| DUBAI, Sept 7
DUBAI, Sept 7 Saudi Arabia will set relatively
low listing requirements for its second stock market in order to
draw smaller companies to the bourse, which it aims to launch at
the end of February next year, regulators have told securities
Much of the Saudi economy is dominated by family-owned
conglomerates, such as the Olayan group, the Juffali group and
the Al Muhaidib group, which have operated in the kingdom for
decades but have generally chosen not to list their
Seeking to diversify the economy away from oil exports, the
government wants to persuade such firms to list in order to
improve their access to capital, reduce the burden on the banks
financing them, and encourage better corporate governance.
A presentation to securities firms by the Capital Market
Authority and the Saudi Stock Exchange, seen by Reuters this
week, shows regulators are proposing that companies with minimum
capitalisations of 10 million riyals ($2.7 million) be allowed
to list on the new market - 10 percent of the capitalisation
required for the main market.
Companies would be permitted to float a minimum of 20
percent of their shares and have as few as 50 public
shareholders, compared to 30 percent and 200 shareholders.
To minimise speculative price swings, regulators said they
would limit direct investors in the new market to institutions,
excluding ordinary retail investors; institutional investors
include government-related entities and "professional investors"
with large portfolios and records of trading routinely.
Other investors could tap into the market via mutual funds.
The presentation did not say if the new market could include
companies now traded on the main market, but specified that
companies could move to the main market after trading for at
least two years on the secondary.
The document also showed the exchange planned to launch a
new index for the top blue-chip stocks trading on the main
The CMA said a committee would decide which companies to
include in the new index, and that all companies in it would
have to submit their financial reports in both Arabic and
English. It did not say when the index would be launched or how
many companies it would comprise.
(Editing by Andrew Torchia and Richard Balmforth)