Capital Market Authority Proposes Requiring Underwriters to Buy All Offered Shares
Key Facts
Saudi Arabia’s Capital Market Authority on September 22, 2026, issued a draft of new rules to strengthen initial public offering practices, including requiring underwriters to buy all shares offered. The authority invited stakeholders to take part in a public consultation lasting 30 calendar days and ending on October 22, 2026. The move does not constitute final approval of the rules; the authority said public comments would be considered before the final version is approved. The announcement set November 2, 2026, as the date the rules would take effect, subject to final approval. The proposal puts the underwriter’s obligation at the center of the book-building process, alongside controls to verify participants’ ability to pay and forward-looking financial disclosures by issuers.
Under the proposal, the underwriting agreement must be signed and take effect before book-building begins. But the underwriter’s obligation to buy all offered shares becomes effective when book-building starts, setting the point at which responsibility is assumed during the offering process. The proposed wording links the prior existence of the agreement to the start of collecting participation orders, then makes the purchase obligation operative as that stage begins. In this way, the proposal addresses the relationship between the underwriter and the offering from before book-building, rather than only at the subscription closing stage. The obligation is part of a broader package that the authority said aims to improve the reliability of book-building and pricing, and link participation orders to liquidity and the actual ability to pay.
The proposal also addresses a situation that may arise if the underwriter’s ownership of the offered shares results in the listing requirements set out in the Listing Rules not being met. In that case, the proposal provides that the issuer’s shares will not be listed, while requiring the underwriter to buy all offered shares. The provision combines an outcome concerning the company’s eligibility for listing with the underwriter’s responsibility for the shares, rather than treating completion of the underwriting separately from listing conditions. This means the effect of the underwriter’s ownership of the shares forms part of the assessment of whether the listing requirements themselves are met. This treatment appears in the draft issued by the authority for consultation; the announcement did not say it had already become an effective rule.
For book-building, the proposal requires participation orders to reflect the liquidity actually available to investors. It also limits the means of verifying participating entities’ financial capacity to cash or its equivalent, instead of accepting evidence unrelated to these specified categories. The proposal makes orders binding for payment no later than the subscription payment date stated in the prospectus. It thus links the amount of demand recorded, the funds whose availability can be verified and the specified payment deadline. The authority says linking orders to liquidity and the ability to pay is intended to strengthen the reliability of book-building and improve pricing.
The proposed package includes disclosure requirements for issuers covering forward-looking data and projections, including financial performance indicators for a period of at least one year. The proposal also requires the financial adviser to exercise the necessary professional due care regarding the forward-looking data and projections provided by the issuer, including future financial performance indicators. This places forward-looking disclosures and responsibility for their professional review within the proposed rules for initial public offerings, alongside the provisions on underwriting and book-building. The minimum period of one year sets a defined timeframe for the projections and indicators issuers must disclose. These requirements remain part of the draft published for consultation pending consideration of comments and approval of the final version.
The proposal comes as the authority approved 60 applications for public offerings and share registrations in 2024, an increase of 36.4% compared with 2023, according to its annual report. In the same year, 44 companies completed listings on the Main and Parallel Markets. These figures provide context for the scale of offering and listing activity covered by the proposed rules, without the consultation announcement linking those results to any specific change in demand or pricing. The announced implementation date is November 2, 2026, following the end of the consultation on October 22, consideration of comments and approval of the final version. The authority’s announcement did not establish that final approval had taken place.