Saudi Capital Market Authority proposes stricter IPO rules to boost transparency

Saudi Arabia’s Capital Market Authority has proposed stricter regulations for initial public offerings as part of its “IPO Enhancement Project,” aiming to strengthen investor protection and increase transparency in the market. The move comes amid a noticeable slowdown in listings during 2026, attributed to escalating tensions in the Middle East.

In a statement on its website, the authority said the new rules are designed to improve the appeal of the Saudi financial market and enhance the environment for IPO execution. The market has faced challenges recovering after the post-pandemic boom, with Mutlaq Al-Ghowairi Contracting recently cancelling its planned listing, which would have been among the region’s largest IPOs this year.

According to the draft rules, investment institutions participating in the book-building process will be required to prove they have sufficient liquidity and the ability to pay for their committed IPO orders. The underwriting agreement will take effect before the start of book-building, and banks will be obligated to purchase all offered shares once the process begins.

The authority emphasized that the underwriter will be responsible for buying all shares in the offering from the start of book-building. If the underwriter fails to meet listing requirements, the issuer’s shares will not be listed and the underwriter must purchase all shares. The draft also mandates disclosure of data, forecasts, and financial performance indicators, with the financial advisor required to exercise professional care regarding future statements.

The authority has invited all interested parties and market participants to submit their feedback on the new regulatory provisions within 30 days, ending on October 22, 2026. According to London Stock Exchange Group data, equity offerings in the Middle East and Africa totaled $2.1 billion in the first half of the year, down 71% from the previous year and marking the lowest level since 2020.