Saudi CMA approves parallel market listing rules
Will be an opportunity for joint stock companies of different categories to be listed
The Saudi Capital Market Authority Board has approved the final version of the Parallel Market Listing Rules after the draft was published on the CMA’s website.
These Rules will be effective and enter into force starting from the date of its publication. The establishment of the Parallel Market through which shares of the listed companies are traded, comes in line with the CMA’s program to achieve Saudi Vision 2030 that is based on a number of themes, which include promoting the role of the Exchange in providing funding sources and making the Exchange more stable, supportive to the national economy and more appealing for investment.
The Parallel Market will be an opportunity for joint stock companies of different categories (including small and medium-sized enterprises) to be listed, and thus obtain funding from the Exchange, as well as the possibility of expanding its activity and sustaining its businesses.
The Rules consist of 29 articles, which include conditions for registration and listing in the Parallel Market which are less rigorous than those required from companies aiming to list in the main market.
In details, the Rules governing companies wishing to be listed in the Parallel Market require that the number of public shareholders should not be less than 50 shareholders if the total market value of all shares to be listed is more than 40 million Saudi Riyals, and 35 shareholders if the total market value of all shares to be listed is less than 40 million riyals, and the ownership of the public within the requested class of share should not be less than 20 percent.
The CMA may allow for a lower percentage or lower number of shareholders if deemed appropriate. Also, the expected aggregate market value, at the date of listing, of all shares to be listed must be at least 10 million riyals.
The current main market requirements in this aspect require that the number of public shareholders should not be less than 200 shareholders, and that the public ownership of the required share class should not be less than 30 percent, and the expected aggregate market value, at the date of listing, of all shares to be listed must be at least 100 million riyals.
Among the requirements contained in the rules that highlight the difference in the listing conditions is that any company wishing to join the Parallel Market must have been carrying out by itself or through one of its subsidiaries, a main activity for at least one financial year.
Also, the company must have prepared its audited financial statements covering at least the preceding financial year which were prepared in accordance with the accounting standards approved by SOCPA.
Furthermore, the percentage of the daily price change of the shares listed in the Parallel Market will be 20 percent.
Moreover, the rules clarifies that participating in the Parallel Market is confined to qualified investors as prescribed in Article 3 of these rules.
CMA also indicated that all provisions of the Corporate Governance Regulations issued by the CMA are indicative for companies listed in the Parallel Market for the purpose of easing the obligations on companies listed in the Parallel Market and encouraging small and medium-sized enterprises to be listed.
The CMA Board Resolution also approved the amendment of the Offer of Securities Regulations to include provisions related to offering shares to qualified investors for the purpose of listing in the Parallel Market.
This report was first published in Saudi Gazette on December 26, 2016.