The Capital Market Authority (CMA) has invited all relevant and interested persons and participants in the capital market for Public Consultation on the Draft Regulatory Framework to Regulate Secondary Offerings for a period of 30 days ending on 08/06/1445 AH, corresponding to 21/12/2023.
The Draft aims to regulate secondary offerings, which provide a new channel for offerings in the capital market by allowing an existing shareholder to partially or completely sell their shares in a listed company in the capital market through an offering process.
Secondary offerings contribute to increasing the market's attractiveness to investors by increasing the number of tradable shares of the listed companies and increasing market weight in emerging market indices, resulting in a more diverse investor base in the Saudi capital market.
According to the Draft issued by the CMA, a shareholder intending to offer their shares in a listed company through a secondary offering must appoint a CMA-authorized financial advisor. This advisor will then need to notify the CMA at least fifteen (15) days prior to the proposed offering date. In addition, the procedures for carrying out the secondary offering in the Saudi capital market.
The Draft also included a restriction period on the remaining shares of the selling shareholders in Public secondary offering and the secondary offering in the Parallel Market.
Furthermore, the proposed Draft outlines the provisions for applying the book building process to determine the final offering price, the allocation of shares, and the price stabilization mechanism, aiming to contribute to the stability of the share price after the secondary offering through additional allocation.
The CMA reported that the opinions and comments of relevant and interested persons will be taken into full consideration for the purpose of approving the final text of the Draft. Opinions and comments can be received through any of the following:
•The Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the National Competitiveness Canter through the following link: (istitlaa.ncc.gov.sa).
•The prescribed form through the following email: (Laws.Regulations@cma.org.sa)
The Draft can be viewed via the following link:
The Draft Regulatory Framework to Regulate Secondary Offerings in the Saudi Capital Market
Prescribed form for providing comments
