|09 October, 2019

Saudi CMA announces the adoption of the amended rules on the offer of securities and continuing obligations

The Rules shall be effective upon its publication date, except for paragraphs (1) and (3) of Article 90 of the Rules, which will enter into force starting from 01/01/2020G.

In continuance to the Capital Market Authority's (CMA) effort to regulate and develop the capital market, in addition to deepening it and promoting its role in raising capital, which were included in the CMA's strategic objectives to enhance the attractiveness of the market for investors of all classes under the pillar of facilitating funding, one of the pillars of the CMA's strategic plan (Financial Leadership Program 2019-2021), and in line with (the Financial Sector Development Program) one of the main programs to achieve the objectives of Saudi Vision 2030.

The CMA Board has adopted the amended Rules on the Offer of Securities and Continuing Obligations (the Rules). The Rules shall be effective upon its publication date, except for paragraphs (1) and (3) of Article 90 of the Rules, which will enter into force starting from 01/01/2020G.

The most prominent amendments that aim at developing the Parallel Market (Nomu) and promoting the trading and listing in it are allowing the direct listing in the Parallel Market, and regulating the provisions related to it in the Rules and the Listing Rules. In addition to changing the disclosure requirement of the interim financial statements from quarterly basis to semi-annual basis for companies listed on the Parallel Market, provided that the referenced amendment to the disclosure requirement of the interim financial statements shall enter into force starting from 01/01/2020G.

In addition, a number of amendments have been adopted to the Rules that will allow foreign issuers to list their shares on the main market, by stating the provisions with which the foreign issuer who submits an application for listing in the Main Market in accordance with the listing rules shall comply. It is also worth mentioning that the CMA Board's resolution to adopt the Rules included that the investments limits imposed by the Capital Market Law and its implementing regulations on the investments of foreign investors shall not apply to the investments of foreign investors (of all categories, whether resident or non-resident) in the shares of the foreign issuer that are listed on the Main Market in accordance with the Listing Rules. In addition, the aforementioned resolution also provides that all categories of foreign investors are allowed to invest directly in the shares of the foreign issuer whose shares are listed on the Main Market in accordance with the Listing Rules.

Other amendments to the Rules included the amendment of paragraph (c) of Article (69) of the Rules to include termination of a director's membership in the board of directors or director's dismissal from the board of directors, and termination of any of the audit committee's membership. The amendments on the Rule also included adding a requirement obliging the issuer seeking registration and offering or registration of its shares in the Parallel Market to submit along with its application to the CMA electronic copies of the acknowledgement and an undertaking signed by the board of directors of the issuer and by each proposed director of the issuer in the form set forth in Annex 8 of the Rules. Further amendments on the Rules included amending Articles 24 and 75 of the Rules for the financial statements required to be submitted in the case if the period covered by the most audited financial statements has ended more than six months prior to the expected date of approval of the application for registration and offer or the application for registration to become reviewed financial statements instead of audited financial statements. The amendments also included amending subparagraph (2) of paragraph (a) of Article (69) of the Rule in relation to the periods during which directors, senior executives or audit committee members of the issuer or any of their associates my not deal in any securities of the issuer. The amendment of the aforementioned subparagraph included that the period of the prohibition of dealing will be during the 30 calendar days preceding the end of the financial year and until the date of disclosing the issuer's audited annual financial statements, or the interim financial statements for the fourth quarter if the issuer has disclosed them after reviewing them and fulfilling the requirements of Article (64) of the Rules. Further, the amendments also included extending the scope of exempt offer pursuant to subparagraph (8) of paragraph (a) of Article (6) of the Rules to not limiting it to sophisticated investors by regulating and stating the requirements for individual investors' participation in the subscription of the offered securities. In addition, the amendments included stating the cases that the issuer is obliged to disclose that are related to bankruptcy procedures under the Bankruptcy Law.

HE Mr. Mohammed El-Kuwaiz, Chairman of the Capital Market Authority, said: "The CMA has adopted the amendment of the Rules on the Offer of Securities and Continuing Obligations in order to regulate and develop the Capital Market, in addition to enhancing its stability and supporting the national economy. He added: “The most prominent amendments were focused on encouraging the entry of the foreign issuer into the Main Market, to create greater opportunities for diversification of investment for investors. In addition, developing the Parallel Market to become more attractive and to facilitate ways to invest in it. The amendments also included stating the cases on which the issuer in the Capital Market must disclose, which are related to bankruptcy procedures under the Bankruptcy Law, in order to raise the level of governance and transparency in the Capital Market. Besides extending the scope of exempt offer to include individual investors, to support entrepreneurs and small enterprises.

It is worth mentioning that the CMA has also adopted the amended Instructions for Companies' Announcements and the amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority to be consistent with the amendments to the Rules. At the same time, the CMA approved the amended Listing Rules and the amended Glossary of Defined Terms used in the Exchange Rules at Tadawul. The CMA has taken into consideration, when amending the Rules, carrying out the public consultation from specialists and interested parties. Moreover, The CMA Board has also issued its resolution to adopt and publish the amended Instructions for Book Building Process and Allocation Method in Initial Public Offerings, which will be effective as of the date of their publication.

The Rules, the Instructions for Companies' Announcements, the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, and the Instructions for Book Building Process and Allocation Method in Initial Public Offerings can be viewed via the following link

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Contact:

+966112053000

800-245-1111

Media@cma.org.sa 

www.cma.org.sa

Capital Market Authority

Communication & Investor Protection Division

+966112053000

800-245-1111

Media@cma.org.sa 

www.cma.org.sa 

About CMA:

The Capital Market Authority (CMA) is the supervisory and administrative authority responsible for regulating and developing the financial market by issuing the laws, regulations and instructions necessary to implement the rules of the Capital Market Law, in order to provide the appropriate climate for achieving confidence, fairness and efficiency for issuance of securities and full disclosure of joint stock companies and protect investors from the illegal acts in the stock market.

For more information about CMA, please visit the official website: www.cma.org.sa 

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