbyists in the marketing of the fund to public pension plans and governmental entities.
There are no specific disclosure requirements or restrictions in Saudi Arabia in relation to placement agents, lobbyists or other intermediaries in the marketing of the fund to public pension plans and other governmental entities. The fund manager and its employees are not required to register as lobbyists to market to public pension plans and other governmental entities.Bank participation
Describe any legal or regulatory developments emerging from the recent global financial crisis that specifically affect banks with respect to investing in or sponsoring private equity funds.
The Saudi Arabian Monetary Agency (SAMA) is the authority governing and regulating investments by banks in Saudi Arabia. SAMA requires banks to maintain specific liquidity ratios but does not restrict banks from investing or sponsoring private equity funds.