​As part of the Capital Market Authority's ("CMA") strategic objectives to develop the capital market, and based on the Capital Market Law issued by Royal Decree No. (M/30) dated 2/6/1424 H, the CMA Board issued its Resolution approving the amendments to the Rules on the Offer of Securities and Continuing Obligations and the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority.

These amendments, approved by the CMA, aim to further regulate and develop the Capital Market and build an advanced capital  market that has an active and pivotal role in supporting the growth and the sustainability of companies in the capital market. The amendments to the Rules on the Offer of Securities and Continuing Obligations aim to enhance the role of the capital market in raising capital to become an advanced market that supports the development of the national economy, and increase the efficiency of the financial sector. Also, these amendments, approved by the CMA,  come in light of the developments of the client classification categories, requirements of “Know Your Customer", client understanding of risk, and client suitability, in addition to developing the structure of the special purposes entity in line with the international best practices and standards.

The main elements of the amendments are:

1. Amending the minimum requirements for the amount paid by each offeree (other than investors under the categories of Institutional and Qualified Clients) in limited offers. In addition to restricting the offer of unlisted contractually based securities to the cases where all offerees are investors under the categories of Institutional and Qualified Clients, or employees of the issuer or any of its affiliates.
2. Amending the Rules on the Offer of Securities and Continuing Obligations in alignment with the amended Rules for Special Purposes Entities in relation to the structure of the special purposes entity that offers debt instruments, in addition to a number of amendments in relation to the offering of debt instruments by the special purposes entity.
3. Amending the Rules on the Offer of Securities and Continuing Obligations regarding the CMA's review period of an application for the registration and offering of debt instruments, or the registration and offering of convertible debt instruments, and requesting the approval for a financing transaction in relation to the public offering of debt instruments to be (20) days from the date of receiving all the information and documents required under the Rules.

The CMA Board Resolution included that the amendments shall be effective as of the date of their publication, except for the amendments to the provisions specified in table (1) below, which will become effective as of 28/5/1443H corresponding to 1/1/2022G. The resolution also included that the provisions specified in table (2) below of the Rules on the Offer of Securities and Continuing Obligations issued by the Board of the CMA pursuant to its Resolution number (3-123-2017) dated 9/4/1439H corresponding to 27/12/2017G, amended by Resolution of the Board of the CMA number (1-104-2019) dated 01/02/1441H corresponding to 30/09/2019G, shall continue to be effective until the date on which the amendments referred to in table (1) come into effect.

Table No. 1

Table No. 2

It is worth mentioning that the CMA Board Resolution included amending the reference to Article 70 of the Rules on the Offer of Securities and Continuing Obligations, stipulated in paragraph (c) of Part 5 of the Instructions on the Price Stabilisation Mechanism in Initial Public Offerings, to reference Article 69 of the Rules on the Offer of Securities and Continuing Obligations, and amending the reference to Article 68 of the Rules on the Offer of Securities and Continuing Obligations, stipulated in paragraph (25) of Article 90 of the Corporate Governance Regulations, to reference Article 67 of the Rules on the Offer of Securities and Continuing Obligations.

This comes after the CMA published the draft amendments to the Rules on the Offer of Securities and Continuing Obligations and the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority on its website for public consultation for a period of (60) calendar days. The number of comments received by the CMA during the public consultation period reached (27), and the CMA has made several amendments based on what was received.  Among these amendments is enabling limited liability companies to be a sponsor of the special purposes entity when issuing any type of debt instruments, in the case of a private placement.

The amended Rules on the Offer of Securities and Continuing Obligations and the amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority can be viewed via the following links:

Rules On The Offer Of Securities and Continuing Obligations

The Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority