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The Saudi Capital Market Authority mentioned that compensation funds are one of many fashions of compensation, that are along with the earlier compensation channels of collective and particular person lawsuits filed earlier than committees for resolving securities disputes.
She famous in an interview with numbersHe identified that the mannequin of compensation funds is complementary to the compensation channels obtainable to these affected within the monetary market, however it isn’t compulsory or a primary possibility in all circumstances.
Based on the Authority, these funds have been beforehand established by getting ready the digital infrastructure and procedural foundations to make sure bridging and linking private and non-private rights.
The Authority mentioned that the Compensation Fund for these affected by the Dar Al-Arkan case is the second compensation fund established by the Market Authority, after it introduced earlier (particularly in late July 2025 AD) the institution of a fund to compensate these affected by the violations dedicated towards the shares of the “Nationwide Metal” firm, in a precedent that’s the first of its sort within the historical past of the market, in accordance with the brand new idea of compensating these affected by conduct that violates the monetary market system and its government rules.
The Authority’s Board had issued a choice to determine a fund to compensate these affected by the violations whose perpetrators – who numbered 17 violators – have been definitively convicted by the Securities Disputes Enchantment Committee in July 2023, and obligated them and 5 different traders to pay 1.196 billion riyals after they violated Paragraph (A) of Article (49) of the Monetary Market Regulation, and Paragraph (A) of Article (Second) of Checklist of market conduct, whereas buying and selling Dar Al Arkan Actual Property Growth Firm shares.
The fund was established primarily based on Paragraph (d) of Article 59 of the Monetary Market Regulation, which represents the brand new idea of compensating these affected by conduct that violates the Monetary Market Regulation and its government rules, indicating the completion of depositing the compensation quantities for these affected by the case.
Mr. Badr bin Muhammad Balghunaim, Undersecretary of the Capital Market Authority for Authorized Affairs and Enforcement, confirmed that the aforementioned compensation fund was established pursuant to the choice of the Authority’s Board in accordance with the powers granted to it primarily based on the Capital Market Regulation issued by Royal Decree No. (M/30) dated 06/02/1424 AH, and amended by Royal Decree No. (M/16) dated 01/19/1441 AH, which gave the Authority the authority to arrange compensation procedures for these affected by Violations dedicated within the Saudi monetary market, together with the institution of such a fund to compensate these affected by the unlawful positive factors collected from violators. This can be a step adopted by getting ready a distribution plan proposed by the Authority and submitting it to the securities dispute decision committees for approval, offered that the Authority completes the suitable procedures to disburse these compensations to these affected.
For his half, Mr. Ali bin Sulaiman Al-Dakhil, Director Normal of the Normal Division of Communication and Investor Safety on the Capital Market Authority, burdened that the Authority pays nice consideration to every part that might protect the rights of traders and members within the monetary market, together with taking the required measures and applicable procedures to protect the rights of these affected by any improper practices and violations that could be dedicated by some violating traders, which in flip might trigger hurt to different traders. Ranging from monitoring violations, taking verification and reasoning procedures concerning them, and coordinating with the related authorities to observe up on the litigation stage and issuing closing selections, all the way in which to significantly looking for to compensate these affected in accordance with the statutory powers granted to the Authority.
numbers I held a particular video assembly with officers on the Capital Market Authority to speak about this matter, by which we first directed quite a lot of inquiries to Mr. Badr bin Muhammad Balghunaim, the Authority’s Undersecretary for Authorized Affairs and Enforcement, and their particulars have been as follows:
*For the reason that important title of this assembly pertains to compensation for these affected by violations dedicated within the monetary market, may you make clear the trail of compensation over the previous years by way of the worth of compensation?
– The entire worth of compensation awarded within the selections of the committees for resolving securities disputes in favor of these affected over the past six years (particularly from 2019 AD till 2024 AD) amounted to roughly 3 billion riyals, with a gradual enhance 12 months after 12 months. The adjudication committees issued rulings to compensate these affected amounting to 40 million riyals in 2019 AD, and the 12 months 2020 AD witnessed a rise within the complete quantities of compensation awarded till it reached 93 million riyals, then 367 million riyals in 2021 AD, and the worth of those compensations in 2022 AD was the biggest quantity amongst these years, because it reached 1.75 billion riyals, whereas its worth in 2023 AD reached 245 million AD. Actual, rose within the 12 months By 2024 AD to an quantity of 389 million riyals.
Right here I wish to level out that the Authority is eager, in accordance with its statutory powers, to take quite a lot of potential procedures and measures to make sure the implementation of selections issued by the committees for resolving securities disputes, and to coordinate with the related authorities to guard the rights of traders within the Saudi monetary market.
*These compensations that you just referred to have been primarily based on direct judicial rulings for these affected, however what’s new within the strategy of defending personal rights and the idea of compensation funds? Since when does the Authority have the authority to determine these funds? Why was it not utilized to earlier circumstances?
– First, I wish to make clear that compensation funds are one of many compensation fashions, which is added to the earlier compensation channels, that are represented by collective and particular person lawsuits which are filed earlier than committees for settling securities disputes. This new mannequin arose on account of amending the monetary market system primarily based on the proposal submitted by the Authority. Paragraph (d) was added to Article Fifty-9 of the Monetary Market Regulation, and it stipulates: “Bearing in mind the provisions of Subparagraph (4) of Paragraph (a) of this Article, the Authority might regulate procedures for compensating individuals who’ve suffered injury on account of the violations dedicated, and for this function it could set up funds designated for compensation whose supply will probably be from the unlawful positive factors collected into the Authority’s account, and compensation for the affected individuals shall be in accordance with a distribution plan.” A call will probably be issued by the Committee to approve them, and these funds will probably be topic to the foundations and procedures established by the Authority in a means that enhances the work of those funds and reduces the authorized and monetary dangers related to them.”
We’ve got labored within the Authority to review the mechanism for implementing the idea of compensation funds. To make sure a excessive degree of readiness for its utility in any respect ranges, in a means that enhances the work of those funds, achieves the aim for which they have been established, reduces the authorized and monetary dangers related to them, and contributes to delivering rights to their homeowners as shortly as potential. The primary objective of those funds is to compensate these affected within the monetary market by circumstances by which selections have been issued that gained closing standing from committees for resolving securities disputes by obliging the violator(s) to pay the unlawful positive factors.
Secondly, there are different concerns that created the necessity for these funds, together with preserving traders’ rights in all potential methods, facilitating compensation procedures for damages brought on to merchants on account of violations and unlawful and unsound practices within the monetary market, and offering extra channels for claiming rights and returning them to their homeowners.
*Does the thought of funds get rid of earlier mechanisms for claiming compensation, similar to collective and particular person lawsuits?
The mannequin of compensation funds is a complement to the compensation channels obtainable to these affected within the monetary market, however it isn’t compulsory or a primary possibility in all circumstances. Slightly, it is likely one of the procedures for organizing compensation for individuals who have suffered injury on account of dedicated violations. This doesn’t prejudice the suitable of any aggrieved social gathering to file a declare earlier than the committees for resolving securities disputes, individually or collectively. Slightly, submitting a person or collective lawsuit is the premise for demanding and acquiring compensation.
The Authority adopts quite a lot of requirements by way of which it determines the suitability of forming a compensation fund from the unlawful positive factors recovered from violators at any time when the info and circumstances of the case present the presence of these really harmed by these violations. The Authority thought of that the formation of a compensation fund could be more practical and productive in sensible phrases than different technique of claiming compensation for the damages incurred by merchants within the monetary market on account of actions. And actions dedicated by violators of the monetary market system and its government rules.
Ali bin Sulaiman Al-Dakhil, Director Normal of the Normal Division of Communication and Investor Safety on the Capital Market Authority
Additionally headed “numbers” To Mr. Ali bin Sulaiman Al-Dakhil, Director Normal of the Normal Division of Communication and Investor Safety on the Capital Market Authority, with quite a lot of inquiries concerning the compensation funds for these affected normally, and the compensation fund for the case of violations towards the shares of the “Dar Al-Arkan” firm particularly, and the inquiries have been as follows:
*Allow us to discuss by way of what we concluded with Mr. Badr Balghunaim, which is compensation funds, particularly since they’re a brand new measure within the Saudi market. Can we all know the connection of the brand new idea to investor safety? Why did the authority undertake it? What do these packing containers seem like?
There is no such thing as a doubt that the dynamism of the monetary markets might end in some merchants committing some prohibited and unsound practices within the monetary markets, and supervisory authorities usually play their position in controlling violating conduct and finishing conviction procedures that in quite a lot of circumstances finish within the restoration of the unlawful positive factors obtained by the violator. In an effort by the Authority to implement the perfect practices geared toward enhancing confidence within the monetary market and defending traders, it adopted the idea of facilitating compensation mechanisms and elevating the arrogance of merchants, and this curiosity moved to a strategic degree that was mirrored within the pillars of the Authority’s strategic plan 2024-2026, all with the goal of shifting actively in the direction of the requirements of environment friendly markets, bringing to thoughts our nationwide targets in our bold imaginative and prescient to deliver our monetary market to the ranks of Superior in world markets.
Concerning the type of these funds, their idea might be simplified as being unbiased accounts established by the Capital Market Authority, by which the unlawful positive factors collected are deposited on account of a choice issued by the committees for resolving securities disputes in public rights lawsuits. They achieve closing standing by obliging the violator to pay the unlawful positive factors to the Authority’s account, and the aim of those accounts is to arrange compensation for these affected by the identical violation associated to that call. The distribution plan – if accredited by the Committee for Decision of Securities Disputes – consists of all of the judicial and monetary ideas for distributing the compensation because of these affected, which the Authority will implement and distribute the compensation from the collected quantities that have been deposited in these funds.
*Allow us to transfer our query to the fund you referred to. Is it potential to determine intimately these entitled to compensation from this fund?
– The Compensation Fund for these affected by the case generally known as the “Case of Violations Carried out towards Dar Al Arkan Firm’s Shares” is a fund established pursuant to the choice of the Board of the Capital Market Authority, and in it have been deposited the unlawful positive factors that have been or are being collected in implementation of the ultimate resolution of the Appeals Committee for Securities Disputes introduced to the general public earlier underneath No. (2912/LS/2023) for the 12 months 1444 AH and the date of 11/22/1444 AH equivalent to 06/11/2023 AD, issued in Case No. (42/37), towards quite a lot of violators of Article (49) of the Monetary Market Regulation and the Market Conduct Laws.
For the reason that date of the Appeals Committee’s resolution, the Authority has labored to review the activation of Article Fifty-9 of the Monetary Market Regulation, which grants the Authority the authority to manage procedures for compensating individuals harmed on account of the violations dedicated, and to determine funds designated for this function, offered that their supply is from the unlawful positive factors collected, and to organize a distribution plan commensurate with the extent of the injury, along with assortment procedures with violators, which resulted within the institution of this fund to compensate. These entitled to it in response to a distribution plan accredited by a choice from the Committee for Decision of Securities Disputes, in accordance with the foundations and procedures established by the Authority to boost the effectivity of those funds and cut back the authorized and monetary dangers related to them.
As for these entitled to compensation from this fund, they’re traders within the monetary market and merchants within the firm’s shares within the interval from 04/27/2017 AD till 04/26/2018 AD, “the violation interval,” and people technical information confirmed that they have been uncovered to damages because of these violations.
It needs to be famous right here that this fund is the primary compensation fund for these affected by violations dedicated towards the shares of an organization listed on the principle market, and the second of its sort, provided that the “Nationwide Metal” firm is listed on the parallel market – Nomu.
*How have been these entitled to compensation from this fund decided? Who accredited these compensations?
Let me make clear that figuring out these affected was primarily based on technical information and digital techniques of the monetary market in a fashion in keeping with the ideas of potential justice. As for the entity that accredited these compensations, as we indicated, the position of the Authority is to gather the quantities awarded from the convicts after which develop a distribution plan to be submitted to the Committee for Decision of Securities Disputes, which is what was completed on this case, and the distribution plan was accredited by a choice of the Committee.
As for the standards for figuring out these affected, figuring out the extent of the injury, and the mechanism for calculating compensation, all of them are accredited by the committee in accordance with the judicial ideas adopted by the committee on this regard.
*It seems that the idea of this fund relies on disbursing monetary compensation to teams affected by the violative conduct dedicated by these convicted by a closing resolution of the adjudication committees, and the success of this idea will depend on the provision of economic sources for compensation. What’s the useful resource of this fund?
The supply of this fund is the unlawful positive factors obtained by these convicted within the lawsuit that we referred to in a earlier reply throughout their unlawful trades in Dar Al Arkan Firm shares. The issuance of this closing resolution was adopted by the completion of enforcement procedures on violators in accordance with the related rules, and the collected positive factors are deposited within the fund allotted to compensate these affected, from which the funds are disbursed to these entitled to compensation.
*Will there be related compensation funds sooner or later?
– Certainly, this fund is the perfect instance after the institution of the primary fund final July, and there will probably be related compensation funds at any time when the Authority deems the necessity to use this mannequin of compensation, and the requirements upon which such funds might be established are utilized, which is adopted by submitting the proposed mechanism for distribution to the committees for resolving securities disputes and the committee approving this mechanism, so as to activate the pillars of the strategic plan of the Capital Market Authority. 2024-2026. The institution of those funds was preceded by the preparation of the digital infrastructure and procedural foundations to make sure bridging and linking the private and non-private rights. The scope of the connection consists of quite a lot of procedures that can guarantee synchronization between the 2 tracks, and some of the necessary synchronization initiatives is the compensation funds. It’s applicable right here to level out that the Authority adopts a matrix of requirements to find out the suitability of the declared violations to type a compensation fund for these affected by them.
