The Saudi Ministry of Sports is expected to require clubs to form an investment committee directly linked to the board of directors, and to prepare a five-year investment strategy covering the club's vision, asset inventory, and investment policies.

This was stated in the clubs' investment regulations that the ministry put up for public consultation, stipulating that the investment committee be chaired by an independent member from outside the board of directors and the club's staff, with its formation to be approved by the ministry.

The consultation aims to establish a comprehensive legal framework governing the exploitation of clubs' tangible and intangible assets, and to raise levels of governance, transparency, and financial efficiency in the sports sector.

The consultation, directed at the youth and sports sector, continues until July 24 to receive views and observations from specialists and the public before the regulation is finalized and officially published in the official gazette.

The regulation contains 33 articles, most notably 10 investment decisions, including requiring all clubs to form an independent investment committee, adopting a five-year investment policy, requiring comprehensive feasibility studies before any investment project, and regulating the establishment of clubs' investment arms.

This is in addition to banning high-risk investments or those exceeding 40% of capital, requiring ministry approval for a number of sensitive investment transactions, regulating investment in the name, logo, and intellectual property, and allocating a separate financial account for each investment project.

It also included imposing strict rules for governance, disclosure, and conflict of interest, and requiring clubs to submit periodic financial and investment reports to the ministry.

The regulation defined investment concepts, tangible and intangible assets, investment arm, and investment committee, and applies to all sports clubs and their investment arms, with some transactions governed by special regulations exempted.

The regulation permitted investment in sports activities, media, sponsorship, advertising, real estate, and intellectual property, conditioned on allocating an asset for investment and providing a reserve of at least 20% of the project's value, and requiring clubs to comply with the regulations of sports federations and leagues when implementing investments.

The regulation prohibited investment in ownership of sports entities, lending, high-risk speculation, investments exceeding 40% of capital, and dealing with entities or activities that are illegal or related to tobacco and nicotine.

It required each club to form an independent investment committee responsible for preparing the investment policy, studying opportunities, making recommendations to the board of directors, and preparing periodic reports, while regulating its formation, meeting mechanism, and powers.

The regulation also required a comprehensive study for each investment project, including market, economic feasibility, financial, technical, regulatory, and risk studies, and gave the board of directors the authority to approve investments.

This is with a requirement for a three-quarters majority for large or long-term or high-risk projects, obtaining ministry approval in specified cases, and exempting some transactions such as sponsorship, advertising, and certain lease contracts from the preliminary study, in return for a brief report and approval.

The regulation permitted investment in the club's name, logo, and intellectual property rights, while banning their assignment or mortgage except with ministry approval, in addition to regulating advertising contracts and limiting them to the club's facilities, platforms, and sports events.

The regulation granted club administrations the right to organize sponsorship contracts and allow the exploitation of the club's assets in return for financial returns or agreed benefits, set a 3% cap on broker commissions, and banned advertising or sponsorship for a number of prohibited activities and products.

The regulation also allowed clubs to organize and establish subsidiary investment companies, requiring ministry approval and setting controls for governance, independence, management, and prevention of conflict of interest, and requiring clubs to be transparent and fair in selecting investors, and to require bank guarantees and verify regulatory and financial solvency.

It also specified the minimum items to be included in investment contracts, such as contract duration, guarantees, penalties, contract termination mechanisms, and tasked the executive management with monitoring contract implementation, while requiring board approval for material amendments or contract termination, and preserving all investment documents and rights, organizing their data, and updating them.

Regarding financial accounts, the regulation required allocating a separate bank account for each investment, preparing periodic financial reports, subjecting them to an independent auditor, setting governance policies including disclosure, risk management, and internal audit, imposing disclosure of any conflict of interest, and giving the board authority to prevent participation in decisions or suspend investments when necessary.

The regulation also required all parties to maintain the confidentiality of investment information and not disclose it except according to regulatory controls, and to set policies and mechanisms for monitoring, dealing with, and mitigating investment risks, and to establish an internal audit committee or unit to monitor the efficiency of investment oversight.

Through the regulation, the Ministry of Sports required its approval for investment of government assets, sponsorship, advertising, foreign investments, and some other transactions, and submission of budgets and financial and annual reports related to investments to the ministry within specified timeframes.