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Proposed Amendments
Clarification
PART 2
Exempt Offer
Article 6: Exempt Offer
a) Without prejudice to the Securities Business Regulations and the Capital Market Institutions Regulations, an offer shall be exempt from the requirements of these Rules in any of the following cases:
…
2) Offer of debt instruments issued by the Kingdom’s development funds and banks and the Kingdom’s sovereign funds, in accordance with the following requirements and conditions:
a. The issuer shall prepare an offering document in accordance with the requirements of Annex (2) of these rules, and that the offering document is made available to the public through the issuer's website at least five days prior to the date specified to start the offering.
b. The offering documents must contain complete, clear and not misleading information, and must contain all the information necessary for investors to arrive at an informed decision concerning the issuer and the debt instruments offered.
c. The issuer must submit the pricing supplement and the debt instrument allocation form to the Authority within ten days after the completion of the offering, or the completion of the offering of each issue if the offering was part of a debt instruments offering program.
d. The Issuer must deposit the debt instruments with the Depository Center within a period not exceeding ten days from the completion of the offering or the completion of the offering of each issuance if the offering was part of a debt instruments issuance program, provided that the request to deposit such debt instruments with the Depository Center shall be made by the Capital Market Institution through whom the private placement is made.
e. The issuer must disclose -through the electronic system specifically designated for such purpose by the Exchange- its audited annual financial statements in Arabic within a period not exceeding six months from the end of the annual financial period covered by those statements.
f. The issuer must disclose -through the electronic system specifically designated for such purpose by the Exchange- its annual report within a period not exceeding twelve months from the end of the relevant financial year.
g. Subparagraphs (a), (e) and (f) of this subparagraph shall not apply if the issuer does not make the necessary arrangements to list the debt instruments on the Exchange.
h. The offering of debt instruments in accordance with subsection (2) of paragraph (a) of this Article is limited to investors of the categories of qualified clients and institutional clients in the event that the issuer does not make the necessary arrangements to list them in the Exchange.
b) Except for the Kingdom’s development funds and banks and the Kingdom’s sovereign funds, The the offeror or the Capital Market Institution (if the offer is carried out through a Capital Market Institution) shall, when making an exempt offer, notify the Authority on a quarterly basis of the total number and value of the exempt offers the Capital Market Institution has made. In addition, the following information must be submitted to the Authority in respect of each exempt offer:
It is suggested to amend the provisions governing exempt offer to develop the regulatory framework for exempt offer of debt instruments through:
89) Where the subscription in total value for the securities being offered is less than 10 million SR or an equivalent amount, in accordance to the following conditions:
c. Declaration by the offeree who participate in the subscription for such offered securities (excluding investors under the categories of Institutional and Qualified Clients) to the offeror or the Capital Market Institution (if the offer is carried out through a Capital Market Institution) of its acknowledgment to the risks associated with the investment, including what may result in loss of the full amount of the investment, and the that the Authority shall not give any assurance as to the accuracy and completeness of the documents related to the Offering or its completeness, and expressly disclaim any liability whatsoever for any loss arising from or incurred in reliance upon any part of these documents, and its acknowledgment that the offeror or the Capital Market Institution (if the offer is carried out through a Capital Market Institution) does not have to notify the Authority of the suitability of such an investment.
12) Declaration by the offeree indicated in subparagraph (c) of paragraph (89) of this Article, including the following information:
a. The total amount payable per offeree who participate in the subscription for such securities and the number and description of the securities.
b. Name of the offeree who participate in the subscription for such securities and its passport number or National ID and signature.
c. Declaration date.
The requirement to submit the aforementioned declaration to the Authority does not apply to the offering of debt instruments.
i) The debt instruments offering documents to be used in advertising the offer must contain a prominent statement in the following form:
“This document may not be distributed in the Kingdom except to such persons as are permitted under the Rules on the Offer of Securities and Continuing Obligations issued by the Capital Market Authority. The Capital Market Authority does not make any representation as to the accuracy or completeness of this document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this document. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this document, you should consult an authorised financial advisor.”
ANNEX 2
CONTENTS OF THE OFFERING DOCUMENT FOR DEBT INSTRUMENTS ISSUED BY THE KINGDOM’S DEVELOPMENT FUNDS AND BANKS AND THE KINGDOM’S SOVEREIGN FUNDS
The offering document for debt instruments issued by the Kingdom’s development funds and banks and the Kingdom’s sovereign funds must be prepared in Arabic, and must contain the following information at a minimum:
1) overview of the issuance or the issuance program.
2) size and duration of the program (if the offer is a debt instruments issuance program).
3) a notice which shows the purpose of the offering document and the nature of information mentioned in the document.
4) a statement clarifying that the offering is considered an exempt offering in accordance with subparagraph (2) of paragraph (a) of Article (6) of the Rules on the Offer of Securities and Continuing Obligations.
5) the issuer’s name and description.
6) issuer credit rating (if any).
7) Information concerning the debt instruments and terms and conditions of the offer:
This section must include the following:
a. terms and conditions of the debt instruments;
b. full information on the rights conferred upon holders of debt instruments;
c. particulars of the debt instruments;
d. subscription method;
e. details of the early redemption of the offer;
f. the names and addresses of the paying agents, and any registrar and transfer agents for the debt instruments;
g. details of the arrangements for transfer of the debt instruments;
h. details of repayment related dates including the final maturity date and early repayment dates, specifying whether exercisable at the issuer's or the holder of debt instruments' request and the date from which payments are due;
i. details of any restrictions on the transferability of the debt instruments; and
j. the date upon which it is expected that trading in the debt instruments will commence, if the issuer can anticipate such date.
8) The risk factors of the issuer, the market and industry in which it operates, and the debt instruments being offered.
9) The funding structure.
10) Use of the proceeds of the offer of the debt instruments.
11) The applicable final terms model.
12) A statement showing the tax and zakat treatment of the debt instruments offered and any tax and zakat obligations on holders of the debt instruments.
13) A statement showing the continuing obligations that the issuer will comply with.
14) copies of the following documents must be enclosed:
a. the issuer's latest annual financial statements; and
b. the issuer's latest annual report.
PART 3
Private Placement Offer
Chapter 1: Private Placement Offer Conditions
Article 10: Private Placement Requirements
a) No person may offer securities by way of private placement unless the following requirements are met:
1) the offer is made through a Capital Market Institution licensed to carry out arranging activities; and
2) the offeror notifies the Authority in accordance with Annexes (23) or (34) of these Rules (as applicable) at least ten days prior to the proposed date of the offer. and submits the following to the Authority: The offering of debt instruments by an offeror established in the Kingdom is exempt from the period specified in this paragraph, provided that the offeror notifies the Authority prior to the start of the offering;
a. 3) the offeror submits to the Authority a declaration by the offeror in the form set out in Annex (45) of these Rules. Or a declaration by the sponsor in the form set out in Annex (45) (a) of these Rules if the offer was made by a special purposes entity;
b. 4) the offeror submits to the Authority a declaration from the Capital Market Institution through which the offer is made, in the form set out in Annex (56) of these Rules; and
c. 5) the offeror submits to the Authority copies of any offering documents to be used in advertising the offer.
h) The Issuer, in case where the Issuer is a Saudi joint-stock company or a special purpose entity whose Beneficiary is a Saudi joint-stock company, must deposit Saudi Riyal-denominated debt instruments with the Depository Center within a period not exceeding ten days from the completion of the offering or the completion of the offering of each issuance if the offering was part of a debt instruments issuance program, provided that the request to deposit such debt instruments with the Depository Center shall be made by the Capital Market Institution through whom the private placement is made.
It is suggested to amend the provisions governing private placement to develop the regulatory framework for private placement of debt instruments through:
Article 11: Responsibilities and Obligations of the Capital Market Institution
The Capital Market Institution through which the offer is made must:
c) In the event of offering debt instruments, the Capital Market Institution must ensure that the offeror has fulfilled all the relevant conditions necessary to undertake the private offering and that it has submitted or will submit all the information and documentation required to be provided to the Authority under these rules. The Authority may exchange relevant information with the authorities, agencies, or bodies having responsibility for the supervision of financial services or other appropriate authorities.
ANNEX 34
CONTENTS OF A PRIVATE PLACEMENT NOTIFICATION IN RESPECT OF DEBT INSTRUMENTS
[To be provided on the offeror’s letterhead]
The following information, must be signed and dated by the offeror or an authorised officer of the offeror and notified to the Authority at least ten days prior to the proposed date of the offer
13) In case of limited offers, The the number and types of securities, including any debt securities, previously issued by the offeror (and the issuer if different from the offeror) within the past 12 months;
14) In case of limited offers, The the total number of securities to be offered plus the total number of securities already issued by the offeror (and the issuer if different from the offeror)
Chapter 2: Registration of Debt Instruments Offered by way of Private Placement for the Purpose of Direct Listing on the Exchange
It is suggested to remove the provisions of Chapter (2) of Part (3) of the Rules on the Offer of Securities and Continuing Obligations and merge such provisions within the provisions governing the public offer of debt instruments, as detailed below.
PART 4
Public Offer
It is suggested to develop the provisions governing public of debt instruments through:
The structure for Part (4) “Public Offer” is suggested to be as follows:
Amended structure of Part (4)
Chapter 1
General Provisions
Chapter 2
Conditions and Requirements for a Public Offer (except for debt instruments)
Chapter 3
Conditions and Requirements for a Public Offer of Debt Instruments
Chapter 2: Advisors to the Issuer Conditions and Requirements for a Public Offer (except for debt instruments)
Article 3921: Requirements and Obligations of the Financial Advisor
d) In the event that the offer is made by a special purpose entity, the financial advisor shall, upon submitting an application to the Authority for offering and listing securities, comply with the following:
1) To be the main point of contact with the Authority in relation to the application.
2) Ensure, after performing due diligence, and ask the special purpose entity, the sponsor and their advisors, that the sponsor and the special purpose entity have met all the conditions required to list and offer the entity's securities and any other related requirements.
3) provide any information or clarifications to the Authority as required within the time limit set by it for the purpose of verifying the compliance of the financial advisor, sponsor and special purpose entity of the Capital Market Law and its Implementing Regulations and Exchange Rules.
4) Submit a letter to the Authority as contained in Annex (20)(a) of these Rules.
Article 4022: Requirements and Obligations of the Legal Advisor
a) The legal advisor must be licensed to practise law in the Kingdom.
b) On an application of an issuer for the registration and offer of its securities, the legal advisor to the issuer must provide the Authority with a letter in the form set out at Annexes (2123) or (21)(a) of these Rules.
Chapter 3: Conditions for a Public Offer
Article 42: Conditions for a Public Offer of Debt Instruments
a) The issuance of debt instruments shall be in accordance with the conditions set out in Article (41) of these Rules as applicable. And where the offer is made by a special purposes entity, the issuer must be a special purposes entity authorised in accordance with Special Purposes Entity's Rules.
b) Where an issuer wishes to launch a debt instrument issuance programme, it must produce a single prospectus which covers the maximum value of debt instruments which may be issued under the programme. If the Authority approves the prospectus, all debt instruments which may be issued under that programme must be offered within (24) months after the approval of the prospectus.
c) An application for registration and offer of debt instruments may be accepted even if it does not meet the requirements of this Article if the Authority is satisfied that it will be in the interest of the investors, provided that the issuer must provide the investors with the necessary information to arrive at an informed judgment concerning the issuer and the securities that are the subject of the application.
d) In relation to an offer of debt instruments by a special purposes entity, the provisions of the paragraphs (3), (4), (5), (6) and (7) of Article (41) of these Rules shall apply only on the sponsor
e) In relation to an offer of debt instruments by a special purposes entity, the provisions of the paragraph (9) of Article (41) of these Rules shall apply on the special purposes entity and the sponsor.
f) The provisions of paragraph (8) of Article (41) of these Rules shall not apply in case of issuing debt instruments.
Article 43: Additional Conditions for a Public Offer of Convertible Debt Instruments and Exchangeable Debt Instruments
a) The issuance of convertible debt instruments shall be subject to the following conditions:
1) The conditions set out in Article (42) of these Rules, as applicable.
2) Convertible debt instruments may be registered and offered only if the shares into which they are convertible are already listed.
3) A prospectus for convertible debt instruments, which would be converted into shares which are already listed on the Exchange, must contain the information set out in Annex (16) of these Rules.
4) The Authority's approval of the application for registration and offer of a convertible debt instrument is regarded as approval of the issuance of the relevant share upon conversion.
b) The issuance of exchangeable debt instruments shall be subject to the following conditions:
1) The conditions set out in Article (42) of these Rules, as applicable.
2) Exchangeable debt instruments may be registered and offered only if the shares into which they are exchangeable are already listed; and the issuer may not dispose of shares equal to the shares that may be exchanged before the expiration of those instruments’ maturity date.
3) A prospectus for exchangeable debt instruments must contain the information set out in Annex (16) of these Rules.
Chapter 4: Application for Registration and Offer
This cell shows the suggested amendments on Chapter (2) “Advisors to the Issuer”, Chapter (3) “Conditions for a Public Offer”, and Chapter (4) “Application for Registration and Offer” of Part (4) “Public Offer” of the Rules on the Offer of Securities and Continuing Obligations, for the purpose of moving the provisions pertaining to debt instruments to a new chapter as will be detailed below.
Chapter 3: Conditions and Requirements for a Public Offer of Debt Instruments
Article 35: Scope and application
Article 36: Appointment of advisors
Article 37: Requirements and obligations of the financial advisor
a) The financial advisor must be authorised by the Authority to carry out arranging activities and any other securities business related to the services which the financial advisor agreed with the issuer to provide.
b) Upon an application to the Authority of an issuer for registration and offer of debt instruments, the financial advisor must:
c) In the event that the offer is made by a special purpose entity, the financial advisor shall, upon submitting an application to the Authority for offering and registering debt instruments, comply with the following:
Article 38: Requirements and obligations of the legal advisor
Article 39: Requirements and obligations of the representative of the holders of the debt instruments
Article 40: Conditions and requirements for a public offer of debt instruments
a) An issuer seeking to register and offer its debt instruments must submit an application to the Authority which contains the information required in Annex (11) of these Rules.
b) The approval of the application for registration and offer of debt instruments will only be given by the Authority if:
c) The Authority will review the application within (20) days of receiving all information and documentation required pursuant to these Rules. The commencement of the period is not subject to the Authority’s receipt of the notification referred to in subparagraph (1) of paragraph (b) of this Article provided that the notification must be submitted to the Authority prior to the end of the review period, otherwise the Authority may extend the review period for a term not exceeding (10) days from the date of receipt of the notification.
d) If, having reviewed the application, the Authority considers that the proposed offer of debt instruments may not be in the interest of the investors or may result in a breach of the Capital Market Law, its Implementing Regulations or the Exchange Rules, then it may take any of the following actions:
e) If, having taken action pursuant to paragraph (d) of this Article, the Authority determines that the offer to be made pursuant to the application may not be in the interest of the investors or may result in a breach of the Capital Market Law, its Implementing Regulations or the Exchange Rules, the Authority may issue a "notification" to the issuer stating that the application has not been approved, or publish a "notice" prohibiting the offer, sale or transfer of title of the debt instruments to which the application relates.
f) The approval of the application for registration and offer of debt instruments by the Authority shall be considered as an approval of the prospectus, as applicable.
g) The prospectus must not be published and made available to the public without the approval of the application for registration and offer of debt instruments by the Authority.
h) The Issuer and its financial advisor may, prior to obtaining the approval of the Authority, present information on the issuer and its financial statements to a specific group of Capital Market Institutions authorised to conduct the advice activity for the purpose of preparing research and financial reports on the issuer, provided that such research and reports shall not be published before obtaining the approval of the Authority for the application of registration and offer of debt instruments.
Article 41: Publication of prospectus and formal notices
“The Capital Market Authority and the Saudi Stock Exchange Company take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure.”
Article 42: Dissemination of information
Article 43: Dormant applications
The Authority may, at its absolute discretion, cancel an application for registration and offer of debt instruments where such application has in the opinion of the Authority remained dormant. The effect of such cancellation is that if the issuer then wishes to seek approval for registration and offer of the same debt instruments, it must make a new application in accordance with the process set out in these Rules.
This cell shows the provisions governing the public offer of debt instruments and the registration of debt instruments offered by way of private placement for the purpose of direct listing on the Exchange, which are added in the new chapter titled “Conditions and Requirements for a Public Offer of Debt Instruments”, as follows:
CONDITIONS AND REQUIREMENTS FOR A PUBLIC OFFER OF DEBT INSTRUMENTS
First: Conditions for a Public Offer of debt instruments
The conditions for making a public offer of debt instruments are:
1) The issuer must be a joint stock company, or a special purposes entity authorised in accordance with the Rules for Special Purposes Entities.
2) Any application for registration and offer of debt instruments must be accompanied by a prospectus.
3) When submitting an application for registration and offer of debt instruments, the issuer must have been carrying on, either by itself or through one or more of its subsidiaries, the same main activity for at least the previous three years before submitting the application for registration and offer of debt instruments.
4) When submitting an application for registration and offer of debt instruments, the issuer must have audited financial statements that cover at least the previous three financial years and that were prepared in accordance with the accounting standards adopted by SOCPA.
5) If the period covered by the most recent audited financial statements has ended more than six months prior to the expected date of approval of the application for registration and offer of debt instruments, it shall submit to the Authority a reviewed interim financial statements covering any period from the date of the end of the period covered by the latest audited financial statements until the expected date of approval of the application for registration and offer of debt instruments, or submit audited annual financial statements (as applicable).In all cases, the period covered by the latest audited interim financial statements submitted to the Authority shall not have ended more than (6) months before the date of approval of the application for registration and offer of debt instruments.
6) Where the issuer has undergone material restructuring, an application for registration and offer of debt instruments may not be submitted until one financial year has elapsed from the date of completion of that material restructuring. For the purposes of this paragraph, "material restructuring" shall mean:
7) The senior executives of the issuer must have an appropriate expertise and experience for the management of the issuer’s business.
8) If reviewed interim financial statements are issued during the application period, the issuer must provide a copy of such statements to the Authority as soon as reasonably practicable.
9) Where an issuer wishes to launch a debt instrument issuance programme, it must produce a single prospectus which covers the maximum value of debt instruments which may be issued under the programme. If the Authority approves the prospectus, all debt instruments which may be issued under that programme must be offered within (24) months after the approval of the prospectus.
10) In the event of offering convertible debt instruments or exchangeable debt instruments:
11) Debt instruments offered by way of private placement may not be registered for the purpose of direct listing on the Exchange unless the maturity date of the debt instruments that are the subject of the registration application is at least one calendar year after the date of the Authority’s approval of the application.
12) Convertible debt instruments offered by way of private placement may not be registered for the purpose of direct listing on the Exchange unless the class of shares into which they may be converted is listed.
13) An application for registration and offer of debt instruments may be accepted if it does not meet the requirements of this Article if the Authority is satisfied that it will be in the interest of the investors and that the issuer presented investors with the necessary information to arrive at an informed judgment concerning the issuer and the debt instruments that are the subject of the application.
14) In relation to an offer of debt instruments by a special purposes entity, the provisions of paragraphs (3), (4), (5), (6) and (7) of this Article shall apply only on the sponsor.
15) Where the registration of asset-linked recourse debt instruments or debt-based recourse debt instruments offered by way of private placement for the purpose of direct listing on the Exchange by a special purposes entity, paragraph (6) of this Article shall apply on the sponsor only.
16) In relation to an offer of debt instruments by a special purposes entity, the provisions of the paragraph (8) of this Article shall apply on the special purposes entity and the sponsor.
17) Where an issuer (or the sponsor if the offer was made by a special purposes entity) already has securities that are listed on the Exchange, paragraphs (3), (4), (5), (6) and (8) of this Article shall not apply.
18) Paragraph (2) of this Article shall not apply in the event an issuer who has securities listed on the Exchange issues additional debt instrument and such additional debt instruments lead to an increase not exceeding 10% of the previously listed debt instruments, provided that the issuer discloses any issuance made in accordance with this paragraph according to what the Authority determines. For the purposes of determining this percentage, a series of issuances that take place within (12) months are considered one issuance, and a series of deals that the Authority considers to be one deal are considered one issuance.
Second: Requirement to Submit an Application for Registration and Offer to the Authority:
a) An issuer seeking to register and offer its debt instruments must submit an application to the Authority which contains the information required under these Rules, and submit to the Exchange, at the same time, an application for listing of such securities in accordance with the provisions of the Listing Rules.
b) The issuer, or the sponsor if the issuer is a special purposes entity, must submit to the Authority with its application for registration and offer electronic copies of the following documents (it shall maintain original copies of such documents and submit it to the Authority at its request):
c) Following the approval of the application for registration and offer by the Authority and prior to the listing, the issuer, or the sponsor if the issuer is a special purposes entity, must submit an electronic copy (and shall maintain the original copies for submission at the Authority's request) of the following documents:
d) With regard to the debt instrument issuance program, the issuer, or the sponsor if the issuer is a special purposes entity in the context of a financing transaction subject to the provisions of Chapter Five of these Rules, must, following the approval of the application for registration and offer by the Authority, and after the completion of the offering of each tranche of a debt issuance programme but prior to the listing thereof, comply with the following requirements:
1) must submit the following documents to the Authority:
2) the issuer must notify the Authority as soon as possible of the final allocation of the debt instruments offered in accordance with the provisions of this section, as well as the total amount paid compared to the total value offered under the prospectus;
3) the pricing supplement of each tranche under the programme must include details in respect of the issue, maturity and redemption dates (if any) of the debt instruments offered as well as the pricing details; and
4) the pricing supplement must provide the terms and conditions of an issue, in addition to those set out in the prospectus related to the debt instrument issuance programme.
e) The issuer, or the sponsor if the issuer is a special purposes entity, must retain original copies (or certified copy where appropriate) of all documents required pursuant to this Article for a period not less than ten years from the completion of the offer. Without prejudice to this period, in the event such documents relate to any litigation or claim (including any litigation pending or threatened) or any on-going investigations, the issuer must retain such documents until the closure of that litigation, claim or on-going investigation.
f) Subparagraphs (2), (8), (9), and (10) of paragraph (b), and subparagraph (3) of paragraph (c) of this Section shall not apply if the issuer has securities listed on the Exchange.
g) Subparagraph (4) of Paragraph (b) of this Section shall not apply to an issuer whose shares are listed on the Exchange.
h) In case the offer is made by a special purposes entity:
Third: Conditions and Requirements of the Prospectus
For the purposes of the Capital Market Law and its implementing regulations, the information contained in the electronic pages referred to in the prospectus shall be considered part of the prospectus.
Fourth: Conditions and Requirements of the Supplementary Prospectus
a) A supplementary prospectus must be submitted to the Authority if, at any time after that prospectus has been published and before completion of the offer, the issuer, and the sponsor in relation to issuance of debt instruments by a special purposes entity, becomes aware that:
b) A supplementary prospectus must contain the following (as applicable):
c) Where a supplementary prospectus is submitted to the Authority under this Article, it must be signed on every page by the relevant representatives of the issuer who are appointed as authorised signatories.
d) Where a supplementary prospectus is submitted to the Authority under this Article, an investor who subscribed for securities prior to the disclosure of the supplementary prospectus is permitted to rescind or amend his subscription for such debt instruments prior to the end of the offering period.
e) Where a supplementary prospectus is submitted to the Authority under this Article, the Authority must be satisfied that the information contained in such supplementary prospectus is complete and fulfils the requirements of the Capital Market Law, its Implementing Regulations and the Exchange Rules. If the information supplied suggests to the Authority that the proposed offer of securities may not be in the interest of the investors or may result in a breach of the Capital Market Law, its Implementing Regulations or the Exchange Rules, then it may require the issuer to terminate the offer.
f) The supplementary prospectus must not be published or otherwise made available to the public without obtaining the approval of the Authority.
This cell shows the conditions and requirements for a public offer of debt instruments, which have been added to a new annex titled “Conditions and Requirements for a Public Offer of Debt Instruments” as follows:
PART 5
Financing Transactions for Special Purposes Entity
Article 55 44: Scope and Application
This Part sets out requirements applicable to each financing transaction entered into in relation to the issuance of a new class or series of debt instruments and its public offering by a special purposes entity.
Article 56 45: Approval of New Financing Transactions by the Authority
a) No financing transaction subject to the provisions of this Chapter may be entered into in relation to the issuance of a new class or series of debt instruments by a special purposes entity without obtaining an approval from the Authority for the financing transaction application required under paragraph (a) of Article (57) of these Rules.
Article 57: Procedures and Powers of the Authority in Relation to a Financing Transaction Application
Article 59: Financing Structures
There is no limit on the type of financing structure that may be utilised by the special purposes entity in a financing transaction
Article 66: Financing Transactions Involving the Issue of Asset-Linked Recourse Debt Instruments or Asset Backed Debt Instruments
Financing transaction involving the issue of asset-linked recourse debt instruments or asset-backed debt instruments is subject to the following requirements:
Article 69: Stop Orders
It is suggested to amend the provisions governing the financing transactions for special purposes entities in Part (5) of the Rules on the Offer of Securities and Continuing Obligations, including:
PART 7
Continuing Obligations
Article 8065: Disclosure of Specific Events
a) The issuer must immediately and without delay disclose to the Authority and the public any of the following developments (regardless of whether or not they qualify as "material" under Article (7964) of these Rules):
27) the call for convening a general or special assembly and its agenda;
28) the outcome of the general or special assembly;
29) any proposed change in the capital of the issuer, with a statement of its impact on the holders of convertible debt instruments (as applicable);
35) any defaults in payments associated with debt instruments.
37) b) Paragraphs Subparagraphs (27), (28) and (29) of paragraph (a) of this Article shall not apply where the issuer is a special purposes entity.
c) Subparagraphs (27) and (28) of paragraph (a) of this Article shall not apply on the issuer of debt instruments listed on the Exchange if the issuer does not have shares listed on the exchange.
Chapter 3: Restrictions on Offering Convertible Debt Instruments Outside the Kingdom
Article 73: Restrictions on Offering Convertible Debt Instruments Outside the Kingdom
Where an issuer with shares listed on the Exchange wishes to offer convertible debt instruments outside the Kingdom, the number of shares into which convertible debt instruments may be converted shall not exceed 15% of the issuer’s total number of shares
It is suggested to develop the continuing obligations on the issuers of listed debt instruments, including the restrictions related to the issue of convertible debt instruments outside the Kingdom by an issuer whose shares are listed on the Exchange.
ANNEX 14
CONTENT OF A PROSPECTUS FOR DEBT INSTRUMENTS FOR AN ISSUER WITHOUT SECURITIES LISTED ON THE EXCHANGE
A prospectus submitted for the registration and the offer of debt instruments from an issuer which does not have any listed securities on the Exchange at the time of submission must contain the information under the following sections at a minimum:
1. Cover page
This section must include the following information (where applicable):
1) the issuer's name, incorporation date and commercial registration number;
2) capital and number of shares;
3) a summary of the offer including debt instruments details and rights;
4) target participants;
2) prospectus date;
3) the name of the issue, its size, and the number of debt instruments to be issued. If the offering is a debt instrument issuance program, include the program's name, its size, and number of debt instruments to be issued;
4) offer price. If the prospectus is published before determining the offering price for debt instruments, a statement must be included stating that the information in the prospectus will be updated or completed before the beginning of the offering;
5) offer period and conditions;
6) name of the financial advisor, arranging manager, and underwriter (if any); and
6) shares and debt instruments that have been listed prior to the particular offer by the issuer (if applicable);
7) a statement that the issuer has submitted the application for registration and offer of securities that are subject to this prospectus to the Authority, has submitted the application for listing to the Exchange and has submitted all the required documents to the relevant authorities;
87) a statement referring to the “Important Notice” and the “Risk Factors” under section (2) and section (98) of this Annex, respectively before making an investment decision.; and
9) the following declaration:
“This prospectus includes information provided as part of the application for registration and offer of securities in compliance with the Rules on the Offer of Securities and Continuing Obligations of the Capital Market Authority of the Kingdom of Saudi Arabia (the "Authority") and the application for listing of securities in compliance with the Listing Rules of the Saudi Stock Exchange Company. The directors, whose names appear in this prospectus, collectively and individually accept full responsibility for the accuracy of the information contained in this prospectus and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. The Authority and the Saudi Stock Exchange Company do not take any responsibility for the contents of this prospectus, do not make any representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus.”
2. Important notice
1) a notice which shows the purpose and the nature of information mentioned in the prospectus.
2) the following declaration:
“This prospectus includes information provided as part of the application for registration and offer of securities in compliance with the Rules on the Offer of Securities and Continuing Obligations of the Capital Market Authority of the Kingdom of Saudi Arabia (the "Authority") and the application for listing of securities in compliance with the Listing Rules of the Saudi Stock Exchange Company. The directors, whose names appear in this prospectus, collectively and individually accept full responsibility for the accuracy of the information contained in this prospectus and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. The Authority and the Saudi Stock Exchange Company do not take any responsibility for the contents of this prospectus, do not make any representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus”.
73. Table of contents
This section must include a table of contents.
84. Terms and definitions
This section must include the terms and definitions used through the prospectus.
35. Corporate directory
2) the contact information, including addresses, telephone numbers, and website and e-mail addresses, for each of the parties listed below, and any other expert to whom a statement or report included in the prospectus has been attributed:
f) credit rating agency (if any);
g) representative of debt instrument holders; and
f) receiving entities.
46. Offer summary
This section must include a disclaimer to the target investors on the importance of reading the prospectus prior to making an investment decision and include the following information (where applicable):
1) the issuer’s name, description and incorporation information;
2) the issuer’s activities;
3) substantial shareholders showing their ownership percentages and number of shares;
4) the capital of the issuer;
5) the issuer’s total number of shares;
62) the nominal value for offered debt instrument;
73) the use of proceeds;
8) types of targeted investors;
9) subscription method for each type of targeted investors;
10) the minimum number of offer debt instruments to be subscribed for by each type of targeted investors;
11) the minimum value of offer of debt instruments to be subscribed for by each type of targeted investors;
12) the maximum number of offer debt instruments to be subscribed for by each type of targeted investors;
13) the maximum value of offer debt instruments to be subscribed for by each type of targeted investors;
4) subscription method;
145) allocation method and description of the process where an excess of subscription monies has been received for all types of targeted investors;
156) the offer period;
167) full information of rights granted to holders of the debt instruments;
178) debt instruments particulars;
189) details of repayment related dates including final maturity date and early repayment dates, specifying whether exercisable at the issuer’s or the holder of debt instruments’ request and the date from which payments are due to start;
1910) restrictions on debt instruments;
2011) details of the arrangements for transfer of the debt instruments;
2112) the names and addresses of the paying agents, and any registrar and transfer agents for the debt instruments;
2213) details of the early redemption of the debt instruments; and
23) a statement referring the reader to the “Important Notice” and the “Risk Factors” under section (2) and section (9) of this Annex, respectively before making an investment decision.
14) include details of any guarantees related to the debt instruments offered (if any); and
15) a statement showing the tax and zakat treatment of the debt instruments offered and any tax and zakat obligations on holders of the debt instruments.
6. Summary of financial information
This section must include a summary of key financial information contained in the prospectus, including issuer’s operational performance, financial condition, cash flows and key performance indicators.
109. Issuer’s background and business nature
This section must include the following information:
7) information concerning the policy of the issuer and the issuer’s subsidiaries (if applicable) on the research and development of new products and production processes over the past three financial years, where significant;
8) particulars of any interruption in the business of the issuer and the issuer’s subsidiaries (if applicable) which may have or has had a significant effect on the financial position in the last 12 months;
9) the number of people employed by the issuer and the issuer’s subsidiaries (if applicable) and any material changes to that number over the last two financial years, with a breakdown of persons employed by Saudisation ratio; and
1110. Organisational structure
1) Management
g) the aggregate remuneration and benefits in kind granted by the issuer or any subsidiary during the three financial years prior to offering to the directors and the five senior executives who received the highest payments, including the CEO and CFO if they were not within the top five;
j) information on the issuer’s compliance with corporate governance.
2) Employees
a) any employee share schemes in place prior to the application for registration and offer of securities subject to this prospectus along with details on the aggregate amount of shares owned by the employees in the issuer; and
b) any other arrangements involving the employees in the capital of the issuer.
1211. Financial information
The information required below must be provided in relation to the issuer for the three financial years immediately preceding the application for registration and offer of securities that are subject to this prospectus as well as the period covered in the interim financial in accordance with the requirements of Annex (11) statements as per paragraph (4) of Article (41) of the Rules on the Offer of Securities and Continuing Obligations:
3) details of holdings, including holdings in contractually based securities or other assets whose value may be subject to fluctuations or be difficult to ascertain with certainty, significantly affecting the assessment of the issuer’s financial position.
43) the information required below must be provided in relation to the to financial, and operating performance, indicators and results of operations.:
a) performance indicators;
b) the financial, operating performance, and results of operations of the main lines of business;
c) any seasonal or business cycles which affect the business or the financial condition;
d) an explanation of any material changes from year to year in the financial information;
e) information regarding any governmental, economic, fiscal, monetary or political policies or other factors that have materially affected, or could materially affect, directly or indirectly, the operations;
f) the funding structure;
g) particulars of any alterations in the capital of the issuer, or where material, any of the issuer’s subsidiaries (if applicable) within the three years immediately preceding the date of the application for registration and offer of securities that are subject to this prospectus. Such particulars must state the price and terms of any issues by the issuers or its subsidisers; and
h) a table showing any capital of the issuer or any subsidiary which is under option, including the consideration for which the option was granted, and the price and duration of the option, and the name and address of the grantee, or provide an appropriate negative statement.
5) property, plant and equipment
a) a breakdown of any existing material fixed assets, including leased properties;
b) an explanation of the issuer’s depreciation policy and any changes contemplated in that policy; and
c) any planned material fixed assets, including leased properties.
7) A statement by the directors of any material adverse change in the financial or trading position in the three financial years preceding the application for registration and offer of securities that are subject to this prospectus and during the period from the end of the period covered in the external auditors’ report up to and including the date of approval of the prospectus or provide an appropriate negative statement.
1716. Underwriter
This section must include information about the underwriter of the offer, as follows:
1) the name and address of the underwriter; and
2) the principal terms of the underwriting agreement, including the compensation arrangement between the issuer and the underwriter.
1917. Information concerning the debt instruments and terms and conditions of the offer
1) a statement that application has been made to the Authority for the registration and offer of the securities that are subject to this prospectus and to the Exchange for the listing;
10) a description of default cases, their conditions, and the procedures that will be taken in these cases.
It is suggested to develop Annex (14) of the Rules on the Offer of Securities and Continuing Obligations to facilitate the requirements to prepare a prospectus by an issuer who does not have securities listed on the Exchange.
ANNEX 15
CONTENT OF A PROSPECTUS FOR DEBT INSTRUMENTS FOR AN ISSUER THAT HAS SHARES CURRENTLY LISTED ON THE EXCHANGE
A prospectus submitted for the registration and offering of debt instruments from an issuer which has shares currently listed on the Exchange at the time of submission must contain the information under the following sections at a minimum:
1. the issuer’s formation, incorporation and commercial registration information;
2. prospectus date;
2. capital and number of shares;
3. a summary of the offer including debt instruments details and rights;
4. target participants;
3. the name of the issue, its size, and the number of debt instruments to be issued. If the offering is a debt instrument issuance program, include the program's name, its size, and number of debt instruments to be issued;
4. offer price. If the prospectus is published before determining the offering price for debt instruments, a statement must be included stating that the information in the prospectus will be updated or completed before the beginning of the offering;
5. offer period and conditions;
6. name of the financial advisor, arranging manager, and underwriter (if any); and
6. shares and debt instruments that have been listed prior to the particular offer by the issuer (if applicable);
7. a statement that the issuer has submitted the application for registration and offer of securities subject to the prospectus to the Authority, has submitted the application for listing to the Exchange and has submitted all the required documents to the relevant authorities;
87. a statement referring to the “Important Notice” and the “Risk Factors” under section (2) and section (8) of this Annex, respectively before making an investment decision; and, and the importance of referring to any information referred to in the prospectus via an electronic link to the Exchange's website.
9. the following declaration:
3. Table of contents
4. Incorporation by Reference
If the sponsor or special purpose entity has listed securities, this section must include a list of information incorporated by references to this prospectus and related sections of this prospectus.
5. Terms and definitions
36. Corporate directory
This section must contain the following:
2. the contact information, including addresses, telephone numbers, and website and e-mail addresses, for each of the parties listed below, and any other expert to whom a statement or report included in the prospectus has been attributed:
e) receiving entities.
47. Offer summary
This section must contain a disclaimer to the target investors on the importance of reading the prospectus prior to making an investment decision and include the following information (where applicable):
1. the issuer’s name, description and incorporation information;
2. the issuer’s activities;
3. substantial shareholders showing their ownership percentages and number of shares;
4. the capital of the issuer;
5. the issuer’s total number of shares;
62. the nominal value for offered debt instrument;
73. the use of proceeds;
8. types of targeted investors;
9. subscription method for each type of targeted investors;
10. the minimum number of offer debt instruments to be subscribed for by each type of targeted investors;
11. the minimum value of offer of debt instruments to be subscribed for by each type of targeted investors;
12. the maximum number of offer debt instruments to be subscribed for by each type of targeted investors;
13. the maximum value of offer debt instruments to be subscribed for by each type of targeted investors;
4. subscription method;
145. allocation method and description of the process where an excess of subscription monies has been received for all types of targeted investors;
156. the offer period;
167. full information of rights granted to holders of the debt instruments;
178. debt instruments particulars;
189. details of repayment related dates including final maturity date and early repayment dates, specifying whether exercisable at the issuer’s or the holder of debt instruments’ request and the date from which payments are due to start;
1910. restrictions on debt instruments;
2011. details of the arrangements for transfer of the debt instruments;
2112. the names and addresses of the paying agents, and any registrar and transfer agents for the debt instruments;
2213. details of the early redemption of the debt instruments; and
23. a statement referring the reader to the “Important Notice” and the “Risk Factors” under section (2) and section (8) of this Annex, respectively before making an investment decision.
14. include details of any guarantees related to the debt instruments offered (if any); and
15. a statement showing the tax and zakat treatment of the debt instruments offered and any tax and zakat obligations on holders of the debt instruments.
5. Summary of financial information
This section must contain at least summary of key financial information contained in the prospectus, including the issuer’s operational operation, financial condition cash flow and key performance indicators.
6. Table of contents
7. Terms and definitions
98. Financial information
The information required below must be provided in relation to the issuer for the last three annual financial statements that were published and the issuer’s subsidiaries (if applicable) for the three financial years immediately preceding the application for registration and offer of securities that are subject to this prospectus as well as the period covered in the interim financial statements in accordance with the requirements of Annex (11) as per paragraph (4) of Article (41) of the Rules on the Offer of Securities and Continuing Obligations.
1. comparative tables of financial information with commentary and analysis by management of financial material information. The comparative tables must:
a. be prepared on a consolidated basis;
b. be extracted without material adjustment from audited financial statements; and
c. include financial information presented in a form consistent with that which is adopted in the issuer’s annual financial statements.
21. a report by certified external auditor must be prepared in accordance with the requirements of Annex (1921) of the Rules on the Offer of Securities and Continuing Obligations in any of the following circumstances:
a. where the external auditor has reservations on the report of the audited financial statements of the issuer for any of the last the three financial years immediately preceding the application for registration and offer of securities that are subject to this prospectus;
b. where the issuer has undergone restructuring in the three financial years immediately preceding the date of the application for registration and offer of securities that are subject to this prospectus;
3. details of holdings, including holdings in contractually based securities or other assets whose value may be subject to fluctuations or be difficult to ascertain with certainty, significantly affecting the assessment of the issuer’s financial position.
4. the information required below must be provided in relation to the financial, operating performance, and results of operations:
a. performance indicators;
b. the financial, operating performance, and results of operations of the main lines of business;
c. any seasonal or business cycles which affect the business or the financial condition;
d. an explanation of any material changes from year to year in the financial information;
e. information regarding any governmental, economic, fiscal, monetary or political policies or other factors that have materially affected, or could materially affect, directly or indirectly, the operations;
f. the funding structure;
g. a table showing any capital of the issuer or any subsidiary which is under option, including the consideration for which the option was granted, and the price and duration of the option, and the name and address of the grantee, or provide an appropriate negative statement.
5. property, plant and equipment
a. breakdown of any existing material fixed assets, including leased properties;
b. an explanation of the issuer’s depreciation policy and any changes contemplated in that policy; and
c. any planned material fixed assets, including leased properties.
7. A statement by the directors of any material adverse change in the financial or trading position in the three financial years preceding the application for registration and offer of securities that are subject to this prospectus and during the period from the end of the period covered in the external auditors’ report up to and including the date of approval of the prospectus or provide an appropriate negative statement.
83. Particulars of any commissions, discounts, brokerages or other non-cash compensation granted within the three years immediately preceding the application for registration and offer of securities that are subject to this prospectus in connection with the issue or offer of any securities by the issuer or any of the issuer’s subsidiaries (if applicable), together with the names of any directors, proposed directors, senior executives, persons offering or placing the securities or experts who received any such payment or benefit or provide an appropriate negative statement.
13. Legal Information
This section must include the following declarations from the board of directors that:
1. the issuance does not constitute a breach of the relevant laws and regulations in Saudi Arabia.
2. the issuance does not constitute a breach of any contract/agreement entered into by the issuer.
3. all material legal issues concerning the issuer have been disclosed in the prospectus.
4. details of any bankruptcies of each director or proposed director, senior executives, or the company secretary of the issuer;
5. details of any company insolvency in the preceding five years where any of the directors or proposed directors, senior executives, or the company secretary of the issuer were employed by the insolvent company in a managerial or supervisory capacity;
14. Underwriter
1. the name and address of the underwriter; and
2. the principal terms of the underwriting agreement, including the compensation arrangement between the issuer and the underwriter.
17. Information concerning the debt instruments and terms and conditions of the offer
1. a statement that application has been made to the Authority for the application for registration and offer of securities that are subject to this prospectus and to the Exchange for the listing;
9. a description of default cases, their conditions, and the procedures that will be taken in these cases;
13. details of any agreements with the representative of the holders of the debt instruments, if any, the name and function and head office of such representative, the conditions under which the representative may be replaced together with an indication of where the public may inspect copies of the documents detailing the obligations of the representative;
It is suggested to develop Annex (15) of the Rules on the Offer of Securities and Continuing Obligations to facilitate the requirements to prepare a prospectus by an issuer who has securities listed on the Exchange, including in relation to allowing to include electronic links to information previously published by the issuer on the Exchange’s website, and stipulating the requirements on the disclosure of financial information for the last three annual financial statements that were published.
A prospectus submitted for the registration and offering of convertible debt instruments or exchangeable debt instruments must contain the information under the following sections at a minimum:
2) capital and number of shares (as applicable);
3) a summary of the offer including convertible debt instruments or exchangeable debt instruments details and rights;
6) name of the financial advisor, arranging manager, and underwriter (if any);
6) shares and debt instruments or convertible debt instruments or exchangeable debt instruments that have been listed prior to the particular offer by the issuer (if applicable);
7) a statement that the issuer has submitted the application for registration and offer of securities subject to this prospectus to the Authority, has submitted the application for listing to the Exchange and has submitted all the required documents to the relevant authorities;
87) a statement referring to the “Important Notice” and the “Risk Factors” under section (2) and section (10) of this Annex, respectively before making an investment decision; and the importance of referring to any information referred to in the prospectus via an electronic link to the Exchange's website.
This section must include the prospectus table of contents.
This section must include a list of information incorporated by references to this prospectus and related sections of this prospectus.
f. credit rating agency (if any);
g. representative of debt instrument holders; and
h. receiving entities.
5. the issuer’s total number of shares (as applicable).
62. the nominal value for offered convertible debt instrument or exchangeable debt instrument;
73. the total number of offered convertible debt instruments or exchangeable debt instruments;
84. The percentage of offered the convertible debt instruments to the capital of the issuer;
95. the use of proceeds;
10. types of targeted investors;
11. subscription method for each type of targeted investors;
12.the minimum number of convertible debt instruments or exchangeable debt instruments to be subscribed for by each type of targeted investors;
13. the minimum value of convertible debt instruments or exchangeable debt instruments to be subscribed for by each type of targeted investors;
14. the maximum number of convertible debt instruments or exchangeable debt instruments to be subscribed for by each type of targeted investors;
15. the maximum value of convertible debt instruments or exchangeable debt instruments to be subscribed for by each type of targeted investors;
6. subscription method
167. allocation method and description of the process where an excess of subscription monies has been received for all types of targeted investors;
178. the offer period;
189. full information of rights granted to holders of the convertible debt instrument or the exchangeable debt instrument;
1910. details of convertible debt instruments or exchangeable debt instruments which includes:
a. Conversion or exchange price.
b. Conversion or exchange rate.
2011. details of repayment related dates including final maturity date and early repayment dates, specifying whether exercisable at the request of the issuer or at the request of the holder of the convertible debt instrument or exchangeable debt instrument, and the date from which payments are due to start;
2112. restrictions on convertible debt instruments or exchangeable debt instruments;
2213. details of the arrangements for transfer of the convertible debt instruments or exchangeable debt instruments;
2314. the names and addresses of the paying agents, and any registrar and transfer agents for the convertible debt instruments or exchangeable debt instruments;
2415. details of the early redemption of the convertible debt instrument or exchangeable debt instruments;
16. include details of any guarantees related to the debt instruments offered (if any);
17. a statement showing the tax and zakat treatment of the debt instruments offered and any tax and zakat obligations on holders of the debt instruments;
25. a statement referring to the “Important Notice” and the “Risk Factors” under section (2) and section (10) of this Annex, respectively before making an investment decision;
2618. any information required under Annex (12) of the Rules on the Offer of Securities and Continuing Obligations that has materially changed since approval of the most recent prospectus; and
2719. any additional information required by the Authority to be provided in the prospectus as it deems appropriate.
7. Summary of financial information
This section must contain a summary of key financial information contained in the prospectus, including the issuer’s operational performance, financial condition, cash flows, and key indicators.
8. Table of contents
9. Terms and definitions
The information required below must be provided in relation to the issuer for the last three annual financial statements that were published for the three financial years immediately preceding the application for registration and offer of securities that are the subject of this prospectus as well as the period covered in the interim financial statements in accordance with the requirements of Annex (11) as per paragraph (4) of Article 41 of the Rules on the Offer of Securities and Continuing Obligations:
2. A report by certified external auditor must be prepared in accordance with the requirements of Annex 1921 of the Rules on the Offer of Securities and Continuing Obligations in any of the following circumstances:
a. where the external auditor has reservations on the report of the audited financial statements of the issuer for any of the last three financial years immediately preceding the application for registration and offer of securities that are the subject of this prospectus;
c. where any material change has been made to the accounting policies of the issuer; or
d. where any material adjustment has been made or is required to be made to the published audited financial statements during the periods referred to in subparagraph (1) above.
43. The information required below must be provided in relation to theon financial, and operating performance, indicators and results of operations:.
g. particulars of any capital of the issuer or any subsidiary (if any) which is under option, including the consideration for which the option was or will be granted, and the price and duration of the option, and the name and address of the grantee, or provide an appropriate negative statement.
h. Particulars of any alterations in the capital of the issuer, or where material, any of the issuer’s substantial subsidiaries (if applicable), within the three years immediately preceding the date of the application for registration and offer of securities that are the subject of this prospectus. Such particulars must state the price and terms of any issues by the issuer or its subsidiaries (if any);
For the purpose of measuring the substantiality of a subsidiary, the issuer and its financial advisors must consider its impact on the investment decision in the securities and its price, including but not limited to, a subsidiary is considered substantial if it constitutes 5% or more of the total assets, liabilities, revenues or profits of the issuer, or any potential obligations on it.
a. a breakdown of any existing material fixed assets, including leased properties;
7. A statement by the directors of any material adverse change in the financial or trading position in the three financial years preceding the application for registration and offer of securities that are subject to this prospectus and during the period from the end of the period covered in the external auditors’ report up to and including the date of approval of the prospectus, or provide an appropriate negative statement.
85. Particulars of any commissions, discounts, brokerages or other non-cash compensation granted within the three years immediately preceding the application for registration and offer of securities that are subject to this prospectus in connection with the issue or offer of any securities by the issuer or any of the issuer’s subsidiaries (if applicable), together with the names of any directors, proposed directors, senior executives, persons offering or placing the securities or experts who received any such payment or benefit, or provide an appropriate negative statement.
16. Underwriter
19. Information concerning the convertible debt instruments or the exchangeable debt instruments and terms and conditions of the offer
1) a statement that an application has been made to the Authority for the registration and offer of the securities that are the subject of this prospectus and to the Exchange for the listing thereof;
76) details of any agreements with the representative of the holders of the convertible debt instruments or the exchangeable debt instruments, if any, the name and function and head office of such representative, the conditions under which the representative may be replaced together with an indication of where the public may inspect copies of the documents detailing the obligations of the representative;
8) a description of default cases, their conditions, and the procedures that will be taken in these cases;
It is suggested to develop Annex (16) of the Rules on the Offer of Securities and Continuing Obligations to facilitate the requirements to prepare a prospectus by an issuer who has securities listed on the Exchange, including in relation to allowing to include electronic links to information previously published by the issuer on the Exchange’s website, and stipulating the requirements on the disclosure of financial information for the last three annual financial statements that were published.
Annex 14 (A)
CONTENTS OF A PROSPECTUS FOR DEBT-BASED RECOURSE DEBT INSTRUMENTS OR ASSET-LINKED RECOURSE DEBT INSTRUMENTS
A prospectus submitted for registration and admission to listing of debt-based recourse securities debt instruments or asset-linked recourse debt instruments must contain the information under the following sections at a minimum. If the sponsor or special purpose entity has listed securities Additionally, such the prospectus for registration and admission to listing debt instruments or asset-linked recourse debt instruments of debt-based recourse debt instruments submitted by a Special Purposes Entity with listed securities are is exempted from satisfying the requirement of sections (58), (11), (12), (13), (14/4/g) paragraph (1) and paragraph (3) of section (14), and paragraph (1) of section (17/1).
1) A license to establish a special purposes entity;
2) The sponsor’s commercial registration.
3) prospectus date;
3) The capital of the sponsor;
4) a summary of the offer including debt instruments details and rights;
54) substantial shareholders of the sponsor;
6) target participants;
5) the name of the issue, its size, and the number of debt instruments to be issued. If the offering is a debt instrument issuance program, include the program's name, its size, and number of debt instruments to be issued;
6) offer price. If the prospectus is published before determining the offering price for debt instruments, a statement must be included stating that the information in the prospectus will be updated or completed before the beginning of the offering;
7) offer period and conditions; and
8) Shares and debt instruments that have been listed prior to the particular offer by the special purposes entity and the sponsor (if applicable);
9) a statement that the special purposes entity has submitted the application for admission to listing to the Authority and that all requirements have been met;
108) a statement referring to the “Important Notice” and the “Risk Factors” under section (2) and section (9), respectively before making an investment decision; and. If the sponsor or special purpose entity has listed securities, a statement indicating the importance of referring to any information added via an electronic link to information previously published on the Exchange’s website.
11) the following declarations:
“This prospectus includes information given in compliance with the Listing Rules of the Capital Market Authority of the Kingdom of Saudi Arabia (the “Authority”). The directors of the special purposes entity and the sponsor, whose names appear in this prospectus, collectively and individually accept full responsibility for the accuracy of the information contained in this prospectus and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. The Authority and the Saudi Stock Exchange Company do not take any responsibility for the contents of this prospectus, do not make any representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus”
and
“The securities offered hereby are issued by a special purposes entity licensed by the Capital Market Authority. The Capital Market Authority maintains a register of special purposes entities and regulates the special purposes entity. The Capital Market Authority does not approve, and is not responsible for, the terms of the securities the special purposes entity issues, the financing structure the special purposes entity employs, or the investment risks and rewards associated with the securities. The Capital Market Authority does not regulate or monitor the value of the assets of the special purposes entity or the ability of the special purposes entity to meet its obligations and makes no endorsement of or recommendation about the securities.”
2) the following declarations:
This section must include the table of contents of the prospectus.
If the sponsor or special purpose entity has listed securities, this section must include a list of references to this prospectus and related sections of this prospectus.
….
h) credit rating agency (if any);
i) representative of debt instrument holders; and
j) receiving entities.
This section must include a disclaimer to the target investors on the importance of reading the prospectus prior to making an investment decision. This section must include the following information (where applicable):
1) the special purposes entity’s name, description and incorporation information;
2) the special purposes entity’s activities;
3) substantial shareholders of the sponsor showing their ownership percentages and number of shares.
4) the capital of sponsor;
52) the nominal value for offered debt instrument;
63) the use of proceeds of the offer;
74) the sponsor ensuring the due payments are paid as per the debt instruments;
8) types of targeted investors of the issuer;
9) subscription method for each type of targeted investors of the issuer;
10) the minimum number of debt instruments to be subscribed for by each type of targeted investors;
11) the value of minimum number of debt instruments to be subscribed for by each type of targeted investors;
12) the maximum number of debt instruments to be subscribed for by each type of targeted investors;
13) the value of the maximum number of debt instruments to be subscribed for by each type of targeted investors;
5) subscription method
146) allocation method and description of the process where an excess of subscription monies is returned to all types of targeted investors;
157) the offer period;
168) full information of rights granted to holders of the debt instruments;
179) debt instruments particulars;
1810) details of repayment related dates including final maturity date and early repayment dates, specifying whether exercisable at the special purposes entity’s or the holder of debt instruments’ request and the date from which payments are due to start;
1911) restrictions on debt instruments;
2012) details of the arrangements for transfer of the debt instruments;
2113) the names and addresses of the paying agents, and any registrar and transfer agents of the issuer for the debt instruments;
2214) the names and addresses of the special purposes entity’s board members;
2315) details of the early redemption of the debt instruments; and
24) a statement referring to the “Important Notice” and the “Risk Factors” under section (2) and section (9), respectively before making an investment decision.
16) include details of any guarantees related to the debt instruments offered (if any);
17) a statement showing the tax and zakat treatment of the debt instruments offered and any tax and zakat obligations on holders of the debt instruments; and
7. Table of contents
8. Terms and definitions
14. Sponsor financial information
The information required below must be provided in relation to the sponsor and its affiliates (if any) for the three financial years immediately preceding the application for registration and admission to listing subject to this prospectus (or the last three published annual financial statements if the sponsor or special purpose entity has securities listed) and the period referred to in preliminary financial statements in accordance with the requirements of Annex (11) according to paragraph (4) of Article (41) of the Rules for the Offer of Securities and Continuing Obligations:
1) comparative tables of financial information with commentary and analysis by management. The comparative tables must:
(a) be prepared on a consolidated basis;
(b) be extracted without material adjustment from audited financial statements; and
(c) include financial information presented in a form consistent with that which is adopted in the sponsor’s annual financial statements.
2) a report by certified external auditor must be prepared in accordance with the requirements of Annex (1921) of the Listing Rules in any of the following circumstances:
(a) where the external auditors’ report on the consolidated financial statements of the sponsor for any of the last three financial years immediately preceding the application for registration and admission to listing has been qualified (or for any of the three financial years subject to this prospectus if the sponsor or special purpose entity has securities listed);
(b) where the sponsor has undergone restructuring or an alteration in capital using external financing in the three financial years immediately preceding the date of application for registration and admission to listing (or for any of the three financial years subject to this prospectus if the sponsor or special purpose entity has securities listed);
(c) where any material change has been made to the accounting policies of the sponsor; or
(d) where any material adjustment has been made or is required to be made to the published audited financial statements during the periods referred to in sub-paragraph (a) above.
3) details of holdings, including holdings in contractually based securities or other assets whose value may be subject to fluctuations or be difficult to ascertain with certainty, significantly affecting the assessment of the sponsor’s financial position.
43) the information required below must be provided in relation to the on financial, and operating performance, indicators and results of operations.:
(a) performance indicators;
(b) the financial, operating performance, and results of operations of the main lines of business;
(c) any seasonal or business cycles which affect the business or the financial condition;
(d) an explanation of any material changes from year to year in the financial information;
(e) information regarding any governmental, economic, fiscal, monetary or political policies or other factors that have materially affected, or could materially affect, directly or indirectly, the operations;
(f) the funding structure;
(g) particulars of any alterations in the capital of the sponsor, or where material, any of the sponsor’s subsidiaries (if applicable) within the three years immediately preceding the date of application for registration and admission to listing. Such particulars must state the price and terms of any issues by the sponsor; and
(h) details of any capital of the sponsor which is under option, including the consideration for which the option was granted, and the price and duration of the option, and the name and address of the grantee, or provide an appropriate negative statement.
(a) a breakdown of any existing material fixed assets, including leased properties;
(b) an explanation of the issuer’s depreciation policy and any changes contemplated in that policy; and
(c) any planned material fixed assets, including leased properties.
7) A statement by the directors of any material adverse change in the financial or trading position in the three financial years preceding the application for registration and admission to listing and during the period from the end of the period covered in the external auditors’ report up to and including the date of approval of the prospectus or provide an appropriate negative statement.
85) Particulars of any commissions, discounts, brokerages or other non-cash compensation granted within the three years immediately preceding the application for registration and admission to listing in connection with the issue or offer of any securities by the sponsor or any of the sponsor’s subsidiaries (if applicable), together with the names of any directors, proposed directors, senior executives, persons offering or placing the securities or experts who received any such payment or benefit or provide an appropriate negative statement.
15. Financing Structure and Use of proceeds
1) Information regarding the financial structure including details of:
(a) the use of the proceeds of issuance by the special purposes entity;
(b) the rights to be acquired by the special purposes entity under the financing structure (including their ranking on the event of insolvency of the sponsor or any other person, where applicable);
(c) the nature of the claim of the special purposes entity on the sponsor;
(d) any direct rights of recourse of the holders against the sponsor;
(e) details of any security interest to be granted in favour of the special purposes entity, including a description of the assets secured and any rights to substitute such assets, or a description of any variation in such security;
2) a description of any obligation on the special purposes entity in relation to the transaction, including the order of priority of any payments.
3) Information of any investment powers associated with the special purposes entity’s assets.
4) a description of how the cash flows will be used to meet the special purposes entity’s obligations including details of:. If the offering is for asset-linked recourse debt instruments, this must include the following:
a. how the cash flow from the assets will meet the issuer's obligations to holders of the securities;
b. information on any credit enhancements, an indication of where material potential liquidity shortfalls may occur and the availability of any liquidity supports and indication of provisions designed to cover interest/principal shortfall risks;
c. without prejudice to item (b) above, details of any subordinated debt finance;
d. an indication of any investment parameters for the investment of temporary liquidity surpluses and description of the parties responsible for such investment;
e. how payments are collected in respect of the assets;
f. the order of priority of payments made by the issuer to the holders of the class of securities in question; and
g. details of any other arrangements upon which payments of interest and principal to investors are dependent.
5) particulars of how payments will be made by the sponsor.
6) a statement as to how the proceeds of issuance are intended to be used by the sponsor.
7) an estimate of the offer expenses.
8) If the offering is for asset-linked debt instruments, information regarding the underlying assets of the asset-linked structure including, where relevant, details of:
(a) in respect of the assets to which the debt instruments are linked:
(b) In respect of an actively managed pool of assets linked to the issue:
(c) Valuation of the assets to which the debt instruments are to be linked, where known:
1. In respect of marketable securities traded on an exchange or other market approved by the Authority, a valuation at a mid-market basis based on a market price verified by the financial advisor.
2. In respect of assets not falling within paragraph (1) above, a valuation by a third party valuer of the assets and any cash flow/income streams. In this respect, the third party valuer must:
(a) not be the special purposes entity, the sponsor, the financial advisor or an affiliate of any of them; and
(b) be appropriately qualified and have relevant expertise in valuing the relevant asset class;
3. particulars of any investment powers associated with the special purposes entity’s assets.
19. Underwriter
2) the principal terms of the underwriting agreement, including the compensation arrangement between the special purposes entity and the underwriter.
22. Information concerning the debt instruments and terms and conditions of the offer
1) a statement that application has been made to the Authority for the registration and admission to listing;
9) a description of default cases, their conditions, and the procedures that will be taken in these cases.
13) details of any agreements with the representative of the holders of the debt instruments, if any, the name and function and head office of such representative, the conditions under which the representative may be replaced together with an indication of where the public may inspect copies of the documents detailing the obligations of the representative;
aNNEX 14 (B)
CONTENTS OF A PROSPECTUS FOR ASSET-LINKED RECOURSE DEBT INSTRUMENTS
It is suggested to merge Annex (14)(A) and Annex (14(b) of the Rules on the Offer of Securities and Continuing Obligations, and develop Annex (14)(A) to facilitate the requirements to prepare a prospectus by a special purposes entity, including in relation to allowing to include electronic links to information previously published by the issuer on the Exchange’s website if the issuer (or sponsor) has securities listed on the Exchange, and stipulating the requirements on the disclosure of financial information for the last three annual financial statements that were published if the sponsor or the special purpose entity has securities listed on the Exchange.
A registration document submitted for the registration of debt instruments offered by way of private placement for the purpose of direct listing on the Exchange by an issuer without securities listed on the Exchange must contain the information under the following sections at a minimum:
1) the issuer's name, incorporation date and commercial registration number. If the issuer is a special purposes entity, a license to establish a special purposes entity and the sponsor’s commercial registration;
2) the registration document date;
4) the proposed guiding price for the listing of debt instruments. If the registration document is published before determining the price, a statement must be included stating that the information in the registration document will be updated or completed before the beginning of listing of the debt instruments;
5) name of the financial advisor and arranging manager;
2) capital and number of shares, and the sponsor’s capital if the issuer is a special purposes entity;
3) a summary that includes the details and rights of the debt instruments;
4) shares and debt instruments that have been previously listed (if applicable). If the issuer is a special purposes entity, shares and debt instruments that have been previously listed by the special purposes entity and the sponsor (if any);
5) a statement that the issuer has submitted the application for registration of securities subject to this document to the Authority, has submitted the application for listing to the Exchange, and has submitted all the required documents to the relevant authorities;
6) a statement on the importance of referring to the “Important Notice” and the “Risk Factors” under section (2) and section (98) of this Annex, respectively; and
7) the following declaration:
“This registration document includes information provided as part of the application for registration of securities in compliance with the Rules on the Offer of Securities and Continuing Obligations of the Capital Market Authority of the Kingdom of Saudi Arabia (the "Authority") and the application for listing of securities in compliance with the Listing Rules of the Saudi Stock Exchange Company. The issuer’s directors (and the sponsor’s directors if the issuer is a special purposes entity), whose names appear in this document, collectively and individually accept full responsibility for the accuracy of the information contained in this document and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. The Authority and the Saudi Stock Exchange Company do not take any responsibility for the contents of this document, do not make any representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this document. In the event that any of the contents of this document cannot be understood, an authorized financial advisor shall be consulted."
1) a notice which shows the purpose and the nature of information mentioned in the document.
This section must include the registration document table of contents.
4. Terms and definitions
This section must include the terms and definitions used in the registration document.
2) The contact information, including addresses, telephone numbers, and website and e-mail addresses, for each of the parties listed below, and any other expert to whom a statement or report included in the registration document has been attributed:
f. credit rating agency (if any); and.
g. representative of debt instrument holders.
3) A statement that the non-objection of the participating parties to use their names, logos, and statements in the registration document was obtained.
46. Summary
This section must include a disclaimer to the target investors on the importance of reading the registration document prior to making an investment decision. This section must include the following information (where applicable):
1) the issuer’s name, description and incorporation information (and the name of the sponsor, its description, and incorporation information if the issuer is a special purposes entity);
2) the issuer’s activities (and the sponsor if the issuer is a special purposes entity);
3) substantial shareholders showing their ownership percentages and number of shares. If the issuer is a special purposes entity, substantial shareholders of the sponsor showing their ownership percentages and number of shares;
42) details of the debt instruments to be listed, their rights, and any restrictions imposed upon them;
53) the nominal value for debt instrument;
64) if the issuer is a special purposes entity, the sponsor’s commitment to ensure that the due payments are paid as per the debt instruments (as applicable);
75) details of repayment related dates including final maturity date and early repayment dates, specifying whether exercisable at the request of the issuer or sponsor (as applicable) or at the request the holders of the debt instruments, and the date from which payments are due to start;
86) details of the arrangements for transfer of the debt instruments;
97) the names and addresses of the paying agents, and any registrar and transfer agents for the debt instruments;
108) details of the early redemption of the debt instruments (if any);
119) any additional information required by the Authority to be provided in the registration document as it deems appropriate; and
12) a statement on the importance of referring to the “Important Notice” and the “Risk Factors” under section (2) and section (9) of this Annex.
10) include details of any guarantees related to the debt instruments offered (if any); and
11) a statement showing the tax and zakat treatment of the debt instruments offered and any tax and zakat obligations on holders of the debt instruments.
This section must include a summary of key financial information contained in the registration document, including issuer’s operational performance, financial condition, cash flows and key indicators (and the sponsor’s operational performance, financial condition, cash flows and key indicators if the issuer is a special purposes entity)
109. Information about the market and sector (as applicable)
If the issuer is a special purposes entity, this section must include information on the market and sector in which the sponsor operates.
1110. The issuer and sponsor (where applicable) background, business nature
8) information concerning the policy of the issuer (or the sponsor if the issuer is a special purposes entity) and its subsidiaries (if applicable) on the research and development of new products and production processes over the past three financial years, where significant;
9) particulars of any interruption in the business of the issuer (or the sponsor if the issuer is a special purposes entity) or its subsidiaries (if applicable) which may have or has had a significant effect on the financial position in the last 12 months;
10) the number of people employed by the issuer and the issuer’s subsidiaries (if applicable) and any material changes to that number over the last two financial years, with a breakdown of persons employed by main categories of activity and by Saudization ratio;
1211. Issuer’s and Sponsor’s organizational structure (as applicable)
This section must include the issuer’s organizational structure (and that of the sponsor if the issuer is a special purposes entity), including the following information:
7) the aggregate remuneration and benefits in kind granted by the issuer (and the sponsor if the issuer is a special purposes entity) or any subsidiary, during the three financial years prior to submitting the registration application for the securities that are the subject of this document, to the directors and five senior executives who received the highest payments, including the chief executive officer and the chief financial officer of the issuer (and of the sponsor if the issuer is a special purposes entity) if they were not within the top five;
11) information about the issuer’s (and the sponsor if the issuer is a special purposes entity) compliance with the corporate governance regulation; and
12) any employee share schemes in place prior to the application for registration of securities that are the subject of this registration document along with details on the aggregate amount of shares owned by the employees in the issuer (or the sponsor if the issuer is a special purposes entity), and any other arrangements involving the employees in the capital of the issuer (or the sponsor if the issuer is a special purposes entity).
1312. Financial information
The information required below must be provided in relation to the issuer (or the sponsor if the issuer is a special purposes entity) for the three financial years immediately preceding the application for registration of securities that are the subject of this document:
1) comparative tables of financial information with commentary and analysis by the issuer’s management (or the sponsor if the issuer is a special purposes entity) of material financial information. The comparative tables must:
2) a report by certified external auditor must be prepared in accordance with the requirements of Annex 1921 of the Rules on the Offer of Securities and Continuing Obligations in any of the following circumstances:
a. where the external auditors’ report on the financial statements of the issuer (or the sponsor if the issuer is a special purposes entity) for any of the last three financial years immediately preceding the application for registration of securities that are the subject of this document;
b. where the issuer (or the sponsor if the issuer is a special purposes entity) has undergone restructuring in the three financial years immediately preceding the date of application for registration of securities that are the subject of this document;
d. where any material adjustment has been made or is required to be made to the published audited financial statements during the periods referred to the subparagraph (a) above.
g. particulars of any alterations in the capital of the issuer (or the sponsor if the issuer is a special purposes entity), or where material, any of the issuer’s subsidiaries (if applicable) within the three years immediately preceding the date of the application for registration of securities that are the subject of this document. Such particulars must state the price and terms of any issues by the issuer (or the sponsor if the issuer is a special purposes entity), or its subsidiaries (if applicable); and
h. details of any amendments in the capital of the issuer (or the sponsor if the issuer is a special purposes entity) or its subsidiaries (if applicable) which is under option, including the consideration for which the option was granted, and the price and duration of the option, and the name and address of the grantee, or provide an appropriate negative statement.
7) a statement by the directors of any material adverse change in the financial or trading position in the three financial years preceding the application for registration of securities that are the subject of this document and the period covered in the external auditors’ report up to and including the date of approval of the registration document or provide an appropriate negative statement.
85) particulars of any commissions, discounts, brokerages or other non-cash compensation granted within the three years immediately preceding the application for registration of securities that are the subject of this document in connection with the issue or offer of any securities by the issuer (or the sponsor if the issuer is a special purposes entity) or any of its subsidiaries (if applicable), together with the names of any directors, proposed directors, senior executives, persons offering or placing the securities or experts who received any such payment or benefit or provide an appropriate negative statement.
1918. Information concerning the debt instruments
1) a statement that an application has been made to the Authority for the registration of the debt instruments and to the Exchange for the listing thereof;
11) a description of default cases, their conditions, and the procedures that will be taken in these cases;
12) details of any agreements with the representative of the holders of the debt instruments, if any, the name and function and head office of such representative, the conditions under which the representative may be replaced together with an indication of where the public may inspect copies of the documents detailing the obligations of the representative;
It is suggested to develop Annex (7) of the Rules on the Offer of Securities and Continuing Obligations to facilitate the requirements to prepare a prospectus by an issuer who does not have securities listed on the Exchange, in alignment with the suggested amendments on Annex (14) as detailed above.
A registration document submitted for the registration of debt instruments offered by way of private placement for the purpose of direct listing on the Exchange by an issuer that has securities currently listed on the Exchange must contain the information under the following sections at a minimum:
1) the issuer's name, incorporation date and commercial registration number. If the issuer is a special purposes entity, a license to establish the special purposes entity and the sponsor’s commercial registration;
5) name of the financial advisor and arranging manager; and
6) a statement on the importance of referring to the “Important Notice” and the “Risk Factors” under section (2) and section (58) of this Annex, respectively;, and the importance of referring to any information referred to in the prospectus via an electronic link to the Exchange's website.
This section must include a list of information incorporated by references to this registration document and related sections of this prospectus.
This section must contain the following (where applicable):
e. credit rating agency (if any); and
f. representative of debt instrument holders.
47. Summary
This section must include a disclaimer to the target investors on the importance of reading the registration document prior to making an investment decision, and include the following information (where applicable):
6) a statement on the importance of referring to the “Important Notice” and the “Risk Factors” under section (2) and section (5) of this Annex, respectively.
6) include details of any guarantees related to the debt instruments offered (if any); and
7) a statement showing the tax and zakat treatment of the debt instruments offered and any tax and zakat obligations on holders of the debt instruments.
910. Information concerning the debt instruments
11) a description of default cases, their conditions, and the procedures that will be taken in these cases.
11) a statement that an application has been made to the Authority for the registration of the debt instruments and to the Exchange for the listing thereof.
It is suggested to develop Annex (8) of the Rules on the Offer of Securities and Continuing Obligations to facilitate the requirements to prepare a prospectus by an issuer who has securities listed on the Exchange, in alignment with the suggested amendments on Annex (15) as detailed above.
Last update: 03 July 2024
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