Investment fund offers in the Kingdom will constitute a private placement if they satisfy the following criteria:
- the offerees are “sophisticated investors” or the minimum amount payable per offeree is at least SR1 million or an equivalent amount. Sophisticated investors are:
- CMA-authorised persons acting for their own account;
- clients of a person authorised by the CMA to conduct managing activities in certain circumstances;
- the Saudi government of the Kingdom and certain other governmental bodies;
- “Institutions” acting for their own account;
- “Professional investors”; or
- certain registered employees of a CMA-authorised person, if the offer is made through that authorised person; and
- the fund manager notifies the CMA in writing at least 15 days in advance of the offer in a prescribed form with certain required information (e.g. any offering documents, the fund’s terms and conditions, and details of the organisational structure of the fund Manager).
The CMA may ultimately block a private placement application if it determines that the proposed offering may not be commensurate with the fund manager’s ability or may result in a breach of the Capital Market Law or its implementing regulations.