FAQs for Implementing Regulations

For greater certainty, insider means any of the following: 1) a director, a senior executive or an employee of the issuer of a security related to inside information; 2) a person who obtains inside information through a family relationship, including from any person related to the person who obtains the information; 3) a person who obtains inside information through a business relationship, including obtaining the information: • from the issuer of a security related to inside information; • from any person who has a business relationship with the person who obtains the information; or • from any person who is a business associate of the person who obtains the information; 4) a person who obtains inside information through a contractual relationship, including obtaining the information: • from the issuer of a security related to inside information; or • from any person who has a contractual relationship with the person who obtains the information.

These instructions address authorized persons and aim to regulate the opening and operation of investment accounts held by authorised persons licensed to conduct the activities of dealing, managing, or custody; and to define the related investment accounts controls and supervisory rules.

An accounting record created by the authorised person for the purpose of the deposited client`s money in a client account opened by the authorized person to fund the client's transactions in the securities. And reflects all details of the client account.

The temporary block of all money transfers from the investment account and usage of the investment account balance, and this does not include preventing the client from the sale of his securities, receive the proceeds and profits generated from his securities into the investment account or transfer from his bank account to the investment account.

Upon the client`s request, the authorised person must issue an investment account identification card for the client and provide it or deliver it to him, which shall contain the client’s name and number of the investment account as well as the authorised person's name and the branch that the investment account was opened with.

The authorised person must freeze all investment accounts of the clients after expiration of the validity date of the documents were provided for opening the investment account, or not adhering to the authorised person`s request to update the account`s information, in accordance with the Clause (a) of Article (14) of the Investment Accounts Instructions.

Yes, the authorised person must notify his clients at least 1 month before the date of freezing the investment accounts. The authorised person must also maintain policies and procedures to achieve this requirement and make record of such fulfillment.

It is a market where shares, that have been registered and admitted for listing as per the Parallel Market Listing Rules, are traded. The Parallel Market was established to promote the role of the Exchange in providing funding sources and making the Exchange more stable, supportive to the national economy and more appealing for investment in. Since the conditions for registration and listing in the Parallel Market-Nomu are less than those required from companies aiming to list in the main market, thus, the Parallel Market is considered as an opportunity for companies (including small and medium-sized enterprises) to obtain funding from the capital market.

The Parallel Market Listing Rules defines "Qualified Investor" as any of the following persons: 1) Authorised Persons, who act for their own account. 2) Clients of a person authorised by the Authority to conduct managing activities provided that this Authorised Person has been appointed as an investment manager on terms which enable him to make decisions concerning the acceptance of an offer and investment in the Parallel Market on the client’s behalf without obtaining prior approval from the client. 3) The Government of the Kingdom, any government body, any supranational authority recognized by the Authority or the Exchange, and any other stock exchange recognized by the Authority or the Securities Depository Center. 4) Government-owned companies, either directly or through a portfolio managed by a person authorised to carry out managing activities. 5) Companies and funds established in a member state of the Cooperation Council for the Arab States of the Gulf. 6) Investment Funds. 7) Qualified Foreign Investors. 8) Any other legal persons allowed to open an investment account in the Kingdom and an account at the Depositary Center. 9) Natural persons allowed to open an investment account in the Kingdom and an account at the Depositary Center, and fulfill any of the following criteria: a. has 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 the General Securities Qualification Certificate which is recognized by the Authority. 10) Any other persons prescribed by the Authority.

The offer, as per the Parallel Market Listing Rules, is confined to the categories of Qualified Investors pursuant to the Qualified Investor's definition set out in Article 3 of the Parallel Market Listing Rules. Trading shares listed in the Parallel Market-Nomu is confined to Qualified Investors pursuant to the Qualified Investor's definition set out in Article 3 of the Parallel Market Listing Rules, and as an exception from that, shareholders of the issuer, other than Qualified Investors, who owned their shares prior to listing them in the Parallel Market, may trade in these shares and rights issue issued by that issuer.

Any of the public can participate in the offering and trading in the Parallel Market-Nomu, only if they are classified as a Qualified Investor pursuant to the Qualified Investor's definition set out in Article 3 of the Parallel Market Listing Rules. The Parallel Market Listing Rules define "Public" as: "persons other than the following: 1) affiliates of the issuer; 2) substantial shareholders of the issuer; 3) directors and senior executives of the issuer; 4) directors and senior executives of affiliates of the issuer; 5) directors and senior executives of substantial shareholders of the issuer; 6) any relative of persons described at (1), (2), (3), (4) or (5) above; 7) any company controlled by any persons described at (1), (2), (3), (4), (5) or (6) above; or 8) persons acting in concert, with a collective shareholding of (5%) or more of the class of shares to be listed." The Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority defines "Substantial shareholder" as: a person holding (5%) or more of the class of shares of the issuer.

The Parallel Market Listing Rules do not require the dependency of the financial advisor of the issuer.

There is nothing to prevent that. However, it is worth to mention that the Authority may, at all times, require the issuer to appoint a financial advisor, a legal advisor, or any other advisor to advise the issuer on the application of the provisions of the Parallel Market Listing Rules, the Capital Market Law or implementing its regulations.

The expected aggregate market value ,at the day of listing, of shares to be listed in the Parallel Market-Nomu must be at least 10 million Saudi Riyals. There is no upper limit to which

Currently, there is no fee imposed to companies willing to register and list its shares in the Parallel Market-Nomu for services provided by the Authority related to application for registration of shares, review/ study of application for registration and registration of shares in 2017. However, the Authority is currently studying the application of a fee in early 2018.