CMA launches enhancements for listed companies’ share buyback, sale processes

Logo of The Capital Market Authority (CMA)

The Capital Market Authority's (CMA) board approved an amendment to the executive regulation of the Companies Law for listed joint stock companies, which will come into effect upon publication.

The approved amendment aims to provide greater flexibility for listed companies in share buyback and sale operations by easing restrictions. This improvement aims to boost investment efficiency in the Saudi capital market while aligning with relevant global practices, the regulator said in a statement.

The amendment provides greater flexibility for listed companies by developing the provisions regulating listed companies' shares buy-back or sale, as follows:

- Daily share buybacks must not exceed 25% of the average daily trading volume of the company's shares over the last five trading days preceding the purchase;

- The sale of treasury shares in a single trading day must not exceed 25% of the average daily trading volume of the company's shares over the same period;

- Private buy and sell transactions are excluded from the calculation of the daily trading volume.

- The amendment extends the period during which the Board may be authorized to execute share buybacks to 18 months.

The previous version of the executive regulation of the Companies Law for listed joint stock companies specified the approved quantity of the company's shares that could be bought or sold by the company itself in a single trading day.

These quantities included either the buyback amounts determined and approved by the extraordinary general assemblies of listed companies or the treasury share sale amounts set and approved by the board, provided they did not conflict with the extraordinary general assembly's decision regarding the buyback of these shares. The regulations required the Boards of Directors to complete the buyback process within a maximum of 12 months from the date of the general assembly's decision.

According to CMA, the project to amend the executing regulation of the Companies Law for listed joint stock companies stems from the regulator's commitment to developing the capital market and regulating trading operations, whether in the buyback or sale of treasury shares by listed companies.

CMA published on June 6, 2024, the draft amendment to the executive regulation of the Companies Law for Listed Joint Stock Companies for public feedback.