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SAUDI ARABIA: Foreign Firms Allowed to List on Local Exchanges

Foreign companies will now be able to list on Saudi Arabian stock exchange, subject to the same rules as domestic firms. Both domestic and international investors will also be able to trade such shares on the stock exchange.

The change was revealed on 6 October by the Capital Market Authority (CMA), financial regulator of the Kingdom of Saudi Arabia, which announced that a new batch of rules has been approved to facilitate foreign issuers’ entry onto the kingdom’s stock market. According to a statement by the Tadawul, the country’s main stock exchange, the new rules are intended to encourage foreign companies to list on the exchange, where they will be subject to the same listing, disclosure and governance requirements as Saudi listed companies. Under the new rules, all categories of resident and non-resident foreign investors will also be allowed to invest directly in the shares of the foreign issuer listed on the main market.

Furthermore, the new rules allow smaller foreign companies to apply for a direct listing on the Tadawul’s parallel small caps market, the Nomu, without undertaking an IPO. The requirement in the kingdom's bankruptcy law for all listed companies to inform market authorities when they apply to courts for a financial restructuring, or an administration process, has also been lifted.

According to the regulator, the new rules shall be effective upon its publication date, except for paragraphs (1) and (3) of Article 90 of the Rules on the Offer of Securities and Continuing Obligations, which will enter into force starting from 1 January 2020.

CMA Chairman, Mohammed bin Abdullah Elkuwaiz, said that the new measures are intended to create greater opportunities for diversification for investors on the Tadawul, following on from a progression of new initiatives in recent years to deregulate the country’s financial markets. In 2012, the kingdom allowed foreign companies whose securities are listed on other regulated exchanges to apply for listing in Saudi Arabia; and in 2015 the Tadawul opened up to foreign investors. The latest changes follow on from an agreement earlier this year between the Tadawul and the Abu Dhabi Securities Exchange aimed at boosting dual listings in Saudi Arabia and the United Arab Emirates.

The official announcement of the new rules is available on the CMA’s website.

Content provided by Picture: HKTDC Research
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