Listing Companies in Saudi Stock Exchange – Everything You Need to Know

Introduction to the Saudi Stock Exchange

The Capital Market Authority (CMA) oversees the Saudi Stock Exchange, also referred as Tadawul, which is the only securities trading platform in Saudi Arabia. Although informal trading began around 1954, it wasn’t until 2007 that Tadawul was formally established as a joint-stock company and became the sole entity authorized to handle securities trading in Saudi Arabia.  Three main paths were clarified by Tadawul’s extensive Guidelines for Offering and Listing of Foreign Companies, which were released in June 2024. These were cross-listing, dual-listing, and reorganization through the creation of a Saudi corporation. In keeping with Vision 2030 and initiatives to diversify the economy, this paves the way for further international engagement.

Listing Routes for Foreign Companies

1. Cross-Listing on Tadawul

A cross-listing occurs when a firm that is currently listed on a foreign stock exchange wishes to list its existing shares on Tadawul rather than issue new ones.

Conditions: 

• The business must be incorporated in a jurisdiction that complies with the MMoU criteria and has a regulatory body approved by the International Organization of Securities Commissions (IOSCO).
• A reputable foreign exchange, such as the NYSE, LSE, HKEX, etc., must list it.
• A minimum market value of SAR 4 billion (~USD 1.1 billion) is required for the 6 months before listing.
• A minimum of two board members must consistently reside in Saudi Arabia.

Example: A UK-based energy firm listed on the London Stock Exchange may apply for a cross-listing on Tadawul to tap into Saudi investors and increase regional presence.

2. Dual-Listing

Dual-listing is similar to cross-listing, except it involves simultaneously listing a company’s shares on Tadawul and a foreign stock market during the IPO or through coordination.

Features: 

• The corporation may issue new shares or list existing shares in both Saudi Arabia and another jurisdiction.
• Regulations in both jurisdictions can be complex.
• Must fulfill all Tadawul and CMA standards, including the necessity for:
• IFRS-compliant financial statements.
• Document translations into Arabic.
• Legal presence and board representation in Saudi Arabia.

Example: In December 2022, Americana Restaurants PLC, a UAE-based firm, became the first to list on both Tadawul and the Abu Dhabi Securities Exchange (ADX).

3. Reorganization through Saudi Entity

This entails forming a new Saudi joint stock company (JSC), which will subsequently be listed on Tadawul. The foreign corporation transfers its business, assets, and ownership structure to the new entity.

When is it used?

• When the company does not meet the requirements for cross- or dual-listing.
• If a local operating presence is necessary or preferable.
• When seeking tax or legal benefits from local incorporation.

Eligibility Thresholds & Requirements

1. Minimum market capitalization.

• Main Market: ≥ SAR 4 billion (~US$ 1.1 billion), six months preceding application.
• Parallel Market (“Nomu”): > SAR 10 million (about US$ 2.7 million).

1. Corporate Structure.

• Foreign corporations must be joint stock companies (or local equivalents) and subject to a recognized securities regulator (signatory to the IOSCO MoU).

1. Board Residency At least two board members must be permanently based in Saudi Arabia.

1. Added value

• Applicants must demonstrate strategic value to Saudi Arabia- economic, market deepening, or innovation through a preliminary assessment option.

1. Financial Standards.

• IFRS-compliant audited financials in SAR and Arabic, conducted by a Big-4 company.
• Main Market: 3+ years of audited history; Parallel Market: ≥1 year.

The Listing Application Package

According to Tadawul’s Listing Rules and CMA requirements, the application must include:

• Formal application letter to the CMA and Tadawul.
• Letters of appointment for financial and legal advisors.
• Draft prospectus (in Arabic).
• Audited financial accounts (three years plus the most recent interim).
• Corporate documents (bylaws and CR).
• Legal and financial due diligence reports.
• Underwriting and distribution agreements.
• Declarations and undertakings by directors and advisors.
• Continuing obligations compliance with Capital Market Law and Listing Rules

Continuing Obligations & Corporate Governance

Following listing, firms must fulfill ongoing duties:

• Submitting quarterly reports and substantial disclosures.
• Ensure 30% public shareholding and 200+ public shareholders (Main Market).
• Maintaining enough market liquidity and adhering to CMA regulations.
• Maintaining a governance system involves independent directors, an audit committee, and risk oversight.
• Following the continuing rules established by the Capital Market Law, the Rules on the Offer of Securities, Listing Rules, and Exchange Rules.

Non-compliance can lead to suspension or delisting of securities by Tadawul or CMA.

Leading Law Firms in Jeddah for Listing Support

Companies looking to list, particularly international entrants, frequently seek top-tier legal assistance in Jeddah. These firms offer legal due diligence, corporate structuring, regulatory filings, and guidance through CMA and Tadawul processes. It is important for law firms in Saudi Arabia to ensure that Tadawul Listing Rules are followed, CMA filings are made, and due diligence, including documentation particular to international companies, is completed.

Strategic Advantages & Vision 2030 Alignment

• Diversification of Tadawul’s investor base through foreign listings and QFI access (from 2015).
• Facilitating international financial inflows to support Tadawul’s modern growth.
• Improving market liquidity, corporate governance, and competitiveness.
• Vision 2030 aims include expanding to 270 listed firms and supporting SMEs through Nomu.

Listing Timeline (Typical for Main Market IPO)

• Tadawul conducts preliminary assessments for overseas candidates.
• Term sheet and advisor appointments.
• Preparation includes financials, due diligence, and an Arabic prospectus.
• Submission to CMA and Tadawul.
• CMA and Tadawul conduct reviews, inquiries, and approvals.
• Book creation and subscription.
• Final CMA clearance, listing, and first day of trading.
• Following listing, compliance continues.

Final Insights

Listing on Tadawul provides strategic advantages, including access to a large regional market, participation in Saudi growth, and oversight by a globally recognized exchange. The 2024 rules provide a clear roadmap for foreign enterprises to cross-list, dual-list, or reorganize, supported by Tadawul’s Main Market and Parallel Market (Nomu) frameworks. Companies can successfully navigate this path by partnering with competent Jeddah law firms, exploiting the QFI framework, and integrating into Vision 2030 activities.

Tadawul’s combination of scale, structure, transparency, and regulatory clarity makes it an appealing platform for international issuers and investors alike, cementing Saudi Arabia’s status as a key financial hub in the MENA region.