By Fatima Muhammad
Jeddah — Four companies have been approved for listing on the parallel stock market which was announced by the Capital Market Authority (CMA) earlier this month.
Applications from 77 companies are also under review.
The Saudi Stock Exchange (Tadawul) plans to launch Nomu-Parallel Market on Feb. 26, 2017.
The four companies approved for listing are: Al-Omran Company for Trade and Industry, Abdullah Assad Abu Mouti Bookstores Company, Al-Somani Factory for Mining Industry, and Food Development Company.
Answering a Saudi Gazette question Naif Al-Adl, head of listing department at Tadawul, said that there will be no demotion from the main market to the parallel market.
He said moving from parallel to main market requires staying in the parallel market for two fiscal years and meeting the requirements of the main market.
He said the parallel market is named “Growth” based on experts’ views.
According to Naif, foreign investors will have to fulfill the same previous requirements to be able to join the market.
Abdullah Bin Gunaim, CMA representative, said that the new market should not be regarded as a market for loss-making companies but a potential market for new companies.
He said if a company wants to register in the parallel market it must fulfill the following conditions:
The company should have the market value of at least SR10 million, it must have a financial consultant, its founders will be banned from selling their shares for 12 months, there must be 50 stakeholders if the value of shares is SR40 million and 35 stakeholders if the value is below SR40 million, it should be operating for at least one year in the market, and 20 percent of it should be publicly owned and each stakeholders shall have only 5% of shares.
These requirements are more flexible than those implemented in the main market which requires SR100 millions as a basic market value of a company, 200 shareholders among other necessary financial documents, explained Bin Gunaim.
Najm Al-Himsi, a member the Small and Medium Enterprise, said that the main categories that will benefit from parallel market are family enterprises, high-risk funds and government-own bodies.
He said that many SMEs are expected to join the parallel market.
