Capital market institutions licensed for arranging activities can now offer sukuk and other debt instruments through securities crowdfunding platforms, the Capital Market Authority (CMA) said in a statement. The framework, which ends the experimental phase launched in 2Q 2021 through the FinTech Lab, is effective immediately under amendments to the rules on the offer of securities and continuing obligations (pdf), the rules for special purposes entities, and the capital market institutions regulations.

The pitch: The new rules — first floated in March for consultation — broaden access to the Kingdom’s debt market, giving investors and issuers alike a new channel to raise and allocate capital. The framework is designed to diversify financing options, expand the investor base, and strengthen protections around what has been one of the fastest-growing corners of the market.

DATA POINT- Debt crowdfunding issuances nearly doubled last year, climbing to SAR 3.4 bn in 2024, up from SAR 1.5 bn the year prior, while the number of authorized firms rose to 17, up from 14.

IN CONTEXT- The approval comes on the heels of overhauling the special purpose entities regime for sukuk and structured debt, widening sponsor eligibility to LLCs, fintechs, and SMEs, introducing exempt offerings, embedding the true sale principle, and tightening governance with independent boards and stronger trustee oversight. These reforms, together with the new crowdfunding framework, give the Kingdom’s debt market faster issuance tools, lighter regimes, and stricter investor protections while widening access for smaller players.

Stepping up: Licensed arrangers are required to act as representatives of debt holders, verify the credit solvency of issuers, sign on at least one licensed credit bureau, and maintain transparent evaluation policies for debt instruments. Offering documents must carry prominent disclaimers noting that the CMA does not ensure their accuracy or completeness, pushing the responsibility of due diligence squarely onto investors.

Clearer guardrails: Only companies authorized to issue debt instruments or special purpose entities (SPEs) can use crowdfunding platforms, and they are barred from using proceeds to repay debt, provide loans, or invest in other companies or funds.

Outstanding financing through crowdfunding is capped at SAR 20 mn per issuer, rising to SAR 80 mn for asset-backed issuances. Issuers must also prepare offering documents and publish them at least five days before launch. Offer periods are limited to 45 days, with a minimum subscription threshold of 80%. If the threshold is not met in time, proceeds must be refunded within five days.

For investors, protections have been tightened. Retail clients face strict limits, capped at SAR 25k per subscription and SAR 100k across all issuances in a 12-month period, and are excluded from asset-backed offerings altogether. They’re given a 48-hour cooling-off window to cancel subscriptions, while institutions are required to disclose overdue payments and default cases publicly, update data monthly, and immediately notify the CMA of any missed payments of 90 days or more.

What happens to existing players: FinTechs that entered the space under the Lab’s experimental phase will continue until their permits expire. Afterward, they must apply for an arranging license to remain active. New Lab applications for debt crowdfunding will no longer be accepted unless they involve innovative aspects worthy of testing.

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