The Capital Market Authority ("CMA") approved, from January, 2018 to the end of the first half (H1) of 2022, about 116 requests to increase listed companies' capital. The size of the capital increase surged by more than SAR 100 billion. This highlights the role that the CMA plays in the funding of listed companies and the economy at large.
In this regard, Abdullah Bin Ghannam, Capital Market Authority (CMA) Deputy for Listed Companies & Investment Products, stated that the capital increase requests approved by the CMA varied between the increase through a capitalisation issue, offering of rights issue, and debt conversion. The capital increase through capitalisation topped the requests with a ratio of 60.3%, followed by the offering of rights issue requests at 37.1%, and debt conversion requests reached 2.6% of total approvals.
Ghannam confirmed that the procedures for approving the requests to increase capital are passing through critical phases to study the requests since their announcement to completion. Such data shall be consistent with the targets of the Capital Market Authority Strategic Plan (2021-2023), which is considered part of the Financial Sector Development Program and, in turn, one of the initiatives of the Kingdom's Vision 2030 that aims to establish an advanced capital market that is open to the world and capable of attracting local and international capital and that plays an efficient and pivotal role in meeting the economy's funding requirements. Ghannam also added that the CMA recognizes the importance of the capital market as a channel for capital building and formation in order to support companies' growth and sustainability.
Within this context, it is essential to foster the market's role as a funding channel to establish and sustain the economy's building blocks, such as institutions, private companies, and development projects. As part of its strategic plan, the CMA will facilitate funding in the capital market by deepening the market and fostering its role in capital formation, developing sukuk and debt instruments market, and promoting the role of funds in order to contribute to the establishment of economic entities that support the growth of GDP and the national economy.
The CMA will work-based on its mandate and in coordination with the Saudi Stock Exchange (Tadawul) and other related parties-on the development of suitable procedures and initiatives to enable different types of companies, including government-owned companies and other types of government-owned assets (which can be transformed into companies) to offer and list their shares in the capital market, reflecting the true contribution of these companies to the national economy, without jeopardizing investor protection. The CMA hopes that this will lead to the establishment of economic entities capable of supporting the national economy and creating more investment opportunities for all investors.