(a) The term "Law" wherever it appears in this Regulation refers to the Capital Market Law issued by Royal Decree No. (M/30) dated 2/6/1424 AH, and the term "Companies Law" wherever it appears in this Regulation refers to the Companies Law issued by Royal Decree No. (M/3) dated 28/1/1437 AH.
(b) The words and phrases contained in this Regulation shall have the meanings defined in the Law in the glossary of terms used in the regulations and rules of the Capital Market Authority, unless the context of the text indicates otherwise.

• a) The purpose of this Regulation is to organize the following:

  • 1) Acquisition operations under the powers of the Authority as stipulated in the Law.

  • 2) Merger operations under the powers of the Authority as stipulated in the Companies Law.

• b) The provisions of this Regulation apply to:

  • 1) Any sale or purchase of shares that carry voting rights in companies listed in the market, resulting in the ownership or control of a person, individually or collectively with those acting in agreement with him, of 10% or more of the shares of the relevant company offered.

  • 2) Any offer to purchase shares that carry voting rights in companies listed in the market if the number of shares that the offeror wishes to acquire will increase his ownership percentage, individually or collectively with those acting in agreement with him, or the shares under their control, to 10% or more of the shares of the relevant company offered, and of the same class of shares.

• c) The provisions of this Regulation apply to the following:

  • 1) Market participants, including issuers of securities, shareholders, licensed persons, and any person who participated or provided advice directly or indirectly in any transaction subject to this Regulation.

  • 2) Members of the boards of directors of companies subject to this Regulation.

  • 3) Any person seeking (or increasing their ownership) to impose actual control over any company subject to this Regulation.

• d) This Regulation does not affect the provisions contained in the Law and its executive regulations.

• e) Any reference to the term "person" or "persons" in this Regulation applies to private investment funds or private investment funds.

• a) Except for private purchase and sale transactions, the bidder and the target company must appoint their financial advisors, who must be independent and licensed by the Authority, as well as their legal advisors, who must be independent and licensed to practice law in the Kingdom. The financial advisors of the bidder or the target company must act as the point of contact to coordinate with the Authority on behalf of each regarding the potential acquisition or potential merger.

• b) The parties involved in the acquisition or merger must exercise due diligence so that the information is not prepared in a manner that may mislead shareholders or the market.

• c) In the case of a bid, the bidder must treat all shareholders of the target company of the same class equally.

• d) Any document or announcement related to the bid or potential offer submitted by the bidder or the board of directors of the target company or any of their relevant advisors to the shareholders must be accurate, fair, and not misleading.

• e) The bidder or the target company or any of their advisors may not, during the bidding period or while studying it, provide information to some shareholders without making it available to all other shareholders. This principle does not apply in either of the following cases:

  • 1) Providing information confidentially by the target company to a bona fide potential bidder or vice versa in the context of the bid.

  • 2) Providing information confidentially by the selling shareholder or the target company to the bidder in the context of a private sale transaction.

• f) The bidder may not announce the bid until after taking the necessary measures in accordance with the provisions of this regulation and ensuring their ability and intention to continue executing the bid, and the responsibility for advising the bidder and taking all necessary steps in this regard lies with their financial advisor.

• g) In the case of a merger or acquisition through an exchange offer of securities related to securities that will be listed in the market, the bidder must comply with the relevant provisions contained in the law and its executive regulations.

• h) In the case of a bid, the bidder and the board of directors of the target company must provide the shareholders of the target company with sufficient information and recommendations to enable them to make an informed decision regarding the acceptance or rejection of the bid, and allow them sufficient time to make that decision, without withholding any relevant information from them.

• i) All persons privy to confidential information, especially those affecting the price of the security, related to the acquisition or any potential transaction of this kind, must treat this information confidentially and may not disclose it to another person unless necessary, and that person is aware of the need to maintain confidentiality. All such persons must act in a manner that limits the chances of leakage of confidential information or information affecting the price of the security.

• j) If the board of directors of the target company is convinced that a bona fide offer is about to be made to the company, the board may not take any action related to the company that would lead to the rejection of the offer or deprive shareholders of the opportunity to make a decision regarding it, except after obtaining the approval of the shareholders in the general assembly of the company.

• k) When there are related parties in the acquisition to which the provisions of this regulation apply, the interests of those parties in the transaction must be fully disclosed to the relevant shareholders before its completion, and it must be on terms equal to those applicable to any transaction in which other persons participated under similar circumstances.

• l) The board of directors of the target company must always act in the interest of the shareholders.

• m) Members of the board of directors of the target company, when making recommendations to their shareholders, must act as board members, without regard to the size of what they personally own or through their relatives in shares, or what the shareholders they represent on the board own or any personal relationship with the bidder or the target company (as applicable). In all cases, they must provide those recommendations in accordance with Article 18 of this regulation. They must also consider the interests of all shareholders in addition to considering the interests of employees and creditors, which must be taken into account when making those recommendations, and the members of the board of directors of the target company must exercise due diligence before entering into any obligation with the bidder, or with any other party, that would restrict their freedom to provide recommendations to their shareholders in the future.

• n) A shareholder who owns shares in the bidder (or the merging company) and the target company (or the merged company) is not entitled to vote in the general assembly of shareholders on decisions related to offers to which this regulation applies except in one of the two companies.

• o) No board member - in a board meeting or any of the committees or in the general assembly - may vote on a decision related to an offer to which the provisions of this regulation apply, or on any related matter, that involves a conflict of interest for that member or any relative of theirs. A conflict of interest arises in any of the following cases:

  • 1) When a board member has an interest - directly or indirectly - related to the offer or potential offer.

  • 2) Being a shareholder in the bidder while simultaneously being a member of the board of directors of the target company or vice versa.

  • 3) Being a member of the board of directors of the bidder while simultaneously being a board member or director in the target company or vice versa.

• p) For the purposes of applying the provisions of this regulation, the interest of any relative of a board member or subordinate to them is considered an interest of the member themselves.

• q) A person intending to enter into an acquisition that creates an obligation to make an offer to all shareholders must ensure before completing the transaction of their ability to execute the offer and continue it before proceeding with the acquisition.

• r) A false market may not be created in which the prices of the securities of the target company (or the merged company), or the bidding company (or the merging company) or any company related to the acquisition or merger, or any other company related to the offer fluctuate in a manner that makes the rise or fall in the prices of the related securities fictitious and disrupts the normal function of the market.

• s) The operations of the target company must not be affected more than a reasonable period as a result of the acquisition or merger.

A) Any announcement or statement related to an offer or private sale transaction required under this Regulation must be complete, clear, accurate, and not misleading, and must comply with the specific instructions for announcements issued by the Authority and the provisions of this Regulation.
B) The parties to the offers or private sale and purchase transactions - other than listed joint-stock companies - required to announce under this Regulation, and who are not members of the market, may do so through the market's website or through the website of the regulatory information service provider.

A) Notification
In the event that the provisions of the Competition Law, its amendments, and its regulatory rules and related instructions apply to a specific offer or sale and purchase transaction – or in the event that there is a requirement to obtain approval from any other local or foreign entity or a non-objection from them, the bidder must clarify this in the announcement of the offer, and both the bidder and the company being offered must notify the General Authority for Competition in accordance with the provisions of the Competition Law.
B) Suspension of the Transaction
If the provisions of the Competition Law, its amendments, and its regulatory rules and related instructions apply to a specific offer or sale and purchase transaction, the transaction will be suspended if the General Authority for Competition notifies the bidder or the company being offered in writing or by any other official means of notification of its objection to the transaction.
C) Expiration of the Offer Period
1) Upon notifying the bidder or the company being offered of the General Authority for Competition's objection to any offer or potential offer, the offer period is considered expired, and any new offer must be announced within (21) days from the date of the General Authority for Competition's approval of the transaction in accordance with the provisions of the Competition Law. In all cases, a new offer period is considered to have begun from the date of the General Authority for Competition's approval of the transaction.
2) If a new offer is not announced within (21) days from the date of the General Authority for Competition's approval of the transaction in accordance with the provisions of the Competition Law, the new offer period continues until the end of the specified duration or the announcement by the relevant bidders (who were affected by the General Authority for Competition's approval of the transaction in accordance with the provisions of the Competition Law) of their intention not to submit an offer, whichever occurs first.

The Authority may exempt any person subject to this Regulation from the application of any of its provisions, either wholly or partially, based on a request received from that person or on its own initiative.

A) The negotiations or discussions between the selling shareholder and the bidder regarding private sale and purchase transactions must remain completely confidential and be limited to a small number of individuals connected to the selling shareholder and the bidder, as well as their direct advisors (if any).
B) The selling shareholder and the bidder, who are negotiating and discussing the private sale and purchase transaction, must take the necessary procedures to limit the leakage of confidential information or information that may affect the price of the security or its misuse in an irregular manner.