CMA approves regulatory framework for depositary receipts issuance

The Capital Market Authority's (CMA) board approved the regulatory framework for the offering of Saudi depositary receipts in the capital market representing shares issued in a foreign country and listed on its capital market, to be effective as of the date of its publication.

The approval of this regulatory framework aims to introduce a new security through the regulation of issuing depositary receipts in the capital market for shares listed in a foreign market, contributing to the deepening of the Saudi capital market and enhancing its role in capital formation, while also increasing its attractiveness by providing additional listing options and diversifying investment products, the regulator said, in a statement.

According to the approved regulatory framework, the CMA will allow foreign companies to register and offer depositary receipts in the Saudi capital market representing their shares listed in foreign markets, upon obtaining the required approval.

In line with the adopted framework, the requirements for registering and offering depositary receipts will follow the requirements for registering and offering shares currently in place under the Rules on the Offer of Securities and Continuing Obligations. The issuer of the Saudi depositary receipts will also be subject to the same continuing obligations applicable to a foreign company that lists its shares on the Main Market under the Listing Rules, subject to certain exceptions.

In 2020, the regulator allowed companies listed on the local capital market to issue certificates of deposit outside Saudi Arabia in exchange for their shares traded in the Saudi capital market. This move aims to strengthen the pillars of Saudi Vision 2030, which seeks to make the Saudi capital market attractive to both local and foreign investors. Consequently, it is now allowed to offer depositary receipts to foreign companies in exchange for their issued shares in a foreign market.