Restricting the activities of private enterprises to debt instruments and investment units


The rules regulating special purposes entities included that it is not permissible to transfer any assets of the facility for any purpose other than issuing debt instruments or investment units or supporting activities necessary to achieve its purposes. A special purposes entity may not merge with another special purpose entity or other legal person of any kind. According to Article Eleven, if a special purposes entity issues debt instruments based on debt or linked to assets, or intends to issue them, the sponsor must be a Saudi joint stock company or a financial market institution licensed to engage in securities business related to the business of the special purposes entity. a private bank, a local bank, or a financing company. As an exception to the provisions of subparagraph (1) of Paragraph (a) of this Article, if the special purposes entity issues debt instruments based on debt or linked to assets, or intends to issue them, through a private placement, the sponsor may be a Saudi company with liability limited. Neither the sponsor nor any of its affiliates may have an interest in the special purposes entity, or claims relating to its assets, except for claims fully and impartially disclosed in the special purposes entity’s documents. The sponsor of the special purposes entity that issued or intends to issue debt instruments may not be changed except in the event of its bankruptcy.

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