1. Introduction
HALA Eastern Capital, a Closed Joint Stock Company, registered under Commercial Registration No. (2030116402), with its registered office in Al Khobar, Eastern Province, Kingdom of Saudi Arabia (hereinafter referred to as the “Company”). The Company is licensed and regulated by the Capital Market Authority (CMA) of the Kingdom of Saudi Arabia to conduct investment management activities under License No. (02_25318) and shall comply with all laws, regulations, and directives issued by the CMA, including any amendments or updates thereto from time to time.
The individual or legal entity whose details are set forth in the Investment Account Opening Form/Agreement (the “Client”) desires to open an investment account with the Company for the purpose of investing in and trading securities, and acknowledges that all investments shall be subject to the terms and conditions of this Agreement.
(2) Account Opening
2.2 The Client undertakes to provide complete and accurate information, including full compliance with all requirements of the “Know Your Customer” (KYC) form, as well as any other documents or data requested by the Company in accordance with applicable laws and regulations.
2.2 Upon the Company’s acceptance of the Client’s information and satisfaction of all other requirements, the Company shall open an investment account for the Client, in full compliance with all applicable regulatory and legal requirements in the Kingdom of Saudi Arabia.
(3) Governing Terms of the Agreement
1.3 These Terms and Conditions constitute the legal framework governing all operations related to the investment account and any other agreements executed between the Parties.
2.3 The Client’s acceptance of these Terms and Conditions constitutes an essential and binding condition for account opening, whereby the Client agrees to be bound by all provisions of this Agreement and all applicable laws and regulations, including the rules and directives of the Capital Market Authority (CMA).
(4) Client Acceptance
The Client’s consent to this Agreement shall be evidenced by any of the following means:
1.4 Signature of this Agreement by the Client, whether through traditional or approved electronic means.
2.4 Acceptance of the Terms and Conditions by the Client via any electronic means approved by the Company.
3.4 Execution of the Client’s first fund transfer to the Company’s account from a licensed bank providing banking services in accordance with applicable laws and regulations in the Kingdom of Saudi Arabia.
(5) Compliance with Terms and Conditions
Upon the Client’s acceptance of this Agreement, these Terms and Conditions shall become legally binding on both Parties. The Client acknowledges that the opening and use of the Account for any Company services is subject to all provisions of this Agreement and all applicable laws and regulations in the Kingdom of Saudi Arabia, including CMA rules and instructions.
(6) Client Investment Objectives
1.6 For the purposes of providing investment services related to securities, Hala Eastern Capital Company shall determine the Client’s investment objectives based on the information and data provided by the Client.
2.6 A copy of such information shall be attached to this Agreement and shall form an integral part hereof. The Client acknowledges that the Company shall act in accordance with these objectives when providing investment services.
3.6 Both Parties shall comply with all applicable laws and regulations in the Kingdom of Saudi Arabia, including CMA instructions, in interpreting and implementing the Client’s investment objectives.
4.6 The Client may update their investment strategy at any time, provided that updated information is submitted to the Company and attached to this Agreement, with all services remaining subject to applicable laws, regulations, and CMA instructions.
(7) Restrictions
1.7 Over-the-Counter Transactions
The Company shall not conduct any transactions on behalf of the Client where the transaction is not subject to the laws of any stock exchange or trading market, except upon the Client’s specific written request. However, the Company may deal in investment fund units, collective investment schemes, or similar arrangements not governed by exchange or market laws, at the Company’s discretion.
2.7 Illiquid Investments
The Company shall not conduct investment transactions in illiquid investments except upon the Client’s specific written instruction.
3.7 Use of Client Assets as Collateral
The Company shall not use the Client’s assets as collateral to secure any debt or liability owed by the Company to any third party, except where the Client expressly instructs such use in writing.
4.7 Stabilization-Subject Investments
The Company may refrain from dealing in investments subject to price stabilization, typically conducted to support prices in new issuances. Stabilization aims to temporarily elevate the market price of a new issuance relative to its natural level and may include other investments affected by the new issuance.
7.4.1 Stabilization is conducted to ensure issuance delivery or to determine the price of investments linked to increases resulting from the new issuance.
7.4.2 Stabilization may be time-limited and subject to price caps for shares and certificates representing securities, while no similar limitations apply to bonds and loans.
(8) Foreign Investor Restrictions
8.1 GCC Nationals
8.1.1 GCC nationals may own securities issued by Saudi listed companies, provided that the total ownership of any single investor does not exceed 25% of the issuer’s capital.
8.1.2 Total foreign ownership by non-GCC investors shall not exceed 20% of the issuer’s capital.
8.2 Residents and Other Nationalities
8.2.1 Residents and other foreign nationals must disclose their assets, holdings, and earnings to their respective tax authorities in accordance with applicable laws.
8.2.2 The Client must disclose any additional nationality they hold.
8.2.3 The Company shall bear no legal responsibility regarding the Client’s tax or legal obligations in any country.
8.3 Foreign Investment in Equity Funds
Foreign investment in equity funds is subject to limits established by Saudi regulations, including maximum non-Saudi ownership, which the Company shall enforce in providing investment services.
(9) Services
9.1 The Company shall enable the Client to manage investment funds either directly or through approved external intermediaries.
9.2 Each investment fund is governed by its own terms and conditions, which the Client must review and understand prior to investing. Such terms form part of the Client’s obligations toward the fund.
9.3 Any third-party fund provider is an independent service provider and shall not be considered an agent of the Company.
9.4 The Company shall bear no responsibility for acts or omissions of third parties, including any losses or liabilities incurred by the Client due to any default, negligence, or insolvency of such third parties.
(10) Payments
10.1 Subscription Limits
10.1.1 Minimum retail subscription: SAR 50,000.
10.1.2 Maximum retail subscription: SAR 200,000.
10.1.3 Minimum subscription per unit at initial offering: SAR 10.
10.2 Fees and Charges
10.2.1 Fees are calculated based on the type of service or commission and payable according to each investment fund’s schedule.
10.2.2 Certain fees are payable once upon subscription, others periodically (quarterly or annually) as determined by the fund terms.
10.3 Fee Details
• Subscription Fees: Deducted upon receipt of subscription funds, either once or in installments.
• Management Fees: Calculated annually on net assets and paid quarterly.
• Trading Fees: Deducted directly from fund assets upon execution.
• Auditor Fees: Accrued daily and deducted daily from fund assets; paid quarterly.
• Benchmark Provider Costs: Accrued daily and deducted daily; payable once annually.
• Independent Board Member Compensation: Accrued daily, deducted daily, paid quarterly.
• Regulatory Expenses: Accrued daily, deducted daily, paid at year-end.
• Exchange Data Publication Costs: Accrued daily, deducted daily, paid at year-end.
• Other Expenses: Accrued daily, deducted daily, paid quarterly.
• Custodian Fees and Services: Calculated annually on fund assets (excluding cash), including local or USD fees, regulatory fees, and paid monthly.
10.4 Note
Fee calculation methods vary by service; the Client must review each fund’s terms for details.
(11) Independence of Services and Execution of Transactions
11.1. Independence of Services
Each service provided by the Company to the Client shall be independent from other services and shall be governed by a separate agreement duly executed between the Parties. The Client acknowledges that any separate agreement shall not conflict with the provisions of this Agreement or waive any obligations set forth herein.
11.2. Execution of Transactions
The Client shall issue instructions for buying and selling in accordance with the terms and conditions applicable to each service or investment fund. The Company shall execute such instructions in compliance with the laws and regulations in force in the Kingdom of Saudi Arabia, and in a manner that does not conflict with the provisions of this Agreement.
(12) Fund/Investment Manager
12.1. Announcement of Fund Size and Investment Type
12.1.1. The Fund Manager shall announce the target size of the Fund.
12.1.2. The Fund Manager shall determine the type of investment, whether in securities listed on financial markets or in private equity not listed on any financial market.
12.2. Compliance with Laws and Regulations
12.2.1. The Fund Manager shall act in the best interest of the Unit Holders in accordance with the Investment Funds Regulations, the Capital Market Institutions Regulations, and the Fund’s terms and conditions.
12.2.2. The Fund Manager shall comply with all principles and duties set out in the Capital Market Institutions Regulations, including the duty of honesty toward Unit Holders and exercising reasonable care to achieve their best interests.
12.3. Reports and Statements
12.3.1. The Fund Manager undertakes to provide periodic account statements consistent with the Fund’s objectives and the nature of its units.
12.3.2. The Fund Manager shall disclose any restrictions related to the type of investment in each Fund, including but not limited to:
• Geographical restrictions;
• Restrictions on the type of securities;
• Restrictions on maximum or minimum investment in specific securities;
• Restrictions on maximum leverage.
12.4. Evaluation of Investment Opportunities
12.4.1. The Fund Manager shall evaluate targeted securities and seek the best investment opportunities through fundamental and financial analysis, including metrics such as sales growth, Annual Recurring Revenue (ARR), cash flows, Customer Acquisition Cost (CAC), and EBITDA.
12.4.2. In the case of initial public offerings, the Fund Manager shall consider sales and profit growth rates, working capital, inventory turnover, debt collection, accounts payable cycles, leverage, cash flows, and profit margins, in addition to fair valuation using discounted cash flow (DCF) or comparison with similar listed companies, taking into account macroeconomic and sectoral data.
12.4.3. The Fund Manager shall assess investments according to their type:
• Listed securities: based on their last closing price;
• Private equity investments: based on clear and objective data, such as increased company profits or entry of a strategic investor at a higher valuation.
12.5. Manager Responsibilities toward Unit Holders
12.5.1. The Fund Manager shall be responsible for compliance with the Investment Funds Regulations, whether executing duties directly or delegating them to a third party.
12.5.2. The Fund Manager shall bear responsibility toward Unit Holders for losses resulting from fraud, negligence, mismanagement, or willful misconduct.
12.6. Policies, Procedures, and Risk Management
12.6.1. The Fund Manager shall establish policies and procedures to monitor risks that may affect the Fund’s investments and ensure timely mitigation, including conducting at least annual risk assessments.
12.6.2. The Fund Manager shall implement a compliance monitoring program for the Fund and provide the Capital Market Authority with results upon request.
12.7. General Administration and Unit Offering
12.7.1. The Fund Manager shall be responsible for managing the Fund and offering its units.
12.7.2. The Fund Manager shall ensure the accuracy, completeness, clarity, and non-misleading nature of the Fund’s terms and conditions.
(13) Risks
13.1. Risk Levels
The risk level associated with the Fund varies according to its objectives and investment nature, including but not limited to:
13.1.1. Credit Risk: The possibility that any debtor may fail to meet contractual obligations, either through direct investment or via money market funds and similar transactions, potentially resulting in losses to the Fund.
13.1.2. Political Risk: The impact of political changes in countries where the Fund invests on the value of its assets.
13.1.3. Legal Risk: The potential exposure of invested companies or funds to legal actions by regulatory authorities or investors, which may adversely affect investment value.
13.1.4. Concentration Risk: Increased risk resulting from concentrating the Fund’s investments in a particular sector or company compared to a more diversified investment distribution.
13.1.5. Issuer Risk: Exposure to the financial and managerial conditions of the issuer, including legal risks or declining stock value, affecting Fund performance and unit prices.
13.1.6. Credit Rating Downgrade Risk: The effect of a downgrade in credit rating of invested money market funds or instruments on the Fund’s asset value.
13.1.7. Conflict of Interest Risk: The impact of personal interests of the Fund’s employees or manager on the objectivity and independence of investment decisions, potentially affecting Fund performance.
13.1.8. Financing Risk: Exposure to late payment fees or the need to liquidate investments to settle debts, potentially negatively impacting assets and performance.
13.1.9. Currency Risk: Fluctuations in foreign exchange rates for investors whose base currency differs from the Fund’s investment currency, potentially affecting unit value.
13.1.10. Key Personnel Risk: Impact on Fund performance due to absence of key employees or difficulty in finding replacements with equivalent experience and skills.
13.1.11. Technology Risk: Potential exposure to cyberattacks or technical failures affecting the Fund’s information systems, limiting the Manager’s ability to manage investments effectively.
13.1.12. Natural Disaster Risk: The impact of natural disasters, including earthquakes, volcanic eruptions, or severe weather, on Fund performance.
13.1.13. Event-Specific Risk: Exposure to political, economic, legislative, governmental, taxation, interest rate changes, or issuer-related events.
13.1.14. Call Risk: Possibility of securities being called before maturity, exposing the Fund to reinvestment risk.
13.1.15. Reinvestment Risk: Inability to reinvest proceeds or Fund distributions at similar prior returns, affecting overall yields.
13.1.16. Unit Price Volatility Risk: Exposure of unit value to fluctuations in securities prices, potentially affecting the value of Unit Holders’ investments.
13.2. Client Acknowledgment of Risks
The Client acknowledges that the Company has informed them of all potential risks and losses, including the possibility of total capital loss, and confirms full acceptance of and sole responsibility for any losses arising from investments in the Fund.
(14) Pledging
14.1. Should the Client pledge any assets within the account or investment account, the Client hereby authorizes the Company, under this Agreement, to act upon the instructions of the pledgee only.
14.2. The Client undertakes to indemnify and hold the Company harmless from any liability arising from executing the pledgee’s instructions.
14.3. This authorization shall remain in effect until both the pledgee and the Client revoke it through a signed written notice submitted to the Company.
Use of Account
15.1. The Client acknowledges that the account is exclusively for buying and selling investments and shall not be considered a current account under any circumstances.
15.2. The Client shall not transfer any funds from the account to any other account held with the Company or any other financial institution, in accordance with standard banking requirements.
(17) Joint Accounts
In accordance with the Capital Market Authority regulations and instructions, joint accounts for securities denominated in Saudi Riyals shall not be permitted.
(18) Compliance with Sharia
Should the Company organize any equity transactions in the future under the Islamic Murabaha system, such transactions shall be conducted pursuant to separate agreements compliant with Sharia provisions.
(19) Accounting and Reporting
19.1. The Company shall provide a confirmation receipt for each executed investment transaction via email in accordance with applicable regulations.
19.2. The Client shall carefully review all investment reports and notify the Company of any errors within fifteen (15) days from the date of issuance of the report.
19.3. If the Client fails to notify the Company of any errors within the specified period, the report shall be deemed accepted and accurate by the Client, and the Company shall be entitled to rely upon it.
(20) Custody
20.1 Custody of Securities
20.1.1. Depositable securities shall be held at the depository center in the Client’s name through a licensed third party acting as custodian.
20.1.2. The Company shall arrange for the Client’s financial instruments to be held exclusively with an independent licensed custodian and shall not perform any direct custody functions itself.
20.1.3. In this context, the Company is authorized on behalf of the Client to:
a. Request and receive dividends, and pay commissions and other entitlements;
b. Exercise subscription and conversion rights;
c. Exercise voting rights.
20.2. Receipt and Execution of Custody Instructions
20.2.1. The Company shall transmit the Client’s instructions regarding investments held in custody to the licensed custodian.
20.2.2. If the Client wishes to authorize instructions from an officially appointed representative, the custodian’s regulatory requirements for recognition of such representative must be fulfilled.
20.2.3. If such requirements are not met, neither the Company nor the custodian shall be obliged to execute the instructions, and no liability shall arise therefrom.
20.3. Custodian Liability
20.3.1. The Client acknowledges and agrees that the Company shall not be liable for any negligence or breach by the custodian in performing its duties.
20.3.2. In case of custodian default, the Client may be required to share with other depositors any shortfall in the deposited instruments proportionally to its share relative to other depositors.
20.4. Entitlement Claims
20.4.1. The Client may authorize the custodian directly to receive dividends, commissions, revenues, and all other financial entitlements on its behalf.
20.5. Statements and Fees
20.5.1. The Company or custodian (as applicable) shall provide the Client with periodic statements reflecting transactions, fees, and charges related to custody services.
20.5.2. If the Client’s securities are held outside the Kingdom of Saudi Arabia, this Agreement constitutes notice to the Client of potential settlement or other applicable fees.
20.6. Licensed Persons
20.6.1. The Client’s financial instruments shall be held with a third-party licensed in accordance with Article 89 of the Regulations for Licensed Persons.
20.6.2. The Client consents to the custody of its financial instruments with an independent custodian and acknowledges that such custodian acts as an independent service provider and not as an agent of the Company.
20.7. Fees and Charges
20.7.1. The custodian shall charge fees and commissions as disclosed in the custody agreement signed with the Client.
20.8. Pooling of Assets
20.8.1. The Company shall notify the Client in writing if it intends to pool its assets with those of one or more other clients with the custodian.
20.8.2. The Company shall warn the Client that:
a. Assets or entitlements may not be represented by separate certificates, documents, or independent electronic records;
b. Other retail clients may share in any unrecoverable shortfall resulting from custodian action.
20.9. Assets Held Abroad
20.9.1. If the Client’s assets are held abroad, the Company shall notify the Client in writing of any settlement or legal/regulatory requirements that differ from those applied within the Kingdom of Saudi Arabia.
(21) Termination or Cancellation of the Agreement
21.1. Right of Cancellation
The Client may cancel any investment transaction conducted with or through the Company, provided that the Client alone bears all risks, losses, and financial consequences arising from such cancellation, including any expenses or obligations incurred.
21.2. Closed-End Investment Funds
If the investment is in a closed-end fund, the Client shall not be entitled to redeem units or assets unless a buyer is available for such assets and after obtaining written approval from the Capital Market Authority in accordance with applicable regulations.
21.3. Exchange-Traded Investment Funds
If the investment is in an exchange-traded fund, the Client may redeem units or assets in accordance with the terms, conditions, and restrictions set out in the fund’s Articles of Association and offering memorandum.
21.4. Termination of the Agreement
Termination procedures shall be governed by the provisions and regulations of this Agreement and any annexes or related agreements, without prejudice to any rights or obligations accrued prior to the effective date of termination.
(22) Asset Liquidation
The Fund Manager, in the case of closed-end investment funds whose capital is called in stages during the investment period, may liquidate the Client’s assets or part thereof if the Client fails to fulfill any of its financial or regulatory obligations in accordance with the fund’s terms and conditions, without prejudice to the Company’s right to claim any additional compensation or amounts due.
(23) Settlement and Dispute Resolution
The Capital Market Disputes Settlement Committee in the Kingdom of Saudi Arabia shall have exclusive jurisdiction to consider and resolve any dispute, claim, or disagreement arising from or relating to this Agreement or its execution. Its decision shall be final and binding on both Parties in accordance with applicable regulations.
(24) Governing Law
This Agreement and any disputes or claims arising from or relating to it shall be governed by the laws and regulations of the Kingdom of Saudi Arabia, and by all rules and directives issued by the Capital Market Authority.
(25) Notices
All notices, communications, or notifications related to this Agreement shall be in writing and sent via registered mail, email, fax, or hand delivery against acknowledgment of receipt. Notices shall be considered valid if sent to the Company’s registered main address or any other address specified in writing by the relevant Party, including email addresses recorded in the Company’s records.
(26) Records and Statements
The Client explicitly acknowledges and agrees that all records, data, and statements prepared or held by the Company, whether in paper, electronic, or any other technical form, are deemed accurate and binding, constituting conclusive evidence in any dispute between the Parties, unless the Client proves a material error in such records or statements.
(27) Confidentiality and Data Protection
Both Parties shall maintain the confidentiality of all information obtained or exchanged under this Agreement or any related agreement and shall not disclose it to any third party except as permitted by law, required by applicable regulations, or with prior written consent of the other Party. This obligation shall continue after the termination or expiry of this Agreement for any reason.