What are "Real Estate Contributions"?

It is when individuals jointly participate in a real estate development project to achieve a common benefit or goal, normally a share in the ownership of the project. These projects may be developed for residential, commercial, or any other purpose.

The development of real estate projects may incur huge costs, too high for one individual or company to bear alone. Hence, creating a system where different persons (natural and/or legal) can participate in one development project, allows a higher rate of success and grants all the participants/contributors a share in this success.

This share of ownership is often documented in a certificate issued by the CMA. This competence was entrusted to it pursuant to Article (16) of the Real Estate Contribution Law.

Listing of Certificates on Financial Markets

A little over a month ago, the CMA issued its regulations concerning the listing of the mentioned certificates on Financial markets.

Here are 5 basic principles to be aware of:

1. Listing via Licensed Entities

The Regulations stipulate that the listing of such certificates must happen through a financial market entity, licensed by the CMA to perform this activity.

2. Public vs Private Listing

The listing of certificates can either be a public or private listing. The listing will be deemed a private one if any of the below events:

1. The listing is only for qualified customers or qualified founders.
2. The listing is only for retail customers (100 or less) and the highest threshold for payment doesn't exceed 200K SAR.

3. Cap on Collections

The CMA has placed a cap on the total amount that can be generated/collected from such listings. The cap is 100M SAR.

4. CMA has Flexible Competences

All applications for listing certificates, whether a public or private listing, will be monitored and reviewed by the CMA. The Authority has the competence to suspend the listing, request additional information or documentation ahead of the listing, and approve/reject the application. The timeframe may range between (10) to (30) days, depending on the type of listing.

5. Retention of Records

Financial Markets have clear obligations to retain records of all the listing activities performed and to notify the CMA of the same. These records will act as a proof of the Markets' compliance with the CMA Regulations. Additionally, Financial Markets are required to retain records of all listing activities for a period of 10 years.