Tadawul official reveals latest updates on listing mechanism

Abdullah Al-Dayel, head of domestic listing, Tadawul

The Saudi Stock Exchange (Tadawul) sought public feedback on the draft regulations of investment funds and real estate investment funds to enable the closed-ended investment traded funds (CEFs), real estate investment traded funds (REITs) and exchange traded funds (ETFs) to offer and list their units on Nomu Parallel Market, Abdullah Al-Dayel, head of domestic listing at Tadawul, told Argaam in an exclusive.

Tadawul is committed to grant companies a conditional approval on listing no later than 10 business days from completing the required paperwork.

He also indicated that Tadawul works with the Capital Market Authority (CMA) continuously to develop the capital market and its various platforms in order to compete with global peers.

Preparation for listing represents a change in the internal, administrative and financial aspects of any company, Al-Dayel said, adding that Tadawul launched a platform in mid-2020 to assess the readiness of companies planning to list their shares and grant early instructions on how to prepare for the listing.

Any company planning to list shares on the main market must be a closed joint stock company before submitting its application to the regulatory authorities and must also appoint financial and legal advisors as well as an underwriter as per the regulations.

The company’s market value should not be less than SAR 300 million, with 30% minimum of shares offered. In addition, a minimum of 200 investors must participate in the subscription before listing.

As for listing on Nomu Parallel Market, the company must be a closed joint-stock firm before applying to the regulatory authorities and must appoint a financial advisor, while the appointment of a legal advisor is optional.

The market value shall also not be less than SAR 10 million, and the firm must offer at least 20% of its shares or shares worth SAR 30 million to qualified investors, whichever is less. In addition, the company must have been operating for at least one year.

Al-Dayel said that Tadawul has recently made fundamental changes allowing companies listed on the parallel market to move to the main market in case of fulfilling all relevant requirements, such as listing on the parallel market for two years and having an average market value of SAR 200 during the last six months before submitting the application.

He confirmed that this effective mechanism helped eight companies move from Nomu Parallel Market to the main market.

The updates offered by Tadawul include issuing semi-annual financial statements in order to reduce the costs of posting continuous disclosures for the companies listed on the parallel market.

As for the minimum value of shares owned by the public, another option was given to the companies planning to list their shares, namely the market value of the shares owned by the public upon listing shall not be less than SAR 30 million, or not less than 20% of the company's shares, whichever is less.

"Tadawul supports research and analyst reports on Nomu-listed companies to motivate higher investments in the platform," Al-Dayel said.

"We aspire to develop the parallel market further, increase the number of listed companies and the number of investors, as well as turnover. We also aim to enhance flexibility in terms of obligations and disclosure of listed companies. In addition, we look forward to developing a platform that provides more diversified investment opportunities for all categories of investors," the official said.

Tadawul is the first capital market in the region that allows direct listing, as this move helps companies to list on the parallel market without subscription, whether for institutional or individual investors. In addition, companies will be able to sell the required minimum amount of liquidity in the bourse no later than 12 months from the listing date.

The companies wishing to be directly listed on the Nomu parallel market must appoint financial advisors to prepare and submit the listing documents. They must also appoint a person authorized by the Capital Market Authority (CMA) to undertake the management activity and act as a liquidity provider on behalf of the company.

Regarding the dual listing, Al-Dayel pointed out that Tadawul seeks to enhance its vision of becoming an integrated capital market through developing its infrastructure and providing products and services efficiently for a larger number of investors. Accordingly, this will enhance the market's competitiveness regionally and internationally, especially as it is the largest bourse in the Middle East, facilitating the entry of foreign investors and providing foreign companies with the opportunity of dual listing.

Tadawul signed agreements with Abu Dhabi Securities Exchange (ADX) and Bahrain Bourse to facilitate the transfer and exchange of securities, and update the securities ownership records for the dual listing, Al-Dayel said, adding that the move aims to attract foreign cashflows and lure international investors and investment institutions.

To increase awareness of listing, the listing team will be in contact with the companies planning to list their shares and will be available at any time to provide the necessary support and answer any questions related to Tadawul via the following email: Listing@tadawul.com.sa, the official concluded.