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A Subscription letter serves as your formal commitment to invest in shares, sukuk, or other securities in Saudi Arabia. When companies or investment funds offer new securities, they require these letters from potential investors to document their binding promise to purchase specific amounts at the agreed price.

Under Saudi Capital Market Authority regulations, these letters play a crucial role in initial public offerings (IPOs) and private placements. They protect both parties by clearly stating the investment terms, including the number of securities, price per unit, and payment conditions. Many Saudi financial institutions use standardized subscription letter templates that comply with Shariah principles and local securities laws.

Use a Subscription letter when investing in any new securities offering in Saudi Arabia's capital markets. This applies to IPOs, private placements, sukuk offerings, and investment fund subscriptions. The letter becomes essential once you've decided to participate in an offering and need to formalize your investment commitment.

Timing matters—submit your Subscription letter during the official subscription period set by the Capital Market Authority. For IPOs, this typically means within the designated offering window announced by the issuing company. Private placement investors need to submit these letters before the stated closing date to secure their allocation and comply with CMA regulations.

• IPO Subscription Letters: Used for public offerings, containing detailed share allocation requests, payment terms, and investor qualification declarations under CMA rules
• Private Placement Letters: More detailed than IPO versions, including sophisticated investor credentials and specific investment restrictions
• Sukuk Subscription Letters: Structured to comply with Shariah principles, outlining profit-sharing mechanisms and underlying asset details
• Fund Subscription Letters: Tailored for mutual and private equity fund investments, with specific investor category classifications and minimum commitment amounts
• Rights Issue Letters: Used when existing shareholders exercise their rights to purchase additional shares, including allocation preferences

• Investors: Submit Subscription letters to formally commit to purchasing shares, sukuk, or fund units, declaring their eligibility and financial capacity
• Issuing Companies: Prepare and distribute the template letters, set subscription terms, and process investor commitments
• Financial Advisors: Review and verify subscription details, ensure compliance with CMA regulations, and manage the allocation process
• Legal Counsel: Draft and validate letter templates, ensuring adherence to Saudi securities laws and Shariah requirements
• Receiving Banks: Process subscription payments and maintain records of investor commitments during offering periods

• Offering Details: Gather the security type, price per unit, minimum subscription amount, and payment terms from the offering prospectus
• Investor Information: Compile full legal name, ID/CR number, contact details, and investor qualification status under CMA rules
• Investment Amount: Calculate exact number of securities requested and total subscription value in Saudi Riyals
• Bank Details: Note designated subscription account numbers and payment deadlines
• Supporting Documents: Prepare copies of required identification documents, proof of funds, and any power of attorney if needed

• Subscriber Details: Full legal name, nationality, ID/CR number, contact information, and investor qualification status
• Investment Terms: Number of securities requested, price per unit, total subscription amount in Saudi Riyals
• Declarations: Investor eligibility confirmations, acceptance of offering terms, compliance with CMA regulations
• Payment Instructions: Bank account details, payment deadline, refund mechanisms
• Legal Acknowledgments: Risk disclosures, Shariah compliance statements, governing law clause specifying Saudi jurisdiction
• Execution Block: Signature fields, date, witness requirements if applicable

A Subscription letter differs significantly from an Acceptance Letter in several key aspects, though both documents formalize agreements. While Subscription letters specifically commit to securities investments under CMA regulations, Acceptance letters serve a broader purpose in confirming agreement to various business proposals or terms.

• Purpose and Scope: Subscription letters exclusively deal with investment commitments in securities offerings, while Acceptance letters cover general business agreements and proposals
• Regulatory Framework: Subscription letters must comply with strict CMA and Shariah requirements for securities trading; Acceptance letters follow general contract law principles
• Content Requirements: Subscription letters require specific investment details, investor qualifications, and regulatory declarations; Acceptance letters typically contain simpler terms of agreement
• Legal Impact: Subscription letters create binding investment obligations under securities law; Acceptance letters establish general contractual relationships