Saudi Arabia's Amended Investment Fund Rules: What They Mean for Fund Managers and Investors

 Saudi Arabia’s financial sector has taken another decisive step towards global competitiveness with the Capital Market Authority (CMA) announcing wide-ranging amendments to its investment fund rules. 

 
The changes, effective immediately from July 9, 2025, reshape how funds operate, expand investor access, and enhance market transparency. 

For fund managers, investors, and firms exploring business setup in Saudi Arabia, these updates carry both opportunities and new compliance requirements. Here’s a detailed look at what’s changed, and why it matters. 

1. Expanding Fund Distribution Channels 

One of the most significant changes is the CMA’s green light for licensed electronic money institutions and digital fund distribution platforms to sell investment fund units online, including via mobile applications. 

This is a milestone for the Kingdom’s fintech ecosystem, making it easier for retail investors to participate and for foreign fund managers to reach the Saudi market without traditional distribution bottlenecks. 

The new framework also permits licensed managers to distribute foreign funds within Saudi Arabia, provided they meet compliance requirements, creating a bridge between local investors and global investment products. 

2. Fee Caps and Manager Withdrawal Rules 

The CMA has, for the first time, formalized how fund managers can voluntarily withdraw from their roles. A 60-day handover period is now mandatory, ensuring operational stability. 

If the CMA removes a manager, all fees must stop immediately. Additionally, the regulator now holds the authority to cap service fees and commissions, especially for retail-focused public funds. 

This creates a more investor-friendly environment and aligns with global best practices, a critical consideration for firms involved in Saudi company formation with asset management ambitions. 

3. Stronger Disclosure and Transparency Standards 

Transparency has been elevated through mandatory disclosures: 

• Public fund managers must reveal the credit ratings of their top ten debt holdings in quarterly reports. 

• Any fund liquidation or unitholder meeting must include pre-published agendas and supporting documents on public platforms. 

These measures aim to close information gaps and protect smaller investors, making the Kingdom’s markets more attractive to those evaluating business incorporation in the KSA in financial services. 

4. Reporting and Accounting Changes 

Fund managers must now prepare interim and annual reports following Saudi Organization for Chartered and Professional Accountants (SOCPA) standards. Liquidation timelines have been extended from six to twelve months for smoother wind-downs. 

Additionally, investor registers can now be managed either by licensed capital market institutions or recognized fund distribution platforms, providing operational flexibility. 

5. Targeted Rules for Specific Fund Types 

The updated regulations bring nuanced requirements across different fund structures: 

• Public funds can now invest in privately placed Saudi debt instruments and must benchmark performance against independent indices. 

• Private and foreign funds face a cap: retail investor contributions cannot exceed 50% of total units at offering or during transfers. 

• Money market and capital protection funds have new exposure limits: no more than 10% of NAV in a single debt issuer and a 25% total entity cap. 

• Closed-ended traded funds are banned from selling in-kind contributions to artificially inflate asset values. 

• Special Purpose Entity (SPE) funds must have by-laws certified before offering units. 

• Feeder funds are now prohibited from investing in private investment funds or other feeder funds. 

These changes will require fund managers to review strategies and internal compliance procedures, an important step for anyone engaging in Saudi Arabia business setup services for investment vehicles. 

6. Expanded Investor Categories and Account Procedures 

The CMA also updated rules for opening investment accounts: 

• Saudi nationals can use national IDs. 

• GCC citizens may use passports or IDs. 

• Foreign residents can apply with valid Iqama or diplomatic credentials. 

• Qualified foreign investors outside the GCC can participate by meeting existing criteria and providing passport verification. 

For legal entities, both Saudi/GCC and foreign, incorporation proof, regulatory approvals, and governance safeguards are required before account opening. This streamlined onboarding process supports the Kingdom’s broader strategy to attract foreign participation in its capital markets. 

7. What This Means for Market Participants 

The updated rules represent a balancing act: expanding access for investors while raising governance expectations for managers. For companies considering business setup in Saudi Arabia in the finance and investment space, this regulatory clarity strengthens market confidence. 

Key takeaways for fund managers include: 

• Update compliance frameworks to meet new reporting and disclosure timelines. 

• Review fee structures considering potential CMA caps. 

• Ensure operational readiness for cross-zone distribution and digital onboarding. 

Saudi Arabia’s updated investment fund regulations are part of a broader economic transformation in line with Vision 2030. By modernizing fund operations, expanding digital access, and enhancing transparency, the KSA is positioning itself as a leading financial hub in the Middle East. 

For businesses exploring Saudi company formation in the capital markets space, the environment is becoming more accessible but also more regulated.  

Working with experienced Saudi Arabia business setup services providers can help navigate licensing, compliance, and operational structuring under the new framework.