Saudi Capital Market Authority approves new rules to enhance IPO practices

The board of the Capital Market Authority has approved regulatory provisions related to the project to enhance initial public offering (IPO) practices, which will take effect from the date of publication.

The adoption of these provisions comes as part of the Authority’s ongoing efforts to develop the financial market, improve procedures to mitigate risks associated with securities transactions, and regulate and supervise the activities of entities under its oversight.

The approved regulations strengthen the role and responsibility of the underwriter in the IPO process by requiring the signing and activation of the underwriting agreement before the start of the book-building process. The underwriter’s commitment to purchase all offered shares becomes effective at the start of book-building. If the underwriter’s acquisition of shares results in non-compliance with listing requirements, the issuer’s shares will not be listed, and the underwriter must purchase all the offered shares. The underwriting agreement may also include a mechanism for handling these shares.

The new regulations also impose additional requirements on participation requests during book-building. These include verifying that submitted requests reflect the actual available liquidity of the investor, restricting financial solvency verification for participating entities to cash or cash equivalents only, and ensuring that such requests are binding for payment by the final subscription payment deadline as specified in the prospectus. This aims to ensure that orders submitted during book-building are backed by real liquidity or payment capability.

Furthermore, the regulations require issuers to disclose in the prospectus and registration document their statements and future forecasts, including forward-looking financial performance indicators for the period following the last financial period included in the prospectus or registration document, as well as at least the subsequent financial year. These statements and forecasts must be clear, not misleading, and based on reasonable and measurable grounds. The financial advisor is also required to exercise due professional care when advising the issuer on such statements and forecasts to reach a reasonable opinion.

The approved regulations are expected to reinforce commitment to participation requests during book-building, enhance discipline and efficiency in the IPO process, and clarify the roles and responsibilities of the underwriter, issuer, financial advisor, and participating entities. This alignment of interests is intended to increase the reliability of information available to investors through clear disclosure of the methodologies used in preparing statements and forecasts, the key assumptions underlying them, and the main risks and factors that may affect the achievement of these forecasts or cause actual results to differ.

Additionally, the approved regulations are expected to further improve IPO practices and enhance the attractiveness of the Saudi financial market by raising transparency and strengthening the environment for IPO execution.

The Authority had published the draft "Regulatory Provisions Related to the Project to Enhance IPO Practices" on September 22, 2026, on the unified electronic platform for public consultation and the Authority’s website for a period of 30 calendar days to gather feedback from the public and relevant government entities.

For further clarification and details, a set of questions and answers regarding the regulatory provisions for enhancing IPO practices will be published in the frequently asked questions section for regulations and rules.