Why companies fail the IPO readiness check: listing criteria and critical items

1. The listing criteria

You do not meet all the listing criteria for this market yet.

• Joint stock company

  Main Market: Joint stock company. Nomu: Joint stock company.

  Source: Listing Rules Art. 7(a); Listing Rules Art. 43(a)

• Expected market value

  Main Market: SAR 300 million. Nomu: SAR 50 million.

  Source: Listing Rules Art. 7(f); Listing Rules Art. 43(g)

• Shares held by the public

  Main Market: At least 30%. Nomu: 20%, or at least 10% worth SAR 50 million or more. "The public" excludes holders of 5% or more, directors, senior executives, their relatives and anyone acting with them. The Exchange can accept less with CMA approval.

  Source: Listing Rules Art. 7(b)(2); Listing Rules Art. 43(b)(2)

• Public shareholders

  Main Market: 200. Nomu: 50.

  Source: Listing Rules Art. 7(b)(1); Listing Rules Art. 43(b)(1)

• Financial years in your main activity

  Main Market: At least 3 years. Nomu: At least 1 year.

  Source: Offer of Securities and Continuing Obligations Rules Art. 23(3); Offer of Securities and Continuing Obligations Rules Art. 78(a)(2)

• Years of audited financial statements

  Main Market: At least 3 years. Nomu: At least 1 year.

  Source: Offer of Securities and Continuing Obligations Rules Art. 23(4)–(5); Offer of Securities and Continuing Obligations Rules Art. 78(a)(3)–(4)

2. Critical items on the Main Market (12)

Shown for a company in a general sector. Banks, insurers and other regulated sectors face further sector rules on top.

• Board and governance: Board size

  Every listed company needs at least three directors. There is no longer a maximum: the old range of 3 to 11 was dropped in 2023.

  Source: Corporate Governance Regulations Art. 17(a); Companies Law

• Board and governance: Non-executive majority

  Mandatory on the Main Market. Recommended on Nomu, and required if you later move to the Main Market.

  Source: Corporate Governance Regulations Art. 16(2); Corporate Governance Regulations Art. 2(c)

• Board and governance: Independent directors

  The Main Market needs two independents or one third of the board, whichever is more. A director is not independent if, for example, they own 5% or more, are a close relative of a director or executive, worked for the company in the last two years, or have served more than nine years.

  Source: Corporate Governance Regulations Art. 16(3); Corporate Governance Regulations Art. 19

• Board and governance: Separate chair and CEO

  On the Main Market the chair may not hold any executive post, even if your articles allow it.

  Source: Corporate Governance Regulations Art. 23(b)

• Board and governance: Audit committee

  Mandatory on both markets. Since 2023 the board forms the committee and the general assembly approves its charter. On the Main Market it also needs at least one independent director, and the board chair may not sit on it.

  Source: Corporate Governance Regulations Art. 51; Corporate Governance Regulations Art. 48(c); Corporate Governance Regulations Art. 2(c)

• Board and governance: Governance documents approved

  A Main Market application must attach the conflict-of-interest policy, board membership standards and the audit and nomination-remuneration committee charters. These need general assembly approval, so companies approve them before filing.

  Source: Offer of Securities and Continuing Obligations Rules Art. 26(a)(24); Corporate Governance Regulations Art. 21(3); Corporate Governance Regulations Art. 51(e); Corporate Governance Regulations Art. 58

• Board and governance: Conflict-of-interest policy

  Required on the Main Market. On both markets, any contract in which a director has an interest needs general assembly approval with an auditor's report, and once listed, deals worth 1% of revenue or more must be disclosed immediately.

  Source: Corporate Governance Regulations Art. 41; Companies Law Implementing Regulation for listed companies Art. 63–67; Offer of Securities and Continuing Obligations Rules Art. 65(a)(11)

• Financial reporting and audit: Accounting standards

  The audited statements in your prospectus must follow the SOCPA-endorsed standards on both markets.

  Source: Offer of Securities and Continuing Obligations Rules Art. 23(4); Offer of Securities and Continuing Obligations Rules Art. 78(a)(3)

• Financial reporting and audit: Reviewed interim statements

  On the date the CMA approves your offering, your latest reviewed statements must cover a period that ended no more than six months earlier. For example, an approval in October needs at least June figures.

  Source: Offer of Securities and Continuing Obligations Rules Art. 23(5); Offer of Securities and Continuing Obligations Rules Art. 78(a)(4)

• Financial reporting and audit: 12 months of working capital

  The Main Market requires enough working capital for 12 months after the prospectus, with a directors' declaration. There is no profit or positive-equity test.

  Source: Offer of Securities and Continuing Obligations Rules Art. 23(8)

• Financial reporting and audit: Internal controls

  Your financial adviser must confirm to the CMA that the directors have adequate procedures, controls and systems. Weak controls stop that letter.

  Source: Corporate Governance Regulations Art. 70; Offer of Securities and Continuing Obligations Rules Annex 22; Offer of Securities and Continuing Obligations Rules Annex 27

• Legal and regulatory: Activity licences

  The prospectus must disclose your licences. An expired or missing licence is a material issue that can stop the offering.

  Source: Offer of Securities and Continuing Obligations Rules Annex 12; Legal due diligence practice

3. Critical items on Nomu (5)

Nomu applies fewer mandatory governance rules, so fewer items are critical. Most governance items are guiding on Nomu.

• Board and governance: Board size

  Every listed company needs at least three directors. There is no longer a maximum: the old range of 3 to 11 was dropped in 2023.

  Source: Corporate Governance Regulations Art. 17(a); Companies Law

• Board and governance: Audit committee

  Mandatory on both markets. Since 2023 the board forms the committee and the general assembly approves its charter. On the Main Market it also needs at least one independent director, and the board chair may not sit on it.

  Source: Corporate Governance Regulations Art. 51; Corporate Governance Regulations Art. 48(c); Corporate Governance Regulations Art. 2(c)

• Financial reporting and audit: Accounting standards

  The audited statements in your prospectus must follow the SOCPA-endorsed standards on both markets.

  Source: Offer of Securities and Continuing Obligations Rules Art. 23(4); Offer of Securities and Continuing Obligations Rules Art. 78(a)(3)

• Financial reporting and audit: Reviewed interim statements

  On the date the CMA approves your offering, your latest reviewed statements must cover a period that ended no more than six months earlier. For example, an approval in October needs at least June figures.

  Source: Offer of Securities and Continuing Obligations Rules Art. 23(5); Offer of Securities and Continuing Obligations Rules Art. 78(a)(4)

• Legal and regulatory: Activity licences

  The prospectus must disclose your licences. An expired or missing licence is a material issue that can stop the offering.

  Source: Offer of Securities and Continuing Obligations Rules Annex 12; Legal due diligence practice

4. How open items change the verdict

• Ready to start the listing process

  Listing criteria met, a high overall score and no open critical item.

• Almost ready

  Listing criteria met and up to three open critical items.

• Needs work before you file

  The foundations are partly there. Work through the plan below, starting with the critical items.

• Not ready yet

  Several foundations are missing. Use the plan below as your roadmap and start with the critical items; closing gaps like these usually takes many months.

Common questions

What makes a company fail the IPO readiness check?

Either a listing criterion that is not met (for example market value, public float, number of public shareholders or years of audited accounts), or open critical items. You do not meet all the listing criteria for this market yet.

What is a critical item?

A requirement that is mandatory under Saudi law or the CMA and Saudi Exchange rules for your market. An open critical item stops the verdict from reaching "Ready".

Are the rules lighter on Nomu?

Yes, in governance: only a few articles of the Corporate Governance Regulations are mandatory on Nomu, which is why Nomu has 5 critical items against 12 on the Main Market.

Does a poor result mean the CMA would reject my company?

No. The check is a self-assessment against published rules, not a decision by the CMA or the Saudi Exchange. A self-assessment guide, not legal or investment advice.