​The Capital Market Authority (CMA) and Tadawul have developed a mechanism to list and trade rights issue of listed companies in the market.  The rights issue will be traded as tradable securities in the capital market. They will be allowed to be traded during the daily trading hours by buying and selling orders just as in the stock exchange.

The Advantages of the new mechanism:

1. Protect the investor by compensating the decrease in the value of his portfolio resulting from the amendment to the stock’s price after the approval to increase the capital from the Extraordinary General Assembly.
2. Increase the investor’s flexibility by giving him/her more options to use the rights issue. The new mechanism will give the investor the option to sell all the rights issue given to him by the issuing company, the subscription to the offering of all these issues to himself, or sell some of it to get the necessary liquidity to subscribe in the other part.
3. Protect those who didn’t exercise their subscription right by offering the remaining stocks by the end of the subscription and rights trading periods. The revenues of the offering will be distributed after deducting the subscription expenses on the remaining rights issue holders according to the percentage of rights they own.
4. Promote transparency in the prices if the rights issuing company’s shares. The demand on these shares through the capital market can be an indication of the demand size on the company’s shares.
5. Provide a mechanism aligned with the international capital markets.
6. Create a new product in the financial market that would provide a larger volume of liquidity.