Implementing Regulation of the Law of Collective Real Estate Investment Schemes

Article 1

  • The meanings of the words and phrases stipulated in Article (1) of the Law apply to the Regulation, and the following phrases - wherever they appear in this Regulation - shall have the meanings indicated next to each of them, unless the context requires otherwise:

  • License Applicant: The real estate developer applying for the real estate contribution license.

  • Real Estate Contribution Capital: The cash and in-kind shares provided for the real estate contribution, divided into equal values.

  • Contribution Agreement: A document between the licensee and the contributors for the purposes of the real estate contribution.

Article 2

  • The real estate development project subject to licensing - referred to in Article (1) of the law - shall be in the case where five or more persons participate in it.

Article 3

  • Real estate contributions are classified by size as follows:

    • A- Small contribution with a capital of less than fifty million Riyals.

    • B- Medium contribution with a capital of no less than fifty million Riyals and no more than three hundred million Riyals.

    • C- Large contribution with a capital exceeding three hundred million Riyals.

Article 4

  • It is not permissible to license multiple real estate contributions on the same property during a single period.

Article 5

  • The Real Estate subject to the real estate contribution must take one of the following forms:

    • 1- It must be a registered in-kind share in the real estate contribution.

    • 2- It must be purchased for the benefit of the real estate contribution.

Article 6

  • 1- If the Real Estate is to be purchased for the benefit of the Real Estate participation, it is required to conclude an agreement with the Owner of Property that includes his commitment to transfer the ownership of the Real Estate to the Real Estate participation after the issuance of the License.

  • 2- The Owner of Property must transfer the ownership of the Real Estate subject to the Real Estate participation to the Real Estate participation after the issuance of the License and before the offering and collection of funds, and it should be stated in the sale record that the sale is conditional upon the payment of the amount within the specified time.

  • 3- Participation in the Real Estate participation may be made with an in-kind share, with Real Estate being the subject of it, and the following conditions must be met for the in-kind share:

    • A- It must be owned by the participant at the time of submission.

    • B- It must be included in the participation agreement.

  • 4- The participant must transfer the ownership of the Real Estate to the Real Estate participation after obtaining the License, within a period not exceeding (five) working days.

  • 5- In the event that the offering of the participation and the collection of funds are not completed, the ownership of the Real Estate shall be returned to its original owner according to a letter from the authority.

  • 6- The participant must retain the in-kind share in the first year with all of his shares, and may dispose of in the second year - until the expiration of the Real Estate participation - no more than (50%) of his share in the Real Estate participation.

Article 7

  • The provisions for offering real estate contributions, announcing them, marketing them, raising funds for them, issuing their certificates, and organizing their shareholders' register are regulated in accordance with the instructions for offering real estate contribution certificates issued by the Capital Market Authority.

Licensing Procedures

Article 8

Previous Amendments
  • The license application shall be submitted to the Authority according to the form prepared by the Authority for this purpose, accompanied by the following:

    • 1- A certificate from a licensed company authorized to provide credit services, including the credit record integrity of the license applicant, provided that the certificate issuance date does not exceed three (3) months from the date of application submission.

    • 2- The real estate register number or a valid property ownership document for the real estate subject to the contribution, confirmed for its validity and negotiability based on a statement from the issuing authority.

    • 3- Regulatory approvals - as applicable - from the Ministry of Municipal and Rural Affairs and Housing, the Ministry of Energy, the Authority, or other competent authorities according to their regulations.

    • 4- An economic feasibility study for the real estate contribution in Arabic, certified by a licensed office in the Kingdom, including estimated financial, construction, and marketing data, expected financial and administrative expenses for all development costs of the contribution project, the expected duration for completion, implementation phases, expected funding sources, and cases for adding the reserve amount.

    • 5- Description of the real estate subject to the contribution.

    • 6- Specification of the capital of the real estate contribution.

    • 7- Contribution agreement template.

    • 8- Agreement with the engineering consultant including the obligations and tasks assigned to him.

    • 9- Agreement with the certified accountant including the obligations and tasks assigned to him.

    • 10- Agreement with the real estate contribution manager.

    • 11- Agreement concluded with the property owner pursuant to Article (Six) of the Regulation, if any.

    • 12- Valuation of the real estate subject to the contribution by three accredited appraisers.

    • 13- Appointment of a Capital Market Institution in accordance with the instructions for issuing real estate contribution certificates issued by the Capital Market Authority.

Article 9

  • 1- The Authority studies the License Claim within a period not exceeding (ten) working days, and if it requires any additional data

  • or documents that it deems necessary, it shall notify the License Applicant, who must complete what is required within a period not exceeding (sixty) days from the date of notification, and the Authority may extend this period for an additional (thirty) days, otherwise, the claim shall be considered rejected.

  • 2- The Authority issues a conditional approval on the License Claim to complete the licensing procedures, or it rejects the claim with a statement of the reasons for rejection.

  • 3- The License Applicant -after obtaining the conditional approval on the License Claim- completes the procedures for offering real estate contribution certificates in accordance with the instructions for offering real estate contribution certificates issued by the Capital Market Authority.

  • 4- The Authority issues the License -after completing what is stated in paragraphs (2) and (3) of this article- including the following data:

    • A- License number.

    • B- Name of the licensee.

    • C- Duration of the License.

    • D- Name of the real estate contribution and the financial and planning data of the real estate.

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