Saudi Arabia IPO and Listing Guide: Tadawul and Nomu Requirements, Process, Costs, and Advisors

Introduction: The Saudi Capital Markets Opportunity

The Saudi stock exchange, Tadawul, has emerged as the dominant capital market in the Middle East and one of the largest in the emerging markets universe. With a total market capitalization exceeding $2.8 trillion, driven primarily by the listing of Saudi Aramco (the world’s most valuable public company), Tadawul offers companies access to deep pools of domestic and international capital, a sophisticated regulatory framework, and a growing base of institutional investors.

For companies considering a public listing, Saudi Arabia offers two distinct markets: the Tadawul Main Market, designed for large, established companies, and the Nomu Parallel Market, created for smaller and growth-stage companies that may not yet meet the Main Market’s stringent requirements. Together, these markets provide listing options for companies across the maturity spectrum, from high-growth startups to diversified conglomerates.

This guide covers the complete listing process for both markets — from eligibility requirements and regulatory approvals to post-listing obligations and practical advice on selecting the right advisory team.

Understanding the Saudi Capital Markets Framework

Key Regulatory Bodies

Capital Market Authority (CMA): The CMA is the primary regulator of Saudi Arabia’s securities market. It is responsible for issuing regulations, approving prospectuses, licensing market intermediaries, monitoring trading activity, and enforcing securities law. The CMA operates independently and has broad authority to investigate and sanction market misconduct.

Saudi Exchange (Tadawul): Tadawul operates the exchange platform, manages listings and delistings, oversees market makers, and ensures orderly trading. Tadawul is itself a listed company (it IPO’d in 2021), creating a unique dynamic where the exchange operator is also subject to the listing rules it administers.

Securities Depository Center Company (Edaa): Edaa provides securities depository and settlement services, managing the ownership records of all listed securities and processing post-trade settlement.

Key Regulations

The following regulations govern the listing process:

• Rules on the Offer of Securities and Continuing Obligations (OSCOs): The primary regulation governing IPOs and public offerings on the Main Market
• Rules on the Parallel Market (Nomu): The specific regulation governing listings on the Parallel Market
• Corporate Governance Regulations: Mandatory governance requirements for listed companies
• Market Conduct Regulations: Rules on insider trading, market manipulation, and disclosure obligations
• Listing Rules: Tadawul’s specific rules on listing eligibility, application procedures, and post-listing requirements

Tadawul Main Market: Listing Requirements

Financial Requirements

To list on the Tadawul Main Market, a company must meet the following minimum financial criteria:

Operating history: At least three years of audited financial statements as a going concern. The financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) and audited by a CMA-approved auditor.

Profitability: The company must have achieved profitability in the most recent fiscal year, with a track record demonstrating sustainable earnings capacity. The CMA evaluates not just the absolute level of profits but also the quality and sustainability of earnings.

Minimum market capitalization: The expected market capitalization at the time of listing must be at least SAR 300 million (approximately $80 million).

Minimum free float: At least 30 percent of the company’s shares must be offered to the public and freely tradable. The CMA may accept a lower free float (minimum 20 percent) in certain circumstances, particularly for very large companies where a 30 percent float would result in an offering that exceeds market absorption capacity.

Minimum number of shareholders: After the IPO, the company must have at least 200 shareholders holding freely tradable shares (excluding shareholders with ownership stakes of 5 percent or more).

Governance Requirements

Listed companies must comply with the CMA’s Corporate Governance Regulations, which include:

Board of directors: A minimum of three board members, with at least one-third (and no fewer than two) being independent directors. Independent directors must meet specific criteria regarding their relationship with the company, its management, and its major shareholders.

Board committees: Listed companies must establish at least three board committees:

• Audit committee: At least three members, all non-executive, with at least one having financial or accounting expertise
• Nomination and remuneration committee: At least three members, majority non-executive
• Risk committee: May be separate or combined with the audit committee

Internal controls and risk management: Companies must establish internal control systems, risk management frameworks, and internal audit functions.

Related party transactions: Transactions with related parties must be disclosed and approved by independent directors. Material related party transactions require shareholder approval.

Disclosure obligations: Listed companies must make immediate disclosure of material events (price-sensitive information), file quarterly and annual financial reports, and maintain a comprehensive investor relations program.

Legal and Structural Requirements

Legal structure: The company must be organized as a Saudi joint stock company (JSC). Companies organized as LLCs or other structures must convert to a JSC before applying for listing.

Clean legal record: The company must not be subject to any material legal proceedings, regulatory actions, or financial obligations that could adversely affect its ability to operate or that could impact the value of its shares.

Related party arrangements: All related party transactions and arrangements must be conducted on arm’s length terms and properly documented. Any non-arm’s length arrangements must be disclosed and, if material, restructured before listing.

Nomu Parallel Market: Listing Requirements

Overview

The Nomu Parallel Market was launched in 2017 as an alternative listing venue for companies that do not meet the Main Market’s requirements or that prefer a less onerous listing process. Nomu is particularly suited to:

• Growth-stage companies with limited operating history
• Small and medium-sized enterprises (SMEs) seeking capital for expansion
• Family-owned businesses transitioning to public ownership
• Companies planning to eventually graduate to the Main Market

Financial Requirements

Operating history: At least one year of audited financial statements (compared to three years for the Main Market). The financial statements must comply with IFRS and be audited by a CMA-approved auditor.

Profitability: There is no profitability requirement for Nomu listings. Companies with pre-revenue or early-stage financial profiles can list, provided they have a credible business plan and sufficient working capital.

Minimum market capitalization: The expected market capitalization at listing must be at least SAR 10 million (approximately $2.7 million), significantly lower than the Main Market threshold.

Minimum free float: At least 20 percent of the company’s shares must be offered to the public.

Minimum number of shareholders: After the IPO, the company must have at least 50 shareholders.

Governance Requirements

Nomu-listed companies are subject to simplified governance requirements compared to the Main Market:

• Board of directors with at least three members (at least one independent)
• Audit committee with at least three non-executive members
• Simplified disclosure requirements (semi-annual rather than quarterly financial reporting)
• Reduced related party transaction approval thresholds

Trading Restrictions

Trading on Nomu is currently restricted to qualified investors (individuals with a portfolio of at least SAR 200,000 or who hold a CMA-recognized professional certification). This restriction means Nomu stocks are less liquid than Main Market stocks but are traded by a more sophisticated investor base.

The IPO Process: Step by Step

Phase 1: Preparation (6–12 Months Before IPO)

Feasibility assessment: Evaluate whether an IPO is the right capital-raising strategy for your company. Consider alternatives (private placement, debt financing, strategic sale) and assess whether the company is ready for the scrutiny and obligations of public ownership.

Advisory team selection: Assemble the advisory team that will guide you through the IPO process:

• Financial advisor (lead manager): A CMA-licensed investment bank that will lead the offering, conduct valuation analysis, structure the offering, and manage the book-building process
• Legal counsel: A law firm with capital markets expertise to prepare the prospectus, negotiate underwriting agreements, and ensure regulatory compliance
• Auditor: A CMA-approved audit firm to audit the financial statements and prepare the comfort letters required for the offering
• Investor relations: A firm or internal team to manage communications with potential investors and the media

Corporate restructuring: Address any structural issues before beginning the formal listing process:

• Convert to a JSC if not already organized as one
• Restructure related party arrangements to ensure arm’s length terms
• Establish board committees and appoint independent directors
• Implement internal controls, risk management, and corporate governance frameworks
• Resolve any material legal or regulatory issues

Financial preparation: Prepare or restate financial statements in accordance with IFRS for the required historical period (three years for Main Market, one year for Nomu). Engage the auditor early to identify and resolve any accounting issues.

Phase 2: Documentation and Regulatory Review (3–6 Months)

Prospectus preparation: The prospectus is the central document of the IPO process. It must contain comprehensive information about the company, including:

• Business description and strategy
• Industry and market analysis
• Management and governance structure
• Financial statements and analysis
• Risk factors
• Offering terms (share price range, offering size, allocation methodology)
• Use of proceeds
• Dividend policy
• Related party transactions
• Legal and regulatory matters

The prospectus must comply with CMA’s disclosure requirements, which are broadly aligned with international standards.

CMA review: Submit the prospectus to the CMA for review and approval. The CMA typically takes 30–60 days to review the initial submission and may request additional information, clarifications, or revisions. Multiple rounds of comments and responses are common.

Tadawul listing application: Submit the listing application to Tadawul concurrently with the CMA prospectus review. Tadawul reviews the application for compliance with listing rules and may request additional documentation.

Phase 3: Marketing and Pricing (2–4 Weeks)

Investor education: Conduct pre-marketing activities to gauge investor interest and refine the offering terms. This may include analyst presentations, one-on-one meetings with major institutional investors, and media briefings.

Book-building: The formal book-building process opens once the CMA approves the prospectus. Institutional investors submit orders indicating the number of shares they wish to purchase and the price they are willing to pay. The book-building period typically lasts 5–10 business days.

Pricing: Based on the book-building results, the financial advisor recommends a final offering price. The price is set to balance the company’s capital-raising objectives with investor demand and market conditions.

Allocation: Shares are allocated to institutional and retail investors according to the methodology described in the prospectus. Saudi IPOs typically reserve a portion of the offering for retail investors (usually 10–30 percent of the total offering).

Phase 4: Listing and Trading (1–2 Weeks)

Settlement: Investors pay for their allocated shares through the settlement process managed by Edaa.

First day of trading: The company’s shares begin trading on Tadawul (Main Market) or Nomu (Parallel Market). The first day of trading is typically marked by significant media attention and potential price volatility.

Stabilization: The financial advisor may conduct stabilization activities (buying shares in the secondary market) during the first 30 days of trading to support the share price and reduce volatility. Stabilization must be conducted in accordance with CMA rules.

IPO Costs

Advisory Fees

The largest cost component of an IPO is advisory fees:

Regulatory Fees

Other Costs

Additional costs include printing and distribution of the prospectus, roadshow and marketing expenses, insurance (directors’ and officers’ liability), and the establishment of investor relations infrastructure. Total IPO costs for a Main Market listing typically range from SAR 10 million to SAR 50 million, depending on the offering size and complexity.

For Nomu listings, costs are significantly lower — typically SAR 2 million to SAR 8 million — reflecting the simplified requirements and smaller offering sizes.

Post-Listing Obligations

Continuous Disclosure

Listed companies must maintain continuous disclosure of material events, including:

• Financial results (quarterly for Main Market, semi-annual for Nomu)
• Material contracts, acquisitions, or disposals
• Changes in board or executive management
• Legal proceedings or regulatory actions
• Changes in major shareholders (5 percent threshold)
• Dividend declarations
• Any other event that could reasonably be expected to affect the share price

Corporate Governance Compliance

Listed companies must maintain ongoing compliance with the CMA’s Corporate Governance Regulations, including board composition requirements, committee structure, related party transaction approval processes, and annual governance reporting.

Shareholder Communication

Listed companies must maintain an investor relations function, hold annual general meetings, provide shareholders with access to information, and respond to inquiries from the CMA and Tadawul.

Lock-Up Restrictions

Major shareholders of newly listed companies are typically subject to lock-up restrictions that prevent them from selling their shares for a specified period (usually 6–12 months for the Main Market and 12 months for Nomu). These restrictions are designed to demonstrate the commitment of existing shareholders and to prevent a flood of selling that could depress the share price.

Selecting Your Advisory Team

Financial Advisor (Lead Manager)

The financial advisor is the most critical appointment in the IPO process. Key selection criteria include:

• Track record: Number and size of IPOs managed on Tadawul, particularly in your sector
• Distribution capability: Breadth and depth of institutional investor relationships
• Research coverage: Ability to provide post-IPO research coverage that supports share price performance
• Valuation expertise: Experience in valuing companies in your sector and at your growth stage
• Regulatory relationships: Established working relationships with CMA and Tadawul
• Team quality: The seniority and experience of the individuals who will work on your transaction

Major financial advisors in the Saudi market include SNB Capital, Al Rajhi Capital, HSBC Saudi Arabia, JP Morgan Saudi Arabia, Goldman Sachs Saudi Arabia, Riyad Capital, and several other CMA-licensed institutions.

Legal Counsel

Select a law firm with deep Saudi capital markets expertise. The firm should have experience preparing CMA-compliant prospectuses, navigating the regulatory approval process, and advising on corporate governance requirements. Leading Saudi capital markets law firms include firms affiliated with international networks (Allen & Overy, Clifford Chance, White & Case) as well as established Saudi firms with specialized capital markets practices.

Auditor

Your auditor must be licensed by the CMA and must have experience auditing companies in your sector and at your scale. The Big Four firms (Deloitte, EY, KPMG, PwC) all have significant Saudi audit practices, as do several mid-tier firms. Consider whether the auditor will also provide post-IPO quarterly review services.

Main Market vs. Nomu: Making the Decision

Many companies use Nomu as a stepping stone to the Main Market, listing on the Parallel Market first to gain access to public capital and establish a track record of public company governance before graduating to the Main Market when they meet the financial and operational requirements.

Conclusion

Listing on the Saudi stock exchange — whether on the Tadawul Main Market or the Nomu Parallel Market — provides companies with access to one of the deepest capital pools in the emerging markets, a sophisticated regulatory framework that provides credibility and investor protection, and a growing base of domestic and international institutional investors.

The IPO process is demanding but well-defined, and companies that invest in thorough preparation — from corporate restructuring and financial statement preparation to advisory team selection and investor marketing — will find the process manageable and the outcome rewarding. The Saudi capital markets continue to deepen and diversify, and the pipeline of companies preparing to list reflects the Kingdom’s broader economic transformation under Vision 2030.

Donovan Vanderbilt is the founder of The Vanderbilt Portfolio and publisher of Invest Riyadh. This guide is for informational purposes only and does not constitute legal, tax, or investment advice.