Saudi Arabia’s Nomu – Parallel Market was introduced in 2016 as the junior market on the Saudi Stock Exchange. As part of the CMA’s contribution towards achieving Vision 2030, its objective is to strengthen the role of the Saudi capital markets in developing the national economy. Furthermore, there has been a strong drive to increase the range of companies that are able to list their shares and thus tap into the Saudi equity markets to fund their activities and expansion. Obtaining a listing has a number of potential benefits for a company; specifically, beyond raising its public profile, such a listing permits funding sources to be diversified away from just debt finance and enables a company to use its shares as employee incentives and as consideration in acquisitions.
Prior to the formation of the Parallel Market, companies wishing to list their securities on the Saudi Stock Exchange could only do so by way of a public offer and full listing on the Main Market. Such a listing requires full compliance with the Tadawul’s Listing Rules—which include a three-year business track record, 30% of the company’s shares in public hands, a SR100 million market capitalization, and at least 200 public shareholders—as well as extensive disclosure requirements. The requirements of the Parallel Market in each of these areas, however, are less burdensome, with the aim of facilitating a stock market listing for a wider range of companies, such as small to medium-sized enterprises (“SMEs”), which are a key priority for the Saudi government.