​The Capital Market Authority (CMA) published today a draft of the Second Market Listing Rules on its website and the Saudi Stock Exchange (Tadawul) website. This step aims to receive views from specialists, interested stakeholders and the public regarding these draft Rules. Comments will continue to be received until  14/2/1438H, corresponding to 14/11/2016G through CMA's official channels.

CMA pointed out that it will take into account all suggestions and comments received in relation to the draft Rules, as part of its commitment to grant specialists and interested stakeholders the opportunity to express their viewpoints and suggestions which will reflect positively on the capital market development.

Further, the second market – which will start listing companies in line with these rules after its approval in its final version – is in line with the Kingdom's 2030 vision that is based on three basic aspects, that include the endeavor to make the Kingdom a leading investment power. It is also consistent with the objectives of CMA strategic plan, which was entered into force as of early 2015 and will continue until 2019. CMA’s strategic plan includes a number of themes and initiatives, which include developing the capital market through deepening it in order to strengthen its role in supporting national economy.

The second market will be an opportunity for national companies of different categories to be listed in, and thus obtaining funding from the financial market, as well as the possibility of expanding its activity and sustaining its businesses.

The draft Rules consist of 29 articles and 7 Annexes, which includes conditions for registration and listing in the second market less than those required from companies aiming to list in the main market.

In details, the draft Rules conditioned companies wishing to be listed in the second market that the number of public shareholders should not be less than (50) shareholders, and the ownership of the public within the requested type of share should not be less than (20%) at the time of listing. Further, 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 SAR 10 million.

It is worth mentioning that 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 type should not be less than (30%).
CMA also indicated that the Corporate Governance Regulations issued by the CMA is a guidance for companies listed in the second market.

Among the requirements contained in the draft Rules and highlights the difference in the listing conditions is that any company wishing to join the second market must have at least one year of operational and financial performance. 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.

The specialists, interested stakeholders and the public can send their comments and observations through the following channels:

•     Email (Laws.Regulations@cma.org.sa);
•     Fax number (+966114906460); or
•     Mail address (P.O. Box 87171 Riyadh 11642, CMA Deputy for Legal Affairs and Enforcement – Laws and Regulations Department).

The draft Rules can be viewed on CMA’s website via the following link:

Draft second market listing rules