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FMA Approves Issuance Rules for Real Estate Certificates

The Financial Market Authority‘s board has adopted instructions for the issuance of real estate participation certificates.

The board has also amended the rules for securities offerings and ongoing obligations, including the terminology used in the Authority’s regulations. These changes are effective immediately upon their publication.

Basis for Adoption

The adoption is based on the Authority’s roles defined by the real estate participation system. It focuses on organizing the real estate participation shareholders’ register and the issuance of real estate participation certificates. These certificates confirm an investor’s ownership in a real estate participation.

The move aligns with the General Authority for Real Estate regarding fundraising for real estate participation offerings.

This initiative aims to keep pace with the significant developments in the real estate sector and to open new financial and investment channels.

Objectives of Instructions

The instructions aim to regulate the registration and offering of real estate participation certificates. They set requirements for offering, marketing, announcing, or fundraising for these certificates.

The instructions also cover the specifics of private and public offerings, regulate the obligations of the financial market institution through which the offering will occur, and detail the requirements for maintaining books and records.

Key Provisions for Financial Institutions

Under these instructions, financial institutions must ensure they provide investors with sufficient information. This information must be complete, clear, accurate, and not misleading, enabling informed investment decisions.

If an offering is not completed, it will be cancelled, and subscribers’ funds returned without any deductions within ten days from the offering’s end. Institutions must notify the Authority of this cancellation.

Submission Requirements

Financial institutions are required to submit a written application to the Authority, including all necessary data and documents. This submission must occur at least ten days before the proposed date for a private offering of real estate participation certificates.

For public offerings, a 30-day minimum submission period is mandated for the Authority to review the applications. Later, it will decide based on appropriate terms and conditions or to reject the application.

Public Consultation, Amendments

The instructions follow the Authority’s publication on November 6, 2023, of the “Real Estate Participation Certificates Offering Instructions” draft. This publication was part of a public and governmental consultation through the National Competitiveness Center’s electronic platform and the Authority’s website.

Also, it accompanied amendments to the securities offering rules, ongoing obligations, and the terminology used in the Authority’s regulations, following public feedback on these amendments.

 

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