a) Securities may not be offered in the Kingdom except in accordance with these Rules.

b) For the purpose of the application of these Rules, offering securities shall mean:

• 1) issuing securities;

• 2) inviting the public to subscribe in securities or the direct or indirect marketing of securities; or

• 3) any statement, announcement or communication that has the effect of selling, issuing or offering securities.

c) Offering securities mentioned in paragraph (b) of this Article shall not include preliminary negotiations or contracts entered into with or among underwriters.

d) The provisions of these Rules shall not apply to units in investment funds including Real Estate Investment Funds and Real Estate Contribution Certificates.

a) Any reference to the “Capital Market Law” in these Rules shall mean the Capital Market Law issued by Royal Decree No. M/30 dated 2/6/1424H.

b) Expressions and terms in these Rules have the meaning which they bear in the Capital Market Law and in the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, unless the contrary intention appears.

c) Any person subject to these Rules may appeal to the Committee in respect of any decision or action that the Authority takes under these Rules.

Securities may be offered in the Kingdom by way of:

• 1) an exempt offer;

• 2) a private placement offer;

• 3) a public offer; or

• 4) a Parallel Market offer.

Liability for an incorrect or incomplete prospectus, supplementary prospectus or registration document, supplementary registration document, shareholders' circular, supplementary shareholders' circular, offering document or other documents relating to an offer or registration shall be determined in accordance with the Capital Market Law or the Companies Law, as applicable.

The provisions of this part apply to an exempt offer of securities in the Kingdom.

a) Without prejudice to the Securities Business Regulations and the Capital Market Institutions Regulations, an offer shall be exempt from the requirements of these Rules in any of the following cases:

• 1) Where the securities are issued by the government of the Kingdom.

• 2) Offer of debt instruments issued by the Kingdom’s development funds and banks and the Kingdom’s sovereign funds, which have a public legal personality in accordance with statutory provisions, in accordance with the following requirements and conditions:

  • a. The issuer shall prepare an offering document in accordance with the requirements of Annex (2) of these rules, and that the offering document is made available to the public through the issuer's website at least five days prior to the date specified to start the offering.

  • b. The offering documents must contain complete, clear and not misleading information, and must contain all the information necessary for investors to arrive at an informed decision concerning the issuer and the debt instruments offered.

  • c. The issuer must submit the pricing supplement and the debt instrument allocation results to the Authority within ten days after the completion of the offering, or the completion of the offering of each issue if the offering was part of a debt instruments offering program. The pricing supplement must provide the terms and conditions of an issue, in addition to those set out in the offering document.

  • d. The Issuer must deposit Saudi Riyal-denominated debt instruments with the Depository Center within a period not exceeding ten days from the completion of the offering or the completion of the offering of each issuance if the offering was part of a debt instruments issuance program, provided that the request to deposit such debt instruments with the Depository Center shall be made by the Capital Market Institution through whom the the offering is made. This requirement does not apply to debt instrument that have a maturity period of less than one year from the date of issuance.

  • e. The issuer must disclose -through the electronic system specifically designated for such purpose by the Exchange- its audited annual financial statements in Arabic within a period not exceeding six months from the end of the annual financial period covered by those statements.

  • f. The issuer must disclose -through the electronic system specifically designated for such purpose by the Exchange- its annual report within a period not exceeding twelve months from the end of the relevant financial year.

  • g. The issuer must disclose -through the electronic system specifically designated for such purpose by the Exchange- the pricing supplement referred to in subparagraph (c) of this subsection after the completion of the offering and upon listing the debt instruments, or after the completion of the offering of each issue and upon listing the debt instruments if the offering was part of a debt instruments offering program.

  • h. Subparagraphs (a), (e), (f) and (g) of this subparagraph shall not apply if the issuer does not make the necessary arrangements to list the debt instruments on the Exchange. i. The offering of debt instruments in accordance with subsection (2) of paragraph (a) of this Article is limited to investors of the categories of qualified clients and institutional clients in the event that the issuer does not make the necessary arrangements to list them in the Exchange

• 3) Offers of contractually based securities, provided that the offer of unlisted contractually based securities shall be limited to any of the following cases:

  • a. Where all offerees are investors under the categories of Institutional and Qualified Clients.

  • b. Where all offerees are employees of the issuer or of any of its affiliates.

• 4) Where an issuer whose shares are not listed on the Exchange increases its capital by offering new shares to existing shareholders.

• 5) Where the offeree is an affiliate of the issuer unless it is an offer of a class of shares that is listed on the Exchange.

• 6) Where all of the offerees are employees of the issuer or of any of its affiliates unless it is an offer of a class of shares that is listed on the Exchange.

• 7) Offers in an insolvency situation where shares are offered to creditors.

• 8) Where an issuer whose shares are not listed on the Exchange increases its capital by way of debt conversion.

• 9) Where the subscription in total value for the securities being offered is less than 10 million SR or an equivalent amount, in accordance to the following conditions:

  • a. The offer shall be not made more than one time during the twelve months after the completion of the offer.

  • b. Subscription in the offered securities shall be limited to (50) offerees or less (excluding investors under the categories of Institutional and Qualified Clients) provided that the amount payable per offeree (excluding investors under the categories of Institutional and Qualified Clients) shall not exceed two hundred thousand SR or an equivalent amount.

  • c. Declaration by the offeree who participate in the subscription for such offered securities (excluding investors under the categories of Institutional and Qualified Clients) to the offeror or the Capital Market Institution (if the offer is carried out through a Capital Market Institution) of its acknowledgment to the risks associated with the investment, including what may result in loss of the full amount of the investment, and the that the Authority shall not give any assurance as to the accuracy and completeness of the documents related to the Offering or its completeness, and expressly disclaim any liability whatsoever for any loss arising from or incurred in reliance upon any part of these documents, and its acknowledgment that the offeror or the Capital Market Institution (if the offer is carried out through a Capital Market Institution) does not have to notify the Authority of the suitability of such an investment.

• 10) If the offering is for new shares of the issuer and made through a capital market institution authorised to carry out arranging activities in the course of carrying out securities crowdfunding, in accordance with the following requirements and conditions:

  • a. The issuer shall not use the proceeds of the offering to provide loans or invest in other entities or companies or in investment funds.

  • b. The issuer is not a company whose shares are listed on the Exchange, or a company wholly-owned by a company whose shares are listed on the Exchange, or any other issuer or other category of issuers as determined by the Authority.

  • c. The total value for the offered shares of the same class through all securities crowdfunding platforms or a limited offering of the same issuer –during the (12) months following the end of the offering– shall not exceed ten million SR or its equivalent, and that the offering through a securities crowdfunding platform shall not coincide with any other offering for the same issuer through another securities crowdfunding platform or a private placement.

  • d. The offering shall be limited to clients registered with the securities crowdfunding platform, and the amount incurred by each retail client’s subscription shall not exceed (25,000) SR or its equivalent for each offering.

  • e. Retail clients shall not be allowed to participate in subscribing in the shares of an issuer that was not established in the Kingdom.

  • f. The issuer shall prepare an offering document in accordance with the requirements of Annex (1) of these rules, and that the offering document is available to clients registered with the securities crowdfunding platform through the website of the capital market institution at least five days prior to the date specified to start the offering.

  • g. The Capital Market Institution through which the offering is made shall have procedures and policies for evaluating the offered shares instruments and a mechanism for approving the evaluation. These shall be made available to clients registered with the securities crowdfunding platform through the website of the Capital Market Institution, and the Capital Market Institution shall notify the registered clients of any updates thereto.

  • h. The Capital Market Institution through which the offering is made shall obtain a declaration from the client registered with the securities crowdfunding platform confirming his acknowledgment of reviewing the procedures and policies referred to in sub-paragraph (10/g) of paragraph (a) of this Article prior to subscribing to the offered shares.

  • i. The Capital Market Institution through which the offering is made shall verify the credit record of the issuer to ensure its financial solvency and ability to fulfill the rights of shareholders.

  • j. The Capital Market Institution through which the offering is made shall enter into a credit information exchange agreement with at least one credit information company to be provided with credit information about the issuer in accordance with the relevant laws and regulations in the Kingdom.

  • k. The offering period shall not exceed (45) days, and the total proceeds of the offering during that period shall not be less than (80%) of the total value of the offering that was disclosed in the offering document. In the event that the offering is not completed, the capital market institution must return the subscription amounts to the subscribers –without imposing any fees– within a period not exceeding (5) days from the end of the offering period.

  • l. The capital market institution shall allow its retail client who has subscribed to cancel his subscription within (48) hours from the time of submitting the subscription application or until the end of the offering period (whichever comes first), and the capital market institution shall inform its client who has subscribed in the offered shares –immediately and without delay– of the completion of the offering or its cancellation and when its shares are registered in the issuer’s shareholders register.

  • m. If a material change occurred to the offering document prior to the start of the offering or after the start of the offering and before its end, the issuer must notify the capital market institution as soon as it becomes aware of such change. In this case, the capital market institution may, at its discretion, request the issuer to resubmit the offering document, and it may also re-impose the five-day period stipulated in subparagraph (f/10) of paragraph (a) of this Article. The capital market institution must notify its client who has subscribed in the offered shares immediately and without delay of that change, and the client who subscribed before being notified of that change has the right to cancel or amend his subscription before the end of the offering period.

  • n. If a material change occurred on the information disclosed in the offering document after the end of the offering period and before the client who subscribed in the offered shares is registered in the issuer’s shareholders register, the issuer must notify the capital market institution as soon as it becomes aware of such change. The capital market institution must notify its client who has subscribed in the offered shares immediately and without delay of that change, and the client who subscribed in the offered shares has the right to cancel or amend his subscription.

• 11) If the offering is for debt instruments and is made through a Capital Market Institution authorised to carry out arranging activities in the course of carrying out securities crowdfunding, in accordance with the following requirements and conditions:

  • a. The issuer must be a company authorised to issue debt instruments, or a special purposes entity licensed in accordance with the rules governing special purpose entities.

  • b. The issuer (or the sponsor if the issuer is a special purpose entity) shall not use the proceeds of the offering to provide loans or invest in other entities or companies or in investment funds, or to repay its debts.

  • c. The total existing outstanding financing for the issuer (or the sponsor, if the issuer is a special purpose entity) through all securities crowdfunding platforms or a limited offering shall not exceed twenty million Saudi Riyals or its equivalent.

  • d. Notwithstanding subparagraph (c/11) of paragraph (a) of this article, and In the event of an offering of asset-backed debt instruments, the total outstanding financing for the sponsor through all securities crowdfunding platforms or a private placement shall not exceed eighty million Saudi Riyals or its equivalent.

  • e. The offering through a securities crowdfunding platform shall not coincide with any other offering by the issuer (or the sponsor, if the issuer is a special purpose entity) through another securities crowdfunding platform or a private placement.

  • f. The offering shall be limited to clients registered with the securities crowdfunding platform, and the amount incurred by each retail client’s subscription shall not exceed (SR 25,000) or its equivalent for all outstanding debt instrument issuances by the issuer (or the sponsor, if the issuer is a special purpose entity) on the securities crowdfunding platform, with a maximum of one hundred thousand Saudi riyals within twelve months for all debt instrument issuances on the securities crowdfunding platform.

  • g. Retail clients shall not be allowed to subscribe through the securities crowdfunding platform to asset-backed debt instrument.

  • h. The issuer shall prepare an offering document in accordance with the requirements of Annex 1 (A) of these rules, and shall make the offering document available to clients registered with the securities crowdfunding platform through the website of the Capital Market Institution at least five days prior to the date specified to start the offering .

  • i. The financial market institution through which the offering is made must be a representative of the debt instrument holders.

  • j. The Capital Market Institution through which the offering is made shall have procedures and policies for evaluating the offered debt instruments and a mechanism for approving the evaluation. These shall be made available to clients registered with the securities crowdfunding platform through the website of the Capital Market Institution, and the Capital Market Institution shall notify - immediately and without delay - the registered clients of any updates thereto.

  • k. The Capital Market Institution through which the offering is made shall obtain a declaration from the client registered with the securities crowdfunding platform confirming his acknowledgment of reviewing the procedures and policies referred to in sub-paragraph (11/j) of paragraph (a) of this Article prior to subscribing to the offered debt instruments.

  • l. The Capital Market Institution through which the offering is made shall verify the credit record of the issuer (or the sponsor, if the issuer is a special purpose entity) to ensure its financial solvency and ability to fulfill the rights of debt instrument holders.

  • m. The Capital Market Institution through which the offering is made shall enter into a credit information exchange agreement with at least one credit information company to be provided with credit information about the issuer (or the sponsor, if the issuer is a special purpose entity) in accordance with the relevant laws and regulations in the Kingdom.

  • n. The offering period shall not exceed (45) days, and the total proceeds of the offering during that period shall not be less than (80%) of the total value of the offering that was disclosed in the offering document. In the event that the offering is not completed, the Capital Market Institution must return the subscription amounts to the subscribers –without imposing any fees– within a period not exceeding (5) days from the end of the offering period.

  • o. The Capital Market Institution shall allow its retail client who has subscribed to cancel his subscription within (48) hours from the time of submitting the subscription application or until the end of the offering period (whichever comes first), and the Capital Market Institution shall inform its client who has subscribed to the offered debt instruments –immediately and without delay– of the completion of the offering or its cancellation.

  • p. If a material change occurred to the offering document prior to the start of the offering or after the start of the offering and before its end, the issuer must notify the Capital Market Institution as soon as it becomes aware of such change. In this case, the Capital Market Institution may, at its discretion, request the issuer to resubmit the offering document, and it may also re-impose the five-day period stipulated in subparagraph (11/h) of paragraph (a) of this Article to allow for reviewing the offering document. The Capital Market Institution must notify its client who has subscribed to the offered debt instruments immediately and without delay of that change, and the client who subscribed before being notified of that change has the right to cancel or amend his subscription before the end of the offering period.

  • q. The Capital Market Institution shall disclose to clients registered with the securities crowdfunding platform, through its website, the status of each debt instrument issuance made through it, and clarify the payment status in accordance with the issuance payment schedule.

  • r. The Capital Market Institution shall disclose to clients registered with the securities crowdfunding platform, through its website, the percentage of overdue payment cases under debt instruments for a period of ninety consecutive days, either in whole or in part, relative to the total debt instrument offerings on the platform, as well as the actions taken or to be taken in this regard.

  • s. The Capital Market Institution shall update the data referred to in subparagraphs (11/q) and (11/r) of paragraph (a) of this Article at least on a monthly basis.

  • t. The Capital Market Institution shall immediately notify the Authority without delay of any overdue payment cases under the debt instruments offered through it, either in whole or in part, for ninety consecutive days, including the actions taken or to be taken.

b) Except for the Kingdom’s development funds and banks and the Kingdom’s sovereign funds, the offeror or the Capital Market Institution (if the offer is carried out through a Capital Market Institution) shall, when making an exempt offer, notify the Authority on a quarterly basis of the total number and value of the exempt offers the Capital Market Institution has made. In addition, the following information must be submitted to the Authority in respect of each exempt offer:

• 1) type of exempt offer;

• 2) categories of the offerees;

• 3) amount paid by each offeree category in Saudi riyals;

• 4) date of the commencement of the offering;

• 5) date of the completion of the offering;

• 6) name and nationality of the issuer;

• 7) name and nationality of the offeror;

• 8) price paid for each security;

• 9) type of security; and

• 10) total size of the offering.

• 11) Information of clients who subscribed in securities if the offering was in accordance with subparagraphs (10) and (11) of paragraph (a) of this Article, with a statement of any contravention of the requirements and conditions imposed therein (if any).

• 12) The status of debt instrument issuances offered by a Capital Market Institution authorised to carry out arranging activities in the course of carrying out securities crowdfunding.

• 13) Declaration by the offeree indicated in subparagraph (c) of paragraph (9) of this Article, including the following information:

  • a. The total amount payable per offeree who participate in the subscription for such securities and the number and description of the securities.

  • b. Name of the offeree who participate in the subscription for such securities and its passport number or National ID and signature.

  • c. Declaration date.

  • The requirement to submit the aforementioned declaration to the Authority does not apply to the offering of debt instruments.

c) The notification referred to in paragraph (b) of this Article must contain the information related to offers that are not complete as follows:

• 1) on-going offerings;

• 2) name of relevant issuer;

• 3) name of relevant offeror;

• 4) the expected date of completion of the offering; and

• 5) type and class of the offered securities.

d) A person (referred to as a “transferor”) who has acquired securities pursuant to subparagraphs (10) and (11) of paragraph (a) of this article, may not offer or sell such securities to any person (referred to as a “transferee”) unless the offer or sale is made through a Capital Market Institution and where one of the following requirements is met:

• 1) the price to be paid for the securities does not exceed (25) thousand SR or an equivalent amount;

• 2) the securities are offered or sold to an investor under the categories of Institutional and Qualified Clients;

• 3) the securities are being offered or sold in such other circumstances as the Authority may prescribe for these purposes.

e) If the requirement in subparagraph (1) of paragraph (d) of this Article cannot be fulfilled because the price of the shares being offered or sold to the transferee has increased since the date of the original offering, the transferor may offer or sell securities to the transferee if their purchase price during the period of the original offering did not exceed 25 thousand SR or an equivalent amount.

f) If the requirement in paragraph (e) of this Article cannot be fulfilled, a transferor may offer or sell the securities if he sells his entire holding of such shares to one transferee.

g) The provisions of paragraphs (d), (e) and (f) of this Article shall apply to all subsequent transferees of such securities.

h) The restrictions in paragraphs (d), (e), (f), and (g) of this Article shall cease to apply upon approval of listing on the Exchange of securities of the same class as the securities that are subject to such restrictions.

i) The debt instruments offering documents to be used in advertising the offer must contain a prominent statement in the following form:

• "This document may not be distributed in the Kingdom except to such persons as are permitted under the Rules on the Offer of Securities and Continuing Obligations issued by the Capital Market Authority. The Capital Market Authority does not make any representation as to the accuracy or completeness of this document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this document. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this document, you should consult an authorised financial advisor.”