First 4 firms approved to list on Saudi’s parallel market

The first four companies have been approved to list on Saudi Arabia’s parallel stock market, the country’s Capital Market Authority has announced.

Al-Omran Company for Trade and Industry, Abdullah Assad Abu Mouti Bookstores Company, Al-Somani Factory for Mining Industry and Food Development Company will be able to list on the market when its launches on February 26.

Applications from 77 other firms are being reviewed.

Saudi Gazette cited Naif Al-Adl, head of listing department at the Saudi stock exchange Tadawul, as saying companies would not be demoted from the main market to the parallel market.

However, companies will be able to shift from the parallel to the main market after listing for two fiscal years and meeting the requirements.

Foreign investors will be subject to the same restrictions as the main exchange on the parallel market

In order to list on the parallel market companies must be at least a year old, have a market value of at least SAR10m ($2.6m) and a financial consultant.

Companies with a value of SAR40m ($10.6m) must have 50 stakeholders and 35 stakeholders if the value is below SAR40m.

In addition, 20 per cent of its shares must be publicly owned and each stakeholder can only own a 5 per cent stake, according to the publication.

The founders of the company are banned from selling their shares for a year.

The Tadawul requires companies to have a SAR100m basic market value and 200 shareholders among other requirements.
Small and medium enterprises, family businesses, high-risk funds and government bodies are the main companies expected to benefit from the parallel market.