The CEO of the Real Estate General Authority, Eng. Abdullah Al-Hammad, confirmed that the real estate contributions system, which was recently approved by the Council of Ministers, will contribute to increasing the supply of commercial and residential real estate products as a new financing and investment channel for real estate developers.
He also indicated that it will have a role in enhancing investor confidence in the real estate sector in Saudi Arabia, through the rules and provisions it contains that preserve the rights of all parties, and will eliminate the practice of random and irregular real estate contributions, in addition to that it includes the governance of control and compliance work, and the system It will create promising investment opportunities for small or medium enterprises in the real estate market, and provide a new and reliable real estate investment vessel.
He added that the system came as an extension of the real estate legislation system supervised by the Commission, and comes within the framework of the objectives of the comprehensive strategy for the real estate sector, which seeks to govern the sector, enable it and sustain it, and raise its effectiveness and efficiency of transactions in it. The system aims to regulate the activity of real estate contributions, and raise the level of transparency and disclosure in the activity of real estate contributions. Protecting the rights of all parties to the real estate shareholding, governing and organizing the real estate shareholdings, and automating all the procedures for offering shares until they are terminated (closed).
And the head of the Real Estate General Authority stated that the system will be effective in November 2023, corresponding to the month of Rabi` al-Thani 1445, and that work is underway in coordination with the Capital Market Authority to issue the executive regulations for the real estate contributions system, which includes executive regulatory rules, interprets and clarifies the system, and specifies in detail its provisions, responsibilities, obligations, procedures and requirements necessary to practice Real estate activity.
Regarding the integrated roles with the Capital Market Authority, he emphasized that the system defined the roles and responsibilities whereby the Real Estate Authority organizes the activity of real estate contributions, issues the license, amends and cancels it, classifies the real estate contributions according to size, type or location, and sets appropriate conditions and requirements and time periods for the real estate contribution according to its classification, and sets Conditions for qualifying and classifying real estate developers for the purpose of offering real estate contributions, and setting conditions for qualifying and classifying practitioners of real estate contributions activity, and laying down foundations that determine the licensee’s entitlements for his fees, commissions and all control and supervision work on real estate contributions, while highlighting the role of the Capital Market Authority in organizing the register of shareholders The real estate contribution, which is a record in which the names of the shareholders, their shares, and any change that occurs in the ownership of their shares are recorded, and the approval of offering the real estate contribution for advertising and marketing and collecting the financial value in exchange for the shares of the contribution, and the issuance of a real estate contribution certificate that proves that the shareholder owns a share in the real estate contribution.
On the other hand, the General Authority for Real Estate clarified that the real estate contributions system contained 38 articles distributed over seven main chapters. .
As for the second chapter, it was devoted to “licensing and subscriptions”, as it included the conditions of the licensee, how to determine the capital of the real estate shareholding, its shares, the shareholder’s subscription mechanism and the distribution of shares, while the third chapter included all the articles related to “management of the real estate shareholding” and the responsibilities of the person responsible for everything related to The real estate contribution towards the shareholder and towards the relevant government agencies, and his role in managing the shareholding and managing its financial assets and his powers.
The fourth chapter bore the title “Assembly of Shareholders”, and it contained all articles related to the formation of a special assembly of shareholders, its mechanism of action, its convening and the enforcement of its decisions. While the fifth chapter included the articles regulating the “expiration of the real estate shareholding” and the mechanism for selling and closing it.
As for “Violations and Penalties”, it was the title of the sixth chapter, which included a mechanism for controlling violations and provisions of the system and the penalties resulting therefrom.
As for Chapter Seven of the system, “Final Provisions,” it set a period of 120 days for the Real Estate General Authority to issue the executive regulations of the system in coordination with the Capital Market Authority, and canceled any contradictory provisions.
