Asset Management Agreement Template for Saudi Arabia

An Asset Management Agreement is a legally binding contract that establishes the relationship between you and a licensed investment company authorized to manage your assets under Saudi Arabian law. This document serves as the foundation for professional investment management services, ensuring compliance with the Capital Market Authority (CMA) regulations while adhering to Shariah principles where applicable.

When do you need this document?

You need an Asset Management Agreement when engaging a licensed investment company to professionally manage your investment portfolio. This includes situations where you're establishing a discretionary investment management relationship, setting up a family office structure, or creating institutional investment mandates. High-net-worth individuals, pension funds, insurance companies, and government entities commonly require these agreements when seeking professional asset management services. The document is also essential when establishing Shariah-compliant investment portfolios or when foreign investors need local asset management services in Saudi Arabia.

Key legal considerations

The agreement must clearly define the scope of the asset manager's authority, investment objectives, and risk parameters. Critical clauses include fee structures, performance benchmarks, and termination provisions. You should carefully review the asset manager's fiduciary duties, conflict of interest policies, and liability limitations. The document must specify reporting requirements, custody arrangements, and the roles of third-party service providers. For Shariah-compliant portfolios, the agreement must detail the role of the Shariah advisor and compliance monitoring procedures. Investment restrictions, permitted asset classes, and concentration limits should be explicitly stated to protect your interests.

Legal requirements in Saudi Arabia

Under the Capital Market Law, asset managers must be licensed by the CMA and comply with Authorized Persons Regulations. The agreement must include specific disclosures about the asset manager's regulatory status, capital adequacy, and professional indemnity insurance. Anti-Money Laundering Law requirements mandate customer due diligence procedures and ongoing monitoring obligations. For Shariah-compliant services, the agreement must demonstrate compliance with Islamic law principles and include oversight by qualified Shariah scholars. The document must specify dispute resolution mechanisms, preferably through Saudi Arabian courts or recognized arbitration centers. Regular reporting to clients and the CMA is mandatory, with specific formats and frequencies outlined in the Investment Funds Regulations.