CMA drafts rules for special purposes entities

CMA drafts rules for special purposes entities
CMA
Updated 29 May 2016

CMA drafts rules for special purposes entities

CMA drafts rules for special purposes entities

The Capital Market Authority (CMA) invites investors, interested parties and the public to provide their comments and observations on the rules for special purposes entities, which is made available on CMA’s official website and will continue to receive the comments and observations for 60 calendar days.
All comments and observations will be studied and considered for the purpose of issuing the final rules.
The purpose of the rules is to regulate the establishment, licensing, registration, offering and management of special purposes entities and associated activities in the Kingdom.
According to the Capital Market Law, the authority will license the establishment of special purposes entity, and regulate and control its business, uses, issuance of securities, the registration in its registry established by the authority and the provisions of its articles of incorporation, and regulate the provisions of the registration of funds transferred to it, including documentation of the rights thereof and its legal standing against others, and the issuance of rules governing thereof.
The draft rules consist of 83 articles and four annexes aiming to regulate special purposes entities, including its licensing, registration, capital, owners and general assemblies, financial rights and liabilities, shareholders rights to participate in decisions and decision-making procedures, share register and other matters.
The draft also mentioned that a special purposes entity will satisfy licensing conditions at all times, and it will not issue securities other than debt instruments that are asset-backed debt instruments, asset-linked recourse debt instruments or debt-based recourse debt instruments and shares for the purpose of financing its capital.