In Saudi Arabia, securities may only be offered in accordance with the Rules on the Offer of Securities and Continuing Obligations (“ROSCO”). Offers that are not listed on the Main Market or the Parallel Market must either be an exempt offer or comply with the requirements for a private placement.
As the name suggests, ‘exempt offers’ are exempt from the requirements of the ROSCO. The categories of exempt offers include securities issued by the government of Saudi Arabia, offers of “contractually based securities” (options, futures, contracts for differences, and long-term insurance contracts), and offers totaling less than SR10 million that are restricted to 50 offerees or less (excluding “sophisticated investors”) where the amount payable by such offeree does not exceed SR 2000,000 or an equivalent amount.
Private placements must be made through a CMA-authorised person and must be limited to either sophisticated investors or be structured as a “limited offer”. Additionally, the CMA requires 10 days’ notice of a private placement along with certain prescribed documents, such as any offering documents.
The Z&Co. team of lawyers routinely advises foreign and local parties on private placements and exempt offers, and they have guided financial institutions in Europe, the USA, and Asia on the CMA’s requirements and possible exemptions, including offers made on a reverse solicitation basis.