Members News

Home / News

Markets Regulations


Active Members

As part of CMA’s regulatory responsibility to
regulate and develop the Capital Market and protect citizens and investors, the
Board has issued its resolution dated 02/07/1434H corresponding to 12/05/2013
to adopt the ratio of %10 (ten percent) of the stock price fluctuation limit of
listed companies in the Saudi Stock Exchange on its first day of trading.

 



http://www.cma.org.sa/en/News/Pages/CMA_N_1302.aspx

CMA board has issued its resolution approving the new Corporate Governance Regulations.
The new Regulations have paid heed to setting effective governance arrangements for the joint stock companies listed in the Saudi Stock Exchange to ensure the clarity of the relationship between shareholders and the company's board from one side, and between the board and the executive management team on the other side. The regulations also took care of the shareholders' rights in these companies, such as the right of fair and equal treatment of shareholders without discrimination and the right of accessing the information transparently to enable them to fully exercise their statutory rights. Moreover, the Regulations cover the rights of stake holders in these companies.
The Regulations have set detailed provisions on the composition of Board of Directors and committees in terms of competencies, responsibilities, meetings, members' rights and duties. These provisions emphasize the principle of active participation in decision making within the Board of Directors as they deal with the issues of conflicts of interest between board members and the company, and adopt honesty, truthfulness and care as a foundation and methodology for these boards.
The Regulations also included detailed provisions regarding companies' external auditors and internal control procedures compelling Boards of Directors to disclose all information the shareholders and dealers need to build their investment strategies or perform any transaction with the company in a fair and systematic manner for all parties.
The Regulations contribute to interacting with the set of national legislations under which companies operate and integrate to fulfil their objectives with efficiency and integrity. The benefits of Corporate Governance are not confined to companies, rather they directly outreach the national economy for the role played by governance-based companies' growth and continuity in boosting the economy and increasing the GDP in line with the Saudi Vision 2030. These Regulations were prepared in cooperation between the CMA and the Ministry; and come as part of the continuous coordination between them under the singed memorandum of cooperation to harmonise policies and procedures adopted for the implementation of the Companies Law to ensure integration and harmony in achieving the sough objectives; and in completion of the legislations issued by CMA in light of the new Companies Law such as the Regulatory Rules and Procedures issued pursuant to the Companies Law relating to joint stock companies listed in the Saudi Stock Exchange that regulates the Remunerations of board members in these companies, the Holding of general and special assembly meetings of shareholders and their participation therein through contemporary technology, Buy-back, sale and pledge of shares, Pledge of company's shares, Issuance, buy-back and conversion of preferred shares by the company, Dividend distribution to shareholders of the company, Issuance and sale of pre-emptive rights resulting from capital increase, and proxy procedures for attending general and special assemblies.
The Capital Market Authority’s Board of Commissioners has issued its resolution to adopt the updated Merger and Acquisition Regulations, thereby replacing the previously implemented Merger and Acquisition Regulations, which was adopted in 2007. This update comes in continuation of the Authority’s efforts to regulate mergers and acquisitions transactions in accordance with best international practices, and in line with the powers vested in the Authority by the new Companies Law with regards to merger transactions, of which a party is a listed company.
It is worth mentioning that the updated regulation aims to set the base for the principles of fairness, equality of treatment and equal opportunities amongst owners of securities who are the subject of a merger or an acquisition. In the light of this, the updated regulation included a number of examples to clarify cases in which a person will be considered as a related party and the obligations arising therefrom. Furthermore, it included a number of examples in which a group of persons are presumed to be Acting in Concert and as such their collective ownership in the listed company will be treated as that of a single person’s ownership.
The Capital Market Authority (CMA) announced that, as of 1st of January 2018, foreign investors would be granted direct access to invest in the Parallel Market "Nomu" on similar terms as those to local investors.
In 2015, the CMA started the deregulation process by allowing foreign financial institutions to invest directly in the Saudi capital market. These initial steps were followed by several further regulation and infrastructural developments that aimed to ease foreign investment access to the capital market. It is worth mentioning that the CMA is working in parallel with the country's General Investment Authority (SAGIA) to set up a framework for non-residential strategic investors to own strategic stakes in listed companies. This would augment the current QFI regime to create more options for foreign investors.
The eligibility criteria in order to trade and participate in the Parallel Market “Nomu" are any of the following persons:
1. Authorized Persons act for their own account
2. Clients of a person authorized by the CMA to conduct managing activities.
3. The Government of the Kingdom, any government body, any supranational authority recognized by the Authority or the Exchange.
4. Government-owned companies either directly or through a portfolio managed by a person authorized.
5. Companies and funds established in GCC countries.
6. Investment Funds.
7. Qualified Foreign Investors.
8. Any other legal persons allowed to open an investment account in the Kingdom and at the Depositary Center.
9. Natural person fulfil any of the following criteria
   a) conducted transactions in security markets of not less than 40 million Saudi riyals in total, and not less than ten transactions in each quarter during the last twelve months
   b) the average size of his securities portfolio shall exceed 10 million Saudi Riyals during the last twelve months,
   c) holds a professional certificate in securities which is recognized by the CMA or an accepted jurisdiction.
In addition, the CMA issued a guidance note for the investment of non-resident foreigners in the Parallel Market "Nomu", which aims at clarifying the mechanism of investment and related restrictions.
The CMA Board has issued its Resolution on amending the Resolution of Securities Disputes Proceedings Regulation (Regulation), by adding a chapter regulating the Class Action Suit, which the CMA has previously posted its draft on its website for (30) calendar days, to obtain the views and remarks of the public.
The regulation of class action suit within the Resolution of Securities Disputes Proceedings Regulation, aims to facilitate litigations proceedings where the plaintiff is a group of persons who share the same legal issues, merits and subject matter of requests, which is appropriate to the nature of the listed companies and the size of their shareholders. The amendment also aims to develop litigation mechanisms and procedures in line with the best international practices, all of which are to enhance the attractiveness of the Saudi capital market and reduce the risk of investing in it, in addition to its role in reducing the time required to resolve investor compensation issues, which in turn, facilitate the work of the committees on one hand and focuses the efforts of investors on the other.
The CMA has prepared an amended draft of the Rules for Qualified Foreign Financial Institutions Investment in Listed Securities.

The purpose of these Rules is to set out the procedures, requirements and conditions for the registration of qualified foreign investors with the Authority to invest in listed securities, and to specify their obligations and the obligations of authorized persons in this regard.

 

The CMA Board has issued its Resolution approving The Rules for Special Purposes Entities ("the Rules") and the Special Purposes Entity by-laws, and will enter into force starting from 15/7/1439H corresponding to 1/4/2018G.
The Rules aim to regulate the establishment and licensing of the special purpose entity; and to define the related monitoring and supervisory rules , taking into consideration all recommendations, observations and opinions, received from investors, specialists, and interested parties during the public consultation.
The resolution to adopt the Rules has been issued in conjunction with the approval of the outcomes of the CFI track within the Transition & Activation of Responsibilities Project (TAR), where the Rules On The Offer Of Securities And Continuing Obligations issued by resolution dated 9/4/1439H corresponding to 27/12/2017G, contain provisions regulating the issuance and trading of securities through a special purpose entity.
The CMA Board has issued its Resolution approving the Rules of Offering Securities and Continuing Obligations, and the updated Glossary Of Defined Terms Used In The Regulations And Rules Of The Capital Market Authority and approve the Listing Rules, and the updated Glossary Of Defined Terms Used In The Exchange Rules which will be effective from 15/7/1439H corresponding to 1/4/2018G, except for the definition of "Qualified Investor" set out in the updated Glossary Of Defined Terms Used In The Regulations And Rules Of The Capital Market Authority and the updated Glossary Of Defined Terms Used In The Exchange Rules, paragraph and (f) of article (71) of the Rules of Offering Securities and Continuing Obligations, and paragraph (b) of article (40) of the Listing Rules which will be effective starting from 31/12/2017G.
The resolution also included that the rules of offering securities and continuing obligations, starting from their effectivity date, shall replace the Offer of Securities Regulations issued under the Board Resolution no. (2-11-2004) dated 20/8/1425H, corresponding to 4/10/2004G, amended under Board resolution no. (3-151-2016) dated 22/3/1438H corresponding to 21/12/2016G, the Listing Rules issued under the Board Resolution no. (3-11-2004) dated 20/8/1425H corresponding to 4/10/2004, amended under Board resolution no. (1-64-2016) dated 19/8/1437H corresponding to 26/5/2016G, and the Parallel Market Listing Rules issued under the Board resolution no. (3-151-2016) dated 22/3/1438H corresponding to 21/12/2016G.
It's worth mentioning that the Rules of Offering Securities and Continuing Obligations aims to regulate the offering of securities in Saudi Arabia. It includes the conditions of the offer of securities, identifies the requirements of listing and offering, and the conditions and requirements of capital changes. In addition to regulating the continuing obligations on issuers whom their securities are listed in the Main Market, and the process of listing and offering shares in the Parallel Market.
Also, the Listing Rules aims to regulate the listing of securities, the continuing obligations on the issuers of listed securities, the suspension of trading listed securities and delisting of listed securities.
The Board of Directors of the Qatar Financial Markets Authority “QFMA” approved an important rules and regulations. This comes as a part of the QFMA’s initiatives for the capital market and its ongoing efforts to regulate and activate the capital market, protect its stability and its participants, and persify its investment tools and mechanisms supporting Qatar Stock Exchange “QSE”.
THE MOST IMPORTANT OF SUCH RULES AND REGULATIONS APPROVED BY THE BOARD ARE:
   1. Rules regulating the market maker activity, which is a new addition to the financial services activities. Such rules aim at activating trading and increasing liquidity in the market, as well as maintaining its stability and balance when the financial services companies, specialized in this activity licensed and regulated by the QFMA, provide continuous offer prices for buying and selling the securities traded in the market.
   2. Operating procedures for ETFs “Exchange Traded Funds”, including short selling transactions covering such fund’s units or index components. This is an addition of a new financial product to the Qatari market alongside shares, governmental treasury bills and bonds, which contributes in the persity of securities available for investors.
   3. Procedures for protecting minority and small investors as a result of the transformation of public shareholding companies to another type of companies as set forth in the Companies Law No. 11 of 2015. Through which such procedures, the QFMA aims to provide adequate protection as per the international best practices for all shareholders when public shareholding company listed on the QSE transforming to any other type of companies.
   4. Rules for employees’ incentive shares in public shareholding companies listed on the QSE, which allow the listed companies organizing incentive schemes for their employees while preserving the shareholders' rights of the company by granting them the right to approve such schemes and supervise their implementation through periodic reports presented annually to shareholders.
In line with CMA’s endeavor to regulate securities activities according to Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Executive Bylaws and their amendments, and in CMA’s pursuit of transparency, and its belief in the value of participation and the importance of benefiting from the expertise and capabilities of regulated entities, with respect to their valid aspirations and visions in the issued decisions and regulations relevant to the field of securities activities, which would fulfill common interests, support the implementation of CMA’s decisions and regulations when properly enforced, contribute to CMA’s success in achieving its goals, and consequently achieve public interest goals.
Thus, the CMA announced conducting an opinion poll for regulated entities on the draft amendment of the Executive Bylaws of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their amendments, by adding Appendix 1 “Standards of Systems for Maintaining Records” to Module Eight (Conduct of Business). 
After the completion of the public consultation seminars on the first set of implementing regulations issued by the CMA in cooperation with World Bank experts in 2015, a specialized CMA working group has completed a rigorous translation process of the three implementing regulations into Arabic, thus allowing for the regulations to be published in the official gazette. The implementing regulations are already considered by CMA as set into force since the date of their publication.
A small brief on the published implementing regulations:

Licensing and Registration Regulation
In order to carry on a securities related business, an institution must be licensed by the CMA under Law 161/2011. Similar to banking business, licensing is critical to protecting customers and ensuring the safety and soundness of institutions operating in the capital markets. Licensed institutions are hence subject to ongoing supervision by the CMA.
Therefore, and as a direct result of this regulation, Banks, financial institutions and financial intermediaries with capital markets business will be “approved institutions” and subject to CMA regulations.

Business Conduct Regulation
“Business conduct” refers to how an approved institution governs and manages its business, its business operations, its systems and controls and its dealings with clients. Business conduct regulations are critical to investor protection, and to ensuring licensed institutions operate with integrity, sound management and effective controls.

Market Conduct Regulation
“Market conduct” refers to the standards of conduct applicable to trading by persons in securities markets. This regulation is critical to market integrity and ensuring fair and efficient markets. It applies to all persons involved in trading, except for item 4 below, which only applies to “Approved Institutions”.
FRA’s BOD decided that companies wishing to offer its shares, whether existing shares or capital increase shall be registered at FRA’s registry first before being listed at the Egyptian Exchange. Also, FRA’s BOD decision stated that companies shall meet the requirements set for calculating the fair value and approving prospectus or disclosure form for offering.

For its part, FRA will comply with standards of transparency and quality systems and companies’ requests shall be decided upon within fifteen days from the date of submitting the needed documents. In addition, Companies will be given a period of no more than one month to complete the offering and trading process in the Egyptian Stock Exchange. In this respect, investors will be aware of the timing of offering, listing and trading.

This decision will be followed by changes in many rules and executive procedures of listing rules prepared by the Authority, that is after consultations with the Egyptian Stock Exchange in preparation for its publication in the Egyptian Gazette and applying it from the next day of publication.
FRA’s Board approved number of important amendments to the Executive Regulations of the Capital Market Law. The amendments to the real estate investment trusts (REITs) included increasing the percentage in which the (REITs) may invest their funds in one project to be 50% if the size of the fund is 500 million pounds or less. In addition, if the fund size is more than 500 million pounds, then it will invest 30% of its funds as long as there is an acceptable feasibility study that is being disclosed to certificates holders. On the other hand, another restriction was amended regarding the fact that the total number of those who own 10% or more of the real estate investment trusts (REITs) shall not exceed75% of the total of fund’s certificate. If these funds are listed at the Stock Exchange, then it shall meet some listing requirements, namely, the minimum number of certificates’ holders and the ratio of tradable certificates. In addition, another restriction is amended and it is related to the fact that ratio of the contribution of the real estate investment trusts (REITs) in the capital of the unlisted real estate company shall not be less than two-thirds of its capital. The new amendments grant the Fund the right to set the percentage of contribution which is in the interest of certificates’ holders pursuant to the fund’s investment policies.
The amendments approved by the Board also allow Investment Manager to use intraday trading system provided that the transactions shall not exceed 15% of the daily volume of fund’s transactions.
Regarding charitable funds, the new amendments allow these funds to invest in various types of mutual funds and it not being limited to private equity funds or real estate investment trusts (REITs) in accordance with the regulations set by the Authority .

In order to facilitate the work of the open-ended funds, the proposed amendments allow banks and insurance companies to issue more than one issuance for open-ended funds.

 

FRA’s Board of Directors issued a regulatory decision after gaining the Board’s approval. The said decision requires obtaining the approval of the company’s General Assembly upon purchasing treasury shares where the percentage of ownership or voting rights of a shareholder or a related group exceeds the percentage set upon submitting a mandatory tender offer, besides the shareholder and the related persons will not participate in voting on purchasing decision in the General Assembly, that is due to the possibility of obtaining an exemption from the Authority upon submitting a mandatory tender offer.
The decision also regulates obtaining an exemption from the Authority regarding not submitting a mandatory tender offer in cases of capital increase whether in cash or through credit balances if the percentage of ownership or voting rights of a shareholder or related group exceeds the percentage set upon submitting a mandatory tender offer, on condition that this is not resulted from purchasing subscription rights in capital increase.

The Authority's decision no. 81 of 2013 was canceled in the light of what was stated in the new decision. Besides, rules of purchasing treasury shares stated in listing and delisting rules will be amended in line with the provisions of the said decision .

 

FRA agreed in principle on the Capital Market Advisory Committee’s recommendation to regulate the rules governing intraday trading mechanism, which increase the maximum limit of THE client to be 1/10000 instead of 20000/1 and allowing him to repeat dealing within the said percentage during intraday trading session. The said proposal shall be presented to the Board of Directors at the next meeting to proceed with the amendment procedures. Also, FRA approved the Committee’s recommendation regarding adding Index Fund certificates to List “ B” of marginable securities list and this shall be done concurrently with the updated lists which include shares that are allowed to be engaged in specialized activities.
FRA’s BOD approved the amendment to decision no. (17) of 2017 issued on 28/2/2017 regarding regulating trading rules and proof of ownership of unlisted securities. The new amendment extends the period in which brokerage companies can notify the Stock Exchange of the transactions required to transfer the ownership of the unlisted securities for one month from the date of the order instead of one week, taking into account the practical cases for such transactions that can exceed the set period stated in the said decision. In addition, extending the period of one week that is stated in the decision will grant greater flexibility that suits the nature of market’s transactions.
The said amendment also states that the purchaser may prove that he deposits the value of the transaction in the bank account for a period exceeding one month stipulated in the same decision in accordance with reasons estimated by the Authority.
 

Subscribe With Us


Subscribe to our newsletter