Saudi Arabia’s Capital Market Authority (CMA) has approved new provisions governing initial public offerings, introducing stricter requirements for underwriters, book-building participation and forward-looking financial disclosures.
The rules require underwriters to sign agreements before book-building begins, with their obligation to purchase all offered shares taking effect once the process starts. If that ownership causes an issuer to fall short of listing requirements, the shares will not be listed and the underwriter must purchase them, subject to any disposal mechanism set out in the agreement.
Participation orders during book-building must reflect investors’ actual liquidity. For participating entities, financial capacity can be verified only through cash or cash equivalents, and orders must become binding for payment by the subscription deadline in the prospectus.
Issuers must also disclose financial forecasts and other forward-looking information in prospectuses and registration documents. These statements must cover the remainder of the latest financial period and at least the following financial year, while being clear, non-misleading and supported by reasonable, measurable grounds.
The provisions take effect upon publication. The CMA said it will publish frequently asked questions to clarify implementation.
Source: Waya
