Capital Market: 11 amendments to facilitate offering, listing and price stability

The Saudi Stock Exchange Company (Tadawul) and the Capital Market Authority have made at least 11 amendments to facilitate the offering and listing processes and broaden the investor base in the financial market, in line with the financial sector development program, one of the pillars of the Kingdom’s Vision 2030. Since the beginning of this year, the Authority has worked to expand the circle of participating groups. Gulf investors with legal personality included in the process of building an order book to increase the efficiency of pricing. A number of restrictions related to determining the price range and covering the offering have also been eased by canceling the requirement that the price range (the difference between the lowest price and the highest price) be a percentage not exceeding 20% ​​of the lowest price, and amending the mechanism for determining the subscription price by giving the financial advisor in agreement with the issuer the ability On determining the subscription price according to the forces of supply and demand. The share allocation mechanism has been modified to give the financial advisor, in agreement with the issuer, the ability to allocate shares as it deems appropriate. The conditions for offering shares to individual subscribers were canceled by covering the entire offering by the participating parties, and public funds covering the specified percentage of the entire offering. The amendments included allowing foreign companies to be listed in the Saudi Stock Exchange, and the Securities Depository Center Company, “Edaa”, also signed two cooperation agreements with the Abu Dhabi Stock Exchange and the Bahrain Clearing Company to enhance bilateral cooperation with regard to listing foreign companies in the Saudi market and standardizing operational, administrative and technical procedures. Between the two countries, the Capital Market Authority allowed all categories of foreigners to invest directly in the shares of a foreign issuer whose shares are listed in the main market in accordance with the listing rules issued by the Saudi Stock Exchange Company (Tadawul). During the last period, the instructions for organizing the price stability mechanism for initial public offerings were approved by means of additional allocation, which is the procedure according to which a number of additional shares are allocated to the shares offered for subscription, which are borrowed from the lending shareholders and are sold to the public during the initial offering period at the subscription price according to the additional allocation agreement. During the past year, the Capital Market Authority and Tadawul Company launched a package of fundamental changes in Nomu – Parallel Market to increase the number of listed companies and the traded liquidity. The changes were implemented in two phases during the first quarter and the second quarter of last year.

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