Article 17 of the Saudi Real Estate Investment Schemes Law
المادة 17 من نظام المساهمات العقارية · الفصل الثالث: إدارة المساهمة العقارية
The article provides that a real estate investment scheme acquires legal personality when the Authority issues the license, and that it is then subject to the Law and the Implementing Regulations.
Official text (Arabic)
This article has not been amended since the law was issued.
تكتسب المساهمة العقارية الشخصية الاعتبارية بصدور الترخيص من قبل الهيئة، وتكون خاضعة لأحكام النظام واللائحة.
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 17 explained in plain English
This article fixes the moment a real estate investment scheme becomes an independent legal entity: when the Real Estate General Authority issues the license. From that moment the scheme acquires legal personality.
Legal personality generally means that the scheme is treated as a person separate from the individuals who form it or run it. This fits with other provisions of the Law, such as:
- Article 1, which defines the escrow account as the bank account dedicated to the scheme.
- Article 16, which makes the scheme certificate evidence that the shareholder owns a share in the scheme.
The article also provides that once the scheme has acquired this personality it is subject to the provisions of the Law and the Implementing Regulations.
It is worth noting that legal personality is tied to the issuance of the license; the article links its acquisition to that specific event. Article 18 then requires the licensee to appoint a certified accountant and an engineering consultant for each scheme.
The effect of legal personality on matters such as contracting or litigating in the name of the scheme needs to be examined under the Law and the Implementing Regulations case by case, and you can consult a lawyer specializing in real estate cases on this.
Practical example
A company in Riyadh brought together a group of investors to develop a plot of land and waited for the Real Estate General Authority to issue the license. When it was issued, the scheme acquired legal personality and became subject to the Real Estate Investment Schemes Law and its Implementing Regulations.
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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Frequently asked questions about Article 17 of the Saudi Real Estate Investment Schemes Law
When does a real estate investment scheme acquire legal personality?
When the Real Estate General Authority issues the license.
Which provisions apply to the scheme after it is licensed?
It is subject to the provisions of the Real Estate Investment Schemes Law and its Implementing Regulations.
Is a real estate investment scheme a separate entity from the developer?
The article grants the scheme legal personality once the license is issued, so it is a legal entity in its own right.
More articles on Licensing a Real Estate Scheme
- Article 3
The article makes the General Authority for Real Estate the regulator of real estate investment schemes and lists its powers, from licensing, classification and qualification conditions to fee-basis setting and oversight.
دون إخلال باختصاصات الجهات الحكومية الأخرى، تتولى الهيئة تنظيم نشاط المساهمات العقارية وفقاً لما يحدده النظام واللائحة، ولها على وجه خاص ما يأتي: 1- إصدار الترخ
- Article 4
The article prohibits offering, advertising, marketing or raising funds for a real estate investment scheme until the Capital Market Authority approves and the Authority issues a license, after verifying the property's title deed and development approvals.
لا يجوز طرح المساهمة العقارية ولا الإعلان عنها ولا تسويقها ولا جمع الأموال لها إلا بعد موافقة هيئة السوق المالية والحصول على ترخيص من الهيئة -وفقاً لأحكام النظا
- Article 5
The article requires the licensee to be qualified and classified by the Authority to carry on real estate investment scheme activity, as the regulations specify.
يجب أن يكون المرخص له مؤهلاً ومصنفاً من الهيئة لممارسة نشاط المساهمات العقارية وفقاً لما تحدده اللائحة.
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.