Article 12 of the Saudi Real Estate Investment Schemes Law
المادة 12 من نظام المساهمات العقارية · الفصل الثاني: الترخيص والاشتراكات
The article requires the licensee's percentage in the scheme to be no less than the regulations specify and held until the scheme ends, and allows other participants to dispose of their shares under the regulations' conditions.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يجب ألا تقل نسبة المرخص له في المساهمة العقارية عن النسبة التي تحددها اللائحة، وأن يحتفظ لنفسه بملكية هذه النسبة حتى انقضاء المساهمة العقارية.
2- يجوز لبقية المساهمين في المساهمة العقارية التصرف بحصصهم وفق الشروط التي تحددها اللائحة.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 12 explained in plain English
This article regulates the ownership of shares from two sides:
First: the licensee.
- Its percentage in the scheme must not be less than the percentage the regulations specify; the article does not state a particular figure.
- It must retain ownership of this percentage until the scheme ends, so it may not dispose of it before then.
The evident purpose is to tie the licensee's interest to the project's success, so it remains a real partner bearing its share to the end and not merely a collector of funds.
Second: the other participants. They may dispose of their shares, such as by sale or assignment, but under the conditions the regulations set. Disposal is permitted in principle, and its details and conditions are in the regulations.
This is linked to Article 1, which defines the register of participants as the register in which any change in the ownership of shares is entered, to Article 11, which limits the right of the creditors of the licensee and participants to what they own in shares, and to Article 13, which makes the licensee responsible for everything connected with the scheme. Anyone who wants to sell their share or buy another's should consult a lawyer specialized in real estate matters to check the regulations' conditions.
Practical example
Abdullah needed cash, so he wanted to sell his shares in a real estate investment scheme in Makkah to a friend. Article 12 allows him to dispose of his shares under the regulations' conditions. The licensee company, however, cannot sell the minimum percentage the regulations set before the scheme ends.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Mohammed bin Saleh Al-Qarawi Law and Notary Office, Riyadh
Frequently asked questions about Article 12 of the Saudi Real Estate Investment Schemes Law
May I sell my share in a real estate investment scheme?
Participants may dispose of their shares under the conditions the regulations set.
Can the licensed developer sell all its shares?
No, its percentage must not be less than the percentage the regulations specify, and it must retain it until the scheme ends.
What is the licensee's minimum percentage in the scheme?
The article does not state a figure and refers the setting of this percentage to the regulations.
More articles on Scheme Capital and Shares
- Article 6
The article provides that a scheme's capital, on which the number and amount of shares are calculated, is set by the estimated cost from a licensed valuation entity after the approval of the Authority and the Capital Market Authority.
يحدد رأس مال المساهمة العقارية، الذي على أساسه يُحتسب عدد الحصص ومقدارها من خلال التكلفة التقديرية من قبل جهة تقييمية مرخصة، بعد موافقة الهيئة وهيئة السوق المال
- Article 7
The article allows the Authority to require a reserve amount, not exceeding 15% of the estimated cost, to be added to a scheme's capital, which may be used only with the participants' assembly's approval.
للهيئة اشتراط إضافة مبلغ احتياطي إلى رأس مال المساهمة العقارية بما لا يتجاوز (15%) من تكلفتها التقديرية، وذلك لمقابلة أي مصاريف إضافية غير متوقعة. ويكون التصرف
- Article 8
The article allows a participant to join a real estate investment scheme with an in-kind or cash share, and refers to the regulations the type of in-kind share and its conditions.
يحق للمساهم الاشتراك في المساهمة العقارية، بحصة عينية أو نقدية. وتحدد اللائحة نوع الحصة العينية والشروط الواجب توافرها فيها.
- Article 9
The article divides a scheme's capital into shares equal in value and rights, limits each participant's liability to the shares they own, and assigns regulation of the register of participants to the Capital Market Authority.
1- يقسم رأس مال المساهمة العقارية إلى حصص متساوية القيمة والحقوق، وتكون مسؤولية المساهمين في حدود ما يملكون من حصص في المساهمة العقارية. 2- تقوم هيئة السوق الما
- Article 10
The article prohibits lending from a scheme's capital and allows borrowing against the scheme's funds or assets if the scheme agreement includes this, under the conditions the regulations set.
لا يجوز الإقراض من رأس مال المساهمة العقارية، ويجوز الاقتراض بضمان أموال أو أصول المساهمة العقارية على أن يتم تضمين اتفاقية المساهمة ذلك، وتحدد اللائحة الاشتراط
- Article 11
The article makes a scheme's net assets owned by the scheme and bars creditors of participants, the licensee and the scheme manager from any right in its funds or assets except what they own in shares.
يكون صافي أصول المساهمة العقارية من أصول ثابتة نقدية وعينية أو حقوق لدى الغير؛ مملوكة للمساهمة العقارية. وليس لدائني المساهمين أو المرخص له أو مدير المساهمة الع
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.