CMA Proposes Tighter IPO Rules for Investors

The Saudi Capital Market Authority has opened a public consultation on a draft set of provisions aimed at strengthening the rules governing initial public offerings (IPOs). The proposals are open for feedback until 22 October 2026 and are not yet final or legally effective.

Under the draft, investment institutions taking part in offerings would have to prove that their IPO orders are backed by actual available liquidity and a genuine ability to pay. Acceptable evidence of financial capacity would be limited to cash or cash equivalents, closing the door on orders that are not fully funded.

Orders placed during the book-building process would become binding for payment no later than the subscription-payment deadline stated in the prospectus. In addition, underwriting agreements would need to be signed and effective before book-building begins, with the underwriter's obligation to buy all offered shares taking effect from the moment book-building starts.

The draft also addresses cases where an underwriter ends up owning shares in a way that prevents the issuer from meeting listing requirements. In that scenario, the shares would not be listed and the underwriter would be required to purchase all the offered shares. Financial advisers and other capital-market institutions that receive book-building orders would face additional verification and compliance steps.

The Authority says the changes are intended to improve the information available to investors and to strengthen price discovery. For the community, tighter checks on who can place orders — and firmer commitments to pay — are meant to make the IPO market more disciplined and transparent. Investors and firms can follow the proposals through the Capital Market Authority's consultation channels and the Saudi Exchange announcement channel while the draft remains open for comment.

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