CMA, Tadawul unveil new reforms to ease debt instruments listing

Logo of The Capital Market Authority (CMA) 

Saudi Tadawul Group Holding Co. announced that the Capital Market Authority (CMA) board issued a decision on Oct. 7, approving the amended listing rules, which will come into effect upon their publication.

According to a statement by Tadawul today, Nov. 13, these amendments aim to ease listing requirements for debt instruments by reducing the minimum issuance size for sukuk and bonds. They also seek to exempt debt instruments issued by funds, development banks, and sovereign funds in the Kingdom—offered as exempt offerings under the Rules on the Offer of Securities and Continuing Obligations—from the provisions of Chapter Three of the amended listing rules.

These changes are expected to encourage the issuance of sukuk and debt instruments and enhance the sukuk and debt market as a primary financing channel for businesses and the economy, while maintaining investor protection.

​The CMA also announced today approving the largest set of regulatory enhancements to the sukuk and debt instruments market since its launch in Saudi Arabia. These changes include amendments to provisions of the Rules on the Offer of Securities and Continuing Obligations related to debt instrument issuance, aimed at easing prospectus requirements for various offering categories, including public, private, and exempted.

The approved amendments aim to strengthen the regulatory framework for debt instrument offerings in Saudi Arabia, helping to attract a broader range of issuers and deepen investment in the sukuk and debt market.

The CMA board’s amendments allow the Kingdom’s development funds, development banks, and sovereign funds to issue debt instruments as exempt offerings, subject to specified regulations and conditions. This added flexibility supports their financing needs and aligns with national strategic and development objectives.

The amendments also simplify the requirements for preparing a prospectus for public offerings and reduce the supporting documentation for debt instruments by over 50% compared to current requirements. Additionally, the amendments refine rules related to public offerings by introducing a separate section dedicated to the regulations governing these offerings, thus providing clearer guidance on the regulatory requirements for issuing sukuk and debt instruments while maintaining investor protection through disclosing all material information.

For private offerings, the CMA abolished the requirement for a notification period before commencing the offering process. Under the approved amendment, local issuers can now notify the CMA and immediately initiate the offering process, addressing the needs of companies. This change is expected to streamline the notification process and expedite issuers' access to financing through the sukuk and debt market.

These amendments are part of the ongoing development of the sukuk and debt market, aiming to stimulate issuances to meet companies' financing needs and diversify their funding sources. This, in turn, is expected to positively impact the national economy and further activate the sukuk and debt market as a key channel for financing businesses and the economy.

The approval of these amendments followed the CMA’s publication of the draft “Proposed Regulatory Enhancements for the Offering of Debt Instruments” on the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform-Istitla), affiliated with the National Competitiveness Center (NCC), and the CMA's website for public consultation over a period of 30 calendar days.

 For more details, the Rules on the Offer of Securities and Continuing Obligations can be accessed via the following link.