Listing on the Saudi Stock Exchange (Tadawul) through an Initial Public Offering (IPO) is a significant strategic step for companies seeking to expand and strengthen their market position. Understanding and precisely meeting the requirements for an IPO in Saudi Arabia is the cornerstone of success in this complex process. This process necessitates compliance with a range of legal, financial, and administrative requirements imposed by the Capital Market Authority (CMA) and the Saudi Stock Exchange (Tadawul).

What are the conditions for companies to go public in Saudi Arabia? They can be mainly divided into conditions related to the issuing company, and conditions related to the size of the offering and the type of target market (main market or Nomu - parallel market).

🏛️ Basic legal and financial requirements for listing on the Saudi market

To understand the conditions for companies to go public in Saudi Arabia, one must first look at the foundations upon which the process of becoming a public joint-stock company is based:

1. Requirements for legal transformation and regulatory form

• Legal structure: The company must be established as a joint-stock company in accordance with the Saudi Companies Law. If the company is a limited liability company or any other structure, it must be converted to a joint-stock company before proceeding with the IPO.

• Articles of Association and Bylaws: The company's articles of association and bylaws must be amended to comply with the requirements of public shareholding companies and the laws regulating the capital market.

2. Financial requirements and company size

• Financial performance history: The authority usually requires an audited financial performance record for a certain number of years (varying by market - "Trading Main" or "Growth").

• Minimum net assets or revenues: The company must meet the minimum requirements for net assets or annual revenues, which are determined to ensure the company's size is adequate and its ability to meet listing and going concern requirements.

• Auditing: The financial statements must be prepared in accordance with the approved accounting standards and audited by a certified external auditor.

3. Governance and Compliance

• Governance structure: The company must establish a strong corporate governance structure, including an effective board of directors and specialized committees (such as an audit committee, a remuneration and nominations committee), and comply with the corporate governance requirements issued by the Capital Market Authority.

• Transparency and disclosure: The highest standards of transparency and disclosure of material information to the public and shareholders must be adhered to on a regular basis.

4. Offering and Trading Requirements

• The percentage of shares offered to the public: A minimum percentage of the company's shares must be offered to the public to ensure sufficient liquidity in trading and a broad distribution of ownership.

• Number of shareholders: There must be a minimum number of individual shareholders after the offering process.

📊 Detailed listing requirements: Main Market vs. Growth - Parallel Market

To understand the requirements for companies to go public in Saudi Arabia, it's essential to differentiate between the listing requirements in each of the following:

A. Main Market (Trading)

• Financial record: Typically requires an audited financial record of at least three years.

• Profitability: The company must have a clear profit record during the specified financial years.

• Market value: Requires a minimum total market value for the company before the offering.

• Shares offered: The minimum percentage of shares offered to the public is higher than in the parallel market.

B. Growth - Parallel Market

Nomo is an alternative listing platform with more flexible requirements, designed to support small and medium-sized enterprises (SMEs) seeking to expand and access finance. Understanding the requirements for listing companies on the Saudi Arabian parallel market is vital for entrepreneurs.

• Financial record: A shorter time period than the required financial record, and may not necessarily require a profitability record.

• Minimum market value: Much lower than the main market.

• Shares offered: The minimum percentage of shares offered to the public is lower, with fewer shareholders required after listing.

• Consulting: Requires the appointment of a financial advisor and a legal advisor accredited by the Capital Market Authority.

🛠️ The role of City Squares Company in fulfilling the conditions of the initial public offering (IPO)

Complying with the requirements for initial public offerings (IPOs) in Saudi Arabia requires significant consulting and legal expertise. This is where City Squares, a company specializing in consulting services and project management, comes in, helping Gulf and international companies meet these requirements and move towards listing.

💼 Company formation services in Saudi Arabia and preparation for IPO

City Squares offers comprehensive services, from establishing your company in Saudi Arabia to managing and preparing it for potential listing. Our services include:

1. Company formation services in Saudi Arabia: Establishing companies of all types, modifying company structures, and merging companies, in a manner that ensures compliance with the requirements of a public joint-stock company.

2. Facilitating the issuance of licenses by the Ministry of Investment: for Gulf and foreign investors to ensure the legitimacy of businesses and their compliance with the Kingdom’s Vision 2030.

3. Factory registration and licensing services: for industrial sector companies, including factory establishment services in Saudi Arabia.

4. Legal expertise and Saudi regulations: Specialized administrative staff with extensive experience in government relations, public relations, and legal expertise in Saudi regulations and laws, including the establishment of foreign companies, investor services, issuance of articles of incorporation, transfer of company ownership, and amendment of articles of incorporation.

🌐 Advanced business and consulting services

At City Squares, we don't offer just one service, but an integrated system that gives you the confidence to enter into projects:

• Market entry and acquisition services: Strategic guidance for entering the Saudi market and corporate acquisitions.

• Business classification and project management services: Management of service and industrial projects and business classification to meet government and private sector standards.

• Registration of commercial agencies and franchises: Registration of trademarks and commercial agencies for international companies.

• VIP, review and follow-up services: Completing all transactions for clients inside and outside Saudi Arabia in all government ministries.

🔗 Integrated services to support growth before and after the IPO

• Public Relations and Communication Services: Building the best corporate image and supporting corporate communication.

• International Partnership Services: Connecting businesses and expertise across our branches within the Kingdom, the Sultanate of Oman, and Bahrain.

• Post-establishment services: Ensuring continued compliance and growth after the establishment phase.

• Factory establishment services in Saudi Arabia: Supporting industrial projects from the beginning until the issuance of environmental licenses in Saudi Arabia.

• Registering contracting companies with Aramco: Facilitating procedures for companies wishing to work with the oil and energy sector.

• Premium Residence Services: Facilitating premium residence services for investors.

We embrace the values ​​of credibility, transparency, and providing high-quality solutions for business people, and we work in accordance with the Kingdom’s Vision 2030 to promote the Arab and global economy and investment.

🧭 Roadmap for achieving IPO requirements

After answering the question, "What are the conditions for companies to go public in Saudi Arabia?", here is a simplified roadmap for preparation, which City Squares Company can efficiently manage for you:

1. Due Diligence: Analyzing the company’s financial, legal, and administrative readiness and compliance with the requirements for companies to be offered for public subscription in Saudi Arabia.

2. Transformation and organization: Changing the legal form of the company and developing a governance structure that complies with the conditions for companies to be offered for public subscription in Saudi Arabia? And preparing internal regulations.

3. Preparation of financial statements: Preparation and auditing of financial statements for the required performance years in accordance with international and local standards.

4. Selection of advisors: Appointing a financial advisor, underwriter, and legal advisor (City Squares provides the necessary personnel and expertise).

5. Submitting the application to the Capital Market Authority (CMA): Preparing and submitting the registration file and prospectus with all the required documents.

6. Final approvals and offering: Obtaining approval from the Authority and "Tadawul", determining the price range, and starting the order book building process and public subscription.

Meeting the requirements for companies to be listed for public subscription in Saudi Arabia requires precision and unwavering commitment, which we at Sahat Al Madin Company guarantee through our experience of more than fifteen years.

📣 Contact us now

To begin the journey of establishing, managing, and preparing your company to meet the requirements for initial public offerings (IPOs) in Saudi Arabia, and to obtain support in company formation services in Saudi Arabia, premium residency services, or registering contracting companies with Aramco:

Contact us on WhatsApp now via the following link: Connect with city squares via WhatsApp

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• International Partnership Services

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