Article 17: Delegation by the Fund Manager

Article 17: Delegation by the Fund Manager

a. A fund manager may, in respect to any investment fund, which the fund manager manages, delegate one or more third parties or affiliates as a fund sub-manager. The remuneration of any fund sub-manager must be paid by the fund manager out of its own resources.

b. With exception for cases described in Paragraph (c) of this Article, Any fund sub-manager delegated pursuant to Paragraph (a) of this Article must be delegated pursuant to a contract in writing and must be a capital market institution licensed to carry out the activity of managing investments and operating funds or the activity of managing investments.

c. A fund manager may delegate a fund sub-manager operating in a jurisdiction other than the Kingdom to manage foreign investments of the investment fund, however the sub- manager shall be established, authorised and supervised in a jurisdiction that employs regulatory standards and requirements at least equivalent to those of the Authority, and must be delegated pursuant to a contract in writing.

d. The Authority shall have the discretion to assess whether the jurisdiction in which any fund sub-manager operates has regulatory standards and requirements at least equivalent to those of the Authority.

e. The fund manager may delegate a third party or more, or any of its affiliate to work as distributor to units of an investment fund managed by the fund manager. The distributor's remuneration must be paid from the fund manager's own resources.

f. The distributor that has been delegated in the Kingdom pursuant to Paragraph (e) of this Article, must be one of the following:

1) a capital market institution licensed to carry out dealing activity.

2) a capital market institution licensed to carry out advising activity.

3) a local bank.

4) Investment Fund Distribution Platform.

5) Electronic Money Institution licensed by the Saudi Central Bank.

g. The delegation referenced in Paragraph (e) of this Article must be made pursuant to a contract in writing, and where the distributor is a local bank or Electronic Money Institution licensed by the Saudi Central Bank, it must include the following controls at minimum:

1) That the units of the publicly offered investment funds shall be distributed through the distributer’s website or application only.

2) The website or application of the delegated distributor provides the ability to fill and sign the required documents, including:

a) The fund manager's investment account opening agreement.

b) The “Know Your Client” form provided in the Capital Market Institutions Regulations.

c) The fund's subscription form, and the Fund’s Terms and Conditions in which a client wishes to participate.

h. Where the fund manager has delegated the distributor under Paragraph (e) of this Article, the fund manager is responsible for complying with the Capital Market Law and its Implementing Regulations, and the Anti-Money Laundering Law, and its Implementing Regulations. The fund manager may rely on the delegated distributor to take due diligence measures towards the client according to the relevant provisions contained in the Anti-Money Laundering Law and its Implementing Regulations.

i. The fund manager may delegate a third party or more, to carry out the fund operations, including administrative services for the fund.

j. With exception for cases described in Paragraph (k) of this Article, any third party delegated pursuant to Paragraph (i) of this Article must be a capital market institution licensed to carry out the activity of managing investments and operating funds, and must be delegated pursuant to a written contract.

k. A fund manager may delegate a third party operating in a jurisdiction other than the Kingdom to carry out the fund operations in relation to investment fund's foreign investments. The third party must be established, authorised and supervised in a jurisdiction that employs regulatory standards and requirements at least equivalent to those of the Authority, and must be delegated pursuant to a contract in writing.

l. The Authority shall have the discretion to assess whether the jurisdiction in which any third party, which delegated to carries out the operations of the fund outside the Kingdom, it has regulatory standards and requirements at least equivalent to those of the Authority.