Article 46: General Provision

Article 46: General Provision

a) The offering, operations and management of the real estate investment traded funds in the Kingdom shall be in accordance with the provisions of this Part and these Regulations, and to the extent that such provisions do not contradict the nature of the fund.

b) In the event of offering a REIT fund units on the Parallel Market, the offer of such units shall be limited, under the provisions of this Part, to qualified investors on the Parallel Market.

c) The unitholder purchasing of REIT fund units from the Exchange is deemed to have read and accepted the funds terms and conditions.

d) As an exception to the provisions of paragraph (a) of Article (42) of these Regulations, any related party may buy or sell any unit of the fund after listing the units.

e) No person or group of persons having their names listed on the fund's terms and conditions, upon establishment, indicating their ownership in the fund's units through in-kind contribution may dispose any of the units in which they subscribed during the first year of trading commencement of the relevant fund's units.

f) Without prejudice to paragraph (k) of Article (39) of these Regulations, it is not permissible to dispose the units allocated to subscribers by in-kind contributions through the mechanism of increasing the fund's total assets value within the first year of its trading commencement.

g) The units of a REIT fund must be deposited with the Securities Depositary Center.

h) The fund manager must publish all the required information to be disclosed as per these Regulations on its website and the Exchange’s website and such information must be complete, clear, accurate and not misleading.

i) Any fundamental changes to the terms and conditions of the fund during the offering period is prohibited.

j) The fund's terms and conditions shall allocate a percentage of the total offer for institutional investors.

k) The fund manager shall ensure when acquiring the assets of an existing real estate investment fund that is managed by the same fund manager, that such acquired assets have achieved rental net profit after deducting all expenses for the last (3) years for the constructionally developed and income generating real estates.

l) If any of the limitations set forth in these Regulations or in the fund’s terms and conditions are breached due to a change of circumstances that is beyond the control of the fund manager and the breach has not been rectified within (5) days from the date of the occurrence of such breach, the fund manager must immediately notify the Authority of such event in writing, indicating the action taken and period of time required to rectify the matter. The Authority may at its absolute discretion vary the time limit for rectifying such breach.

m) Without prejudice to paragraph (h) of Article (39) of these Regulations, the fund manager must disclose to the Authority regarding the statement of the offering results on the Exchange's website.

n) To achieve the independence a member of the fund board of directors, the following must be complied with:

1. An independent fund director shall be able to perform his/her duties, express his/her opinions and vote on decisions objectively with no bias in order to help the board make sound decisions that contribute to achieve the interests of the fund.

2. With regards to the definition of "Independent fund director" stipulated in the Glossary of Defined Terms used in the Regulations and Rules of the Capital Market Authority, cases that negate the independence requirement for an independent director in the board of a REIT fund, include but are not limited to, the following:

a) if he/she holds (5%) or more of the fund's units or the units of another fund under the management of the same fund manager; or is a first degree relative of someone who owns such percentage.

b) if he/she is a representative of a legal person that holds (5%) or more of the fund's units or the units of another fund under the management of the same fund manager;

c) if he/she is a representative of a legal person that holds (5%) or more of the shares of the fund manager, an affiliate of the fund manager, the custodian or an affiliate of the custodian;

d) if he/she is a first degree relative of any member of the board of the fund or any other fund under the management of the same fund manager;

e) if he/she is a first degree relative of any related party of the fund.

f) if he/she is an employee or used to be an employee, during the preceding two years, of the fund manager or any party related to the fund, or if he/she, during the preceding two years, held a controlling interest in any of these parties.

g) if he/she receives financial consideration from the fund in addition to the remuneration for his/her membership of the board.

o) A real estate investment traded fund may apply for listing on the Parallel Market after the issuance of a special fund resolution by the unitholders approving of such.