The Capital Market Authority (“CMA") called upon relevant and interested persons participating in the capital market to share their feedback for Public Consultation on the Draft Regulatory Framework to the Offer of Depositary Receipts in the Saudi Capital Market (“Draft“) for a period of thirty (30) days ending on 08/08/1446 AH, corresponding to 07/02/2025.
The Draft aims to introduce a new security by regulating the offering of depositary receipts in the Saudi capital market that represent shares of a foreign company. This shall contribute to deepening the market, enhancing its role in capital formation, and increasing its attractiveness by providing additional listing options and diversifying investment products in the capital market.
According to the proposed draft regulatory framework, the CMA will allow foreign companies to register and offer depositary receipts in the Saudi capital market that correspond to their shares in the foreign financial market, upon obtaining approval.
Once the CMA approves the offering request, investors in the Saudi capital market 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 the Saudi capital market concerning trading, settlement, and clearing.
In 2020, the Capital Market Authority allowed companies listed on the local capital market to issue certificates of deposit outside Saudi Arabia in exchange for their shares traded in the Saudi capital market. This move aims to strengthen the pillars of Saudi Vision 2030, which seeks to make the Saudi capital market 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.
According to the proposed draft regulatory framework, the requirements for registering and offering depositary receipts will be similar to those for shares, as currently outlined in the Rules on the Offer of Securities and Continuing Obligations.
CMA emphasized that the comments of relevant and interested persons shall be taken into full consideration for the purpose of finalizing the Draft. Opinions and comments 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).
The Draft Amendments can be viewed via the following links:
The Draft Regulatory Framework to the Offer of Depositary Receipts in the Saudi Capital Market
Prescribed form for providing comments
It is also worth noting that, in light of the Draft Amendments, the Saudi Exchange (Tadawul) and the Securities Depository Center Company (Edaa) have announced the publication of the draft amendments to the Exchange Rules and Procedures for Public Consultation. The draft amendments can be viewed via the following link:
The Draft Amendments to the Exchange Rules and Procedures for Public Consultation
