Article 6 of the Saudi Real Estate Investment Schemes Law
المادة 6 من نظام المساهمات العقارية · الفصل الثاني: الترخيص والاشتراكات
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 المالية وفقاً لما تحدده 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 6 explained in plain English
This article sets the rule for determining the capital of a real estate investment scheme, which is the basis on which the number of shares and the amount of each share are calculated. The determination rests on the following elements:
- It is based on the estimated cost of the scheme.
- This cost comes from a licensed valuation entity, not from the licensee's own estimate alone.
- It takes place after the approval of the General Authority for Real Estate and the Capital Market Authority.
- It is done as the regulations specify in detail.
The practical aim is that the capital participants pay is tied to a real cost estimated independently, so it is not inflated or understated without a basis. Article 7 then allows the Authority to require a reserve amount to be added to the capital to meet unexpected expenses, not exceeding 15% of the estimated cost.
For the participant, this means the value of their share is not an arbitrary figure but results from capital determined in this way. The valuation method and its detailed procedures are found in the regulations. Where there is a dispute about the capital or the value of shares, you may consult a lawyer specialized in real estate matters.
Practical example
A company in Riyadh plans a scheme to develop land into residential villas. It commissioned a licensed valuation entity to estimate the cost, which put it at a certain amount, and after the approval of the General Authority for Real Estate and the Capital Market Authority this amount was adopted as the scheme's capital and divided into shares that participants buy.
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 6 of the Saudi Real Estate Investment Schemes Law
How is the capital of a real estate investment scheme determined?
By the estimated cost from a licensed valuation entity, after the approval of the Authority and the Capital Market Authority, as the regulations specify.
What is the relationship between capital and the number of shares?
The capital is the basis on which the number and amount of shares are calculated.
Does the licensee set the capital itself?
The article ties the determination to an estimated cost from a licensed valuation entity and to the approval of the Authority and the Capital Market Authority.
More articles on Scheme Capital and Shares
- 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
- Article 12
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.
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
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.