The Capital Market Authority (CMA) called upon all interested persons and participants in the capital market to share their feedback on the Draft for Enhancing Disclosure within the Management Discussion of Financial Performance Section in the Annual Board Report. The consultation period will last for 30 days, ending on 10/06/1448H, corresponding to 20/11/2026.
The Draft aims to strengthen corporate governance, transparency, and disclosure practices among listed companies and enhance the quality of financial information available to shareholders and potential investors, thereby enabling them to better assess companies' performance, results of operations, and financial positions, and make well-informed investment decisions.
The Draft includes developing the existing regulatory provisions related to the disclosure of financial and operational performance, by consolidating and organizing them within an independent section of the annual Board's Report titled “Discussion and Analysis of Financial and Operational Performance and Financial Position," alongside adding a number of requirements aimed at enhancing the comprehensiveness and quality of disclosures and facilitating investors' ability to access, analyze, and compare relevant information, thereby providing a clearer picture of companies' performance and the factors affecting it.
Most notably, the Draft specifies the minimum content that the independent section must include, covering an analysis of the company's performance, results of operations, financial position, and liquidity, and the financial information relevant to the audited financial statements, with an explanation of the reasons and drivers of material changes and the key factors affecting them, and a review of the material trends, factors, and uncertainties that are expected to affect the company's business, results, and financial position in the future.
The proposed requirements also include an analysis of the financial and operational performance during the financial year, and the key performance indicators, alongside an analysis of liquidity, financial solvency, financial position, and capital resources compared to the previous financial year, thereby enhancing investors' ability to understand the developments in the company's performance and assess its results of operations.
With respect to the key performance indicators, the Draft proposes that the analysis — where material — be based on the relevant financial and non-financial performance indicators, which may include profitability margins, return on capital or equity, revenue and profit growth rates, operational efficiency indicators, and other indicators determined by the nature of the company's business.
The Draft proposes that compliance shall be mandatory for all companies listed on the Main Market, starting from the first Board's Report issued after the date of the resolution approving the proposed regulatory provisions, and shall be on an indicative basis for companies listed on the Parallel Market, becoming mandatory for them starting from the first annual Board's Report issued in the year following the year in which the provisions are approved.
It is noteworthy that this Draft comes within regulatory directions the CMA is working on, aimed at enabling investors to exercise their rights more effectively and enhancing their participation in general assemblies. The CMA will announce any regulatory developments in this regard upon their completion.
The CMA emphasized that all feedback and comments received from the public shall be carefully studied for the purpose of approving the final version of the regulatory provisions related to the Draft for Enhancing Financial Disclosure Requirements within the Board of Directors' Report for listed companies. Comments can be submitted through the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the Saudi Competitiveness & Business Center, during the specified consultation period, through the following link: istitlaa.ncc.gov.sa
