Article 39: Subscription and Offering

Article 39: Subscription and Offering

a) Without prejudice to the Law of Real Estate Ownership and Investment by Non-Saudis, subscription in the Fund is open to any Saudi, GCC citizens, non- Saudi residents or foreigners non-residents in the Kingdom.

b) The applicant must commence the offer of the fund units within (6) months from the date of the Authority’s decision referred to in sub-paragraphs (1) or (2) of paragraph (c) of Article (8) of these Regulations. If the applicant does not commence the offer of the fund’s units during such period, the Authority’s approval shall be deemed to be cancelled

c) The Fund’s unit value must be fully paid during the fund’s offering period in accordance with the Fund’s Terms and Conditions.

d) the Fund Manager, who should ensure, before accepting any subscription, that the Unitholder obtains and signs a copy of the Fund’s Terms and Conditions.

e) The Fund Manager shall issue a confirmation notice to the unitholder upon subscription in the units of the Fund.

f) The offering period of the Fund shall be specified, and in case the required minimum amount, which stipulated in the fund’s terms and conditions that must be collected is not reached, the subscription amounts must be returned back to the unitholders, then the fund manager must cancel the offering and return the fund's unitholders without any deduction within a period not exceeding (5) days from the date of ending the offer.

g) The Real Estate Investment Fund offering period must not exceed a maximum period of

(60) days.

h) The Fund Manager must submit to the Authority within (10) days of the end of the offering period, a statement of the offering results, and disclose it on its website, in accordance with the requirements of Annex (12) of these Regulations.

i) A unitholder who has subscribed in the fund with an in-kind contribution may reduce its ownership in the fund's units to a minimum of (50%) of the number of units issued corresponding to such right after one year from the date of subscription in the fund or the date of operation of the fund, whichever is further, unless the relevant fund’s terms and conditions state a longer period.

j) The Fund Manager and its affiliates may subscribe for their own account in the fund units managed by the fund manager, provided that the fund manager discloses this in the fund's terms and conditions, provided that the following requirements are met:

1. the subscription condition of the fund manager and his affiliates in the units and related rights shall not have more privileges than the conditions and rights related to the units owned by the other unitholders of the same category.

2. That the Fund Manager and his affiliates shall not exercise voting rights related to the units they own.

3. The Fund Manager shall disclose the details of its investments in the fund units, by the end of each half for a real estate investment fund and each quarter for the real estate investment traded fund, on its website and the Exchange’s website or any other website available to the public according to the controls set out by the Authority (where applicable), as well as in the reports prepared by the fund manager in accordance with Article (26) of these Regulations.

k) The total value of the fund's assets may be increased according to the following mechanism:

1. The fund manager must obtain the Authority's approval before obtaining the unitholders’ approval to offer additional units to the fund by accepting in-kind contributions or by accepting cash contributions, or both in accordance with Article

(27) of these Regulations.

2. The Fund Manager must commence offering the additional fund’s units, within a period not exceeding (6) months from the date of the Authority’s approval. If the applicant did not commence the offer of the fund’s units during such period, the Authority’s approval shall be deemed to be cancelled

3. In case that the total value of the fund’s assets increased by accepting cash contributions or cash and in-kind contributions, the offering period of real estate fund shall be not exceeding, as a maximum, (60) days from the date of the Authority’s approval.

4. In the event that the value of the units to be offered is collected, the offered units must be allocated to the registered fund’s unitholders on the day of the unitholders meeting and then allocate the remaining units - if any - to the rest of the unitholders and return the surplus to all the unitholders in cash - if any - within a period that not exceeding

(15) days from the end of the offering period set forth in the fund’s terms and conditions. Provided that the ownership of the property to be acquired or its benefit is transferred to the interest of the fund within a period not exceeding (60) days from the end of the offering period.

5. In the event that the total value of the fund’s assets is increased by accepting in-kind contributions, the additional units shall be allocated to the unitholders in the form of in-kind immediately, after obtaining the approval of the unitholders referred to in subparagraph (1) of paragraph (k) of this Article. Provided that the ownership of the property to be acquired or its benefit shall be transferred to the fund’s interest within a period not exceeding (60) days from the date of approval of the unitholders.

6. With regards to the provisions of subparagraph (2) of Paragraph (k) of this Article, and in the event that the minimum required to be collected and stipulated in the fund’s terms and conditions is not collected, the Fund Manager must cancel the offering and return back the amounts to the fund’s unitholders without any deduction within a period not exceeding (5) days from the date of ending the offering period.

7. The fund manager must submit to the Authority a supplementary annex to the fund’s terms and conditions, for every increase in the net assets value of the fund by accepting in-kind contributions, cash contributions or both, in accordance with the requirements of Annex (14) of these Regulations.

8. The fund manager must publish the supplementary annex to the fund’s terms and conditions referred to in sub-paragraph (7) of paragraph (k) of this Article, on its website and the Exchange’s website or any other website available to the public according to the controls set out by the Authority (where applicable)

l) The traded fund is excluded from the provisions of paragraphs (d) of this Article, and from the provisions of paragraphs (i) of this Article without prejudice to the restrictions stated in paragraph (e) of Article 46 of these Regulations.