The Saudi Capital Market Authority has taken a notable step in reshaping the Kingdom’s investment landscape. On 2 March 2026, the CMA’s Board issued the Instructions of Simplified Investment Funds (the Instructions), a self-contained regulatory regime designed to sit alongside, rather than within, the existing Investment Funds Regulations.
For institutional market participants, private equity sponsors, venture capital managers, family offices, and sophisticated asset managers, this development deserves careful attention.
A Purpose-Built Framework
It would be a mistake to read the Instructions as merely a lighter version of the existing rules. They are better understood as a purpose-built channel, designed specifically to serve institutional deal flow that does not require the full apparatus of retail-facing fund regulation.
The Instructions govern the registration, management, and operation of Simplified Investment Funds from the ground up. Where a provision of the existing Investment Funds Regulations is meant to apply, the Instructions say so explicitly. Otherwise, the new regime stands on its own terms.
Who Can Manage and Who Can Invest
Fund managers operating under the Instructions must hold a CMA licence covering either investment management and fund operation, or investment management alone. One important qualification: managers licensed solely for investment management, without fund operation authority, cannot use this framework for real estate funds or for funds that invest in real estate assets.
On the investor side, the Instructions draw a clear line. Units may only be offered through private placement to institutional clients. Secondary market transfers are similarly restricted to that same category. The CMA retains discretion to approve offerings to other investor classes on request, though additional conditions will apply.
Faster to Market: The Notification Model
Perhaps the most commercially significant change is the move away from a pre-approval process. Under the existing Investment Funds Regulations, the CMA was required to review an offering application within 15 days of a fund’s ability to proceed. That requirement is gone.
In its place, fund managers must notify the CMA in writing before the intended offering date, submit a signed declaration in the prescribed form, attach the fund’s Terms and Conditions and offering documents, and pay the applicable registration fee. The process is leaner, but it is not without risk.
The CMA expressly reserves the right to raise objections after notification. Fund managers who wish to reduce that exposure can seek the CMA’s non-objection in advance, preserving the speed advantage of the new regime while building in a degree of regulatory comfort before launch. How the CMA administers this post-notification review in practice will be one of the key areas to watch as the framework beds in.
Custody: The General Rule and Its Exceptions
As a baseline, fund managers must appoint one or more custodians based in the Kingdom under a written agreement, and the custodians must be institutions licensed by the CMA to carry out custody activities. The custodian cannot be the fund manager, a sub-fund manager, or an affiliate of either.
Two exceptions are worth flagging:
- Where a Simplified Investment Fund is structured as a Special Purpose Entity, the requirement to appoint a custodian falls away entirely. This will be particularly relevant for deal-by-deal or project-specific structures that are common in private markets.
- Where the fund is a feeder fund, the prohibition on a custodian’s affiliation with the fund manager is relaxed, provided that the conditions set out in Article 25 of the Investment Funds Regulations are met.
Flexibility in Fund Documentation
The Instructions introduce meaningful flexibility in the structure of a fund’s Terms and Conditions. Rather than mandating conformity with prescribed annexes as the Investment Funds Regulations do, the Instructions identify the categories of information that must be covered: offering period, target capital, investment strategy and objectives, fee arrangements, and risk disclosures. How that information is presented is, within those parameters, a matter for the manager.
This shift allows Terms and Conditions to be tailored more directly to the fund’s strategy and investor base, without requiring structural conformity to a template designed for a broader universe of funds.
Manager Duties and Delegation
The Instructions preserve a clear accountability framework. Fund managers owe their duties to unitholders and remain liable for losses arising from fraud, wilful negligence, misconduct, or default. Core responsibilities, including accurate disclosure, asset valuation, risk management, and compliance monitoring, cannot be transferred away.
Delegation is permitted for operational functions. Sub-fund managers, fund operators, and distributors may be appointed, subject to the conditions in the Instructions. Foreign sub-fund managers may be engaged to manage investments held outside the Kingdom, provided that the regulatory standards of their home jurisdiction are at least equivalent to the CMA’s own.
Operational Obligations
Books and records must be retained for a minimum of ten years, or longer where they relate to pending proceedings. Annual financial statements are required, prepared in accordance with standards approved by the Saudi Organization for Chartered and Professional Accountants and audited by a CMA-registered auditor who meets applicable independence requirements.
Our Assessment
The Instructions represent a considered effort by the CMA to create a more agile, institutionally oriented pathway within Saudi Arabia’s capital markets. For fund managers who have found the existing regime better suited to retail fund structures, this is a genuine development, not a marginal one.
That said, the framework raises practical questions that will take time to resolve. The notification model’s interaction with the CMA’s post-launch objection right, the eligibility of specialist strategies such as private credit and direct lending, and the precise scope of the SPE custodian exemption are all areas where market participants will want clarity before committing to structures that rely on the new regime.
We are advising clients across the fund formation, private equity, and capital markets space on what the Instructions mean for their strategies. If you would like to discuss how this framework applies to your specific situation, please reach out to our team.