The Real Estate General Authority (REGA) announced the issuance of the implementing regulations for the Real Estate Contributions Law, published today, Friday, 6 Sha'ban 1445 Hijri, corresponding to 16 February 2024, on REGA’s official website and in Umm Al-Qura newspaper. The regulations were issued in coordination with the Capital Market Authority, in accordance with the Real Estate Contributions Law issued by the Cabinet. REGA confirmed that applications for Real Estate Contributions licenses are now open through its electronic services platform.
REGA explained that the implementing regulations consist of forty main articles distributed across six chapters, covering definitions, general provisions, classification of real estate contributions, and types of real estate subject to contributions. The first chapter, titled Licensing Procedures, outlines the conditions for obtaining a real estate contribution license and provides a model for the real estate contribution agreement. The second chapter addresses Real Estate Contribution Capital Provisions, detailing the requirements for adding reserve amounts, their disposal mechanisms, and provisions regarding contributors transferring their shares.
The third chapter focuses on Real Estate Contributions Activity Practitioners and Their Specializations, including the classification of practitioners, eligibility conditions, roles, and duties. The fourth chapter sets out the responsibilities of the Shareholders' Assembly, including its authority in the contribution process and the procedure for calling meetings. The fifth chapter, titled Profit Distribution and Real Estate Contribution Liquidation Mechanism, clarifies how distributable profits are handled, including the allowance for distributing interim profits from sale proceeds to shareholders on a semi-annual or quarterly basis. It also defines the provisions for valuing real estate involved in contributions. The sixth chapter deals with Supervision, Inspection, and Control, outlining the authority and responsibilities of supervisory officials, and the process for handling violations of the law and its regulations.
In a related development, REGA also published the escrow account controls for real estate contributions, consisting of seven main articles: The first article defined the escrow account as the bank account specific to real estate contribution and defined the account trustee as the banking institution licensed by the competent authority. The second article stated that these controls aim to regulate escrow accounts in real estate contributions projects, while the third article addressed provisions related to opening accounts and the mechanism for creating sub-accounts linked to the main account specific to real estate contribution. The fourth chapter was dedicated to provisions for managing the main account and sub-accounts and disbursement mechanisms from them. The fifth article included the account trustee's tasks and obligations incumbent upon them. The controls stated in the sixth article that the escrow account should not be closed by the licensee after the real estate contribution expires and funds are returned to their rightful owners until after REGA's approval. The regulations can be reviewed on REGA's official website.
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