CMA seeks public input on rules for offering depository receipts in Tadawul

Logo of The Capital Market Authority (CMA)

The Capital Market Authority (CMA) called on interested capital market parties to share their feedback on the draft regulations on the offer of depositary receipts in the Saudi Exchange (Tadawul), for 30 days until Feb. 7, 2025.

The draft rules seek to introduce new security by regulating the offering of depositary receipts in Tadawul in exchange for shares of a foreign company. This will contribute to deepening the market further, enhancing its role in capital formation, and boosting its attractiveness by providing additional listing options and diversifying investment channels in the capital market.

According to the proposed draft regulatory framework, the CMA will allow foreign companies to register and offer depositary receipts in Tadawul that correspond to their shares in the foreign capital market, upon obtaining approval.

Once the CMA approves the offering request, investors in Tadawul will be able to invest in depositary receipts corresponding to the shares of a foreign issuer listed in a foreign market. These investments will follow the same procedures applicable in Tadawul with respect to trading, settlement, and clearing.

In 2020, the CMA permitted Saudi-listed companies to issue deposit certificates outside Saudi Arabia in exchange for their shares to be traded in Tadawul. This move aimed to strengthen the pillars of Saudi Vision 2030, which seeks to make Tadawul attractive to both local and foreign investors. Consequently, it is now proposed to offer depositary receipts to foreign companies in exchange for their issued shares in a foreign market.

Under the draft regulations, the requirements for registering and offering depositary receipts will be similar to those for securities, as currently outlined in the Rules on the Offer of Securities and Continuing Obligations.

The CMA emphasized that opinions put forth by relevant and interested persons will be taken into full consideration for the purpose of finalizing the draft. Feedback can be received through any of the following:

•The Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the National Competitiveness Center, through the following link: (istitlaa.ncc.gov.sa).

•The prescribed form through the following email: (Laws.Regulations@cma.org.sa).

In light of the Draft Amendments, Tadawul and the Securities Depository Center Co. (Edaa) announced the publication of the draft amendments to the exchange rules and procedures for public consultation.

Draft rules on the offer of depositary receipts for public consultation