Saudi Exchange Proposes Rule Reforms to Boost Nomu Listings and Investor Access

 

RIYADH — In a major step to expand investor access and encourage more listings, the Saudi Exchange (Tadawul) has unveiled draft rule amendments aimed at making the Nomu Parallel Market more attractive to small and medium-sized enterprises (SMEs) and a broader pool of qualified investors.

The proposed changes, now open for public consultation until August 19, target relaxed listing requirements, redefined investor qualifications, and updates in line with Saudi Arabia’s new Companies Law.

This move is seen as a key pillar of the Kingdom’s Vision 2030 capital market development strategy, which seeks to diversify funding sources and strengthen private sector participation in the economy.

Key Proposed Changes to Nomu Rules

According to a statement from Tadawul, the proposed amendments include:

• Broader Definition of Qualified Investors: A new classified category for qualified investors in Nomu is being introduced. The expanded definition would now include:

  • Capital market institutions

  • Investment funds

  • Gulf Cooperation Council (GCC) companies

  • Qualified foreign financial institutions

  • High-net-worth individuals

• Lower Entry Barriers for Individuals:
  While the net worth requirement of SR5 million ($1.33 million) remains, the minimum required securities activity could drop from SR40 million to SR30 million annually, widening access for active investors.

• Reduced Market Cap and Liquidity Requirements:

  • Minimum publicly held share value may be reduced to SR30 million or 20% of the share class, whichever is less.

  • Expected market value at listing could be set at SR10 million for IPOs and SR100 million for direct listings.

  • Further reductions may be approved by the Capital Market Authority (CMA) if investor interest and share liquidity are proven.

• Alignment with Companies Law:
  The reforms also revise terms like “Demerger,” “Spin-Off,” and “Qualified Investor” to reflect regulatory changes, particularly those related to corporate restructurings and post-demerger listings.

• CMA Flexibility:
  The CMA will retain discretionary power to approve lower thresholds on a case-by-case basis.

Stakeholders and market participants are encouraged to submit their feedback via email during the 14-day consultation window. Final amendments will be announced following regulatory approval by the CMA.

Momentum in IPO Activity and Market Expansion

The Saudi Exchange has been experiencing robust listing momentum, supported by positive macroeconomic trends and strong investor appetite:

• In 2024, Saudi Arabia accounted for 31% of MENA IPO proceeds, second only to the UAE.

• Tadawul’s main market hosted 14 IPOs, raising $3.8 billion, while

• Nomu saw 28 IPOs, raising a combined $297 million.

By reducing the barriers for SMEs and qualified investors, these changes are expected to further energize listings on Nomu, positioning it as a vital platform for growth-stage companies seeking capital.

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