[Last updated: 1 January 2024, unless otherwise noted]

A listing applicant must satisfy the conditions for registration and listing. The CMA may accept an application for listing even if a company does not satisfy all of the conditions, as long as the CMA is satisfied that a listing will be in the interests of investors and investors have received the necessary information to make an informed judgment.

Simply meeting the CMA's requirements does not guarantee a listing on Tadawul. The CMA has broad discretionary powers and its board can reject any listing application if it considers that the applicant is not suitable for listing on Tadawul or if it would not be in the best interests of investors for the company to go public.

Financial criteria

An issuer must have:

• A market capitalization of at least SAR300 million (approximately US$80.01 million) at the time of listing for the Main Market, and a market capitalization of at least SAR10 million (approximately US$2.67 million) at the time of listing for the Parallel Market.
• Sufficient working capital (on its own or with its subsidiaries) for 12 months from the date of the publication of the prospectus (Main Market only).
• Submitted a liquidity plan to satisfy the liquidity requirements set out in the Listing Rules (Parallel Market only).

Once a company lists, it is not required to meet similar financial requirements in order to maintain its listing on an ongoing basis. However, listed companies are subject to other financial reporting and other ongoing obligations, which are summarized in section 4 below.

The above requirements also apply to foreign issuers applying to cross-list their securities on the Main Market of Tadawul.

Operating history; management

For a listing on the Main Market, an issuer must:

• Be a joint stock company (except in the case of the cross-listing of securities).
• Have been carrying on, either by itself or through one or more of its subsidiaries, the same main activity for at least three financial years.
• Have published audited financial statements covering at least the last three financial years, prepared in accordance with the accounting standards adopted by The Saudi Organization for Certified Public Accountants (SOCPA).

In addition, the senior executives of the issuer must have appropriate expertise and experience for the management of the issuer's business.

For a listing on the Parallel Market, an issuer must:

• Be a Saudi joint stock company or a GCC joint stock company with a majority of the capital owned by GCC citizens.
• Have been carrying on, either by itself or through one or more of its subsidiaries, a main activity for at least one financial year.
• Have published audited financial statements covering the last financial year, prepared in accordance with the accounting standards adopted by SOCPA.

Free float; shareholders

At the time of listing on the Main Market at least 30% of the shares must be offered to the public and there must be at least 200 public shareholders. At the time of listing on the Parallel Market at least 20% of the shares must be offered to the 'public' (defined in this instance to include various connected persons such as substantial shareholders, directors, senior executives and relatives of those persons) or the market value of the shares owned by the public is not less than SAR300 million (approximately US$80.01 million) (whichever is less), and there must be at least 50 public shareholders. In all cases these conditions are part of the issuer's continuing obligations under the relevant set of listing rules, although the CMA may allow a lower percentage to be floated and a lower number of shareholders.

At the time of the initial public offering on the Main Market, only public funds, listed companies, licensed financial institutions, government entities, certain unlisted Saudi companies and QFIs (though the book building process) and Saudi nationals (through the retail offer) may subscribe for the issuer's shares. Once the shares are listed on Tadawul, Saudi nationals, non-Saudi nationals holding valid residency permits in Saudi Arabia, GCC nationals, as well as Saudi and GCC companies, and categories of investors eligible to participate in the book building process (including QFIs) may trade in the shares. Non-Saudi individuals living outside Saudi Arabia and institutions registered outside Saudi Arabia (who do not wish to register as QFIs) can also invest in the shares by entering into swap arrangements with persons authorized by the CMA to purchase shares listed on Tadawul.

Participation in any offer made by a company seeking a listing on the Parallel Market and in any secondary trading on the Parallel Market, is limited to "Qualified Investors" which include licensed financial advisors (acting for their own account), government entities, investment funds, GCC company and funds, QFIs and certain individuals who meet "professional investor" type criteria. Non-Saudi individuals living outside Saudi Arabia can also invest in the Parallel Market, subject to certain restrictions. These restrictions include, but are not limited to, the investor being a QFI and entering into swap arrangements with an authorized person. A non-resident foreign investor in the Parallel Market may not own 10% or more of the shares of any issuers whose shares are listed or convertible debt instrument of the issuer.

Lock-up requirements

The CMA requires that all founding shareholders of a company listing on the Main Market be subject to a lock-up period. The lock-up period is set as six months from the date that the shares of the issuer commenced trading on Tadawul. However, in some cases, the CMA has requested that the restrictions on founding shareholders remain for up to five years (as was the case with telecommunication companies). A company may set a lock-up period in excess of six months provided that it is stated in the prospectus and registration document.

Existing shareholders of an issuer seeking a listing on the Parallel Market are subject to a 12-month lock-up period from the date of commencement of trading in the issuer’s shares under the Parallel Market Listing Rules.

Appointment of advisors and representatives

The issuer must appoint independent financial and legal advisors for listing on the Main Market, but only an independent financial advisor for a listing on the Parallel Market. In all cases the issuer must also appoint two representatives (a director and a senior executive) to act as its representatives before the CMA. Foreign issuers applying to cross-list their securities on the Main Market of Tadawul are also required to appoint independent financial and legal advisors.

Corporate governance

The CMA has issued the Corporate Governance Regulations which provide basic governance guidelines for all listed companies. The Corporate Governance Regulations cover various topics, including related party transactions, the composition and duties of the board of directors and the formation and duties of board committees. It should be noted that the Corporate Governance Regulations are deemed indicative to all issuers whose shares are listed on the Parallel Market. See section 5 below for further information.

Other requirements

Alteration in capital and restructuring. The CMA will not accept an application for registration and admission to listing on the Main Market from an issuer that has undergone a material restructuring or has been subject to an alteration in capital using external financing (including through any shareholder current account), unless one financial year has lapsed since the date of completion of the material restructuring or alteration in capital. The CMA has defined "material restructuring" to mean the following:

• Disposing of any of the issuer's assets that generate 30% or more of the issuer's revenue or net income as per the most recent annual financial statements.
• Acquiring assets with a value exceeding 30% or more of the net asset value of the issuer as per the most recent annual financial statements.
• Acquiring a company with a shareholder equity constituting 30% or more of the issuer's shareholder equity as per the most recent annual financial statements.

Class of listed securities. The whole class of the relevant securities must be listed on the Tadawul.

Currency. Securities must be traded and settled in Saudi Arabian Riyals.

Board approval. A company cannot offer securities to the public unless it has the approval of its board.