Subsidiaries of companies listed on Tadawul’s main market could have a path to a fast-tracked listing that skips over the IPO process under a new draft framework (pdf). The Capital Market Authority (CMA) launched a 30-day public consultation on the proposed amendments, giving stakeholders until Friday, 27 March to weigh in.

What changed

Testing investor appetite: Under the draft amendments, issuers and their financial advisors could, before CMA approval, present key company information and financials to a select group of potential investors to test appetite for a direct listing. They could also share details with licensed capital market institutions to prepare research reports, as long as nothing is publicly released before CMA approval.

Direct listening preparations: The draft introduces a registration document for direct listings on the main market, covering the indicative share price mechanism, key risks, and other essential information — similar to requirements on the parallel market.

Independent oversight: Financial advisors must be independent from both the subsidiary and the parent company, reducing the risk of the parent influencing valuation or “guiding price” to the disadvantage of new minority shareholders.

Lock-up periods: To maintain market stability, the draft sets a 12-month restriction on share sales for the parent company and certain shareholders after trading begins.

Why it matters

By removing the IPO requirement, the CMA is offering a fast-track for established groups to unlock value from their subsidiaries, cutting both timelines and costs. It’s a structural shift aimed at deepening the market — not just through new listings but by unbundling major conglomerates already on TASI.

The timing isn’t a coincidence. Following the CMA’s move earlier this month to allow all categories of non-resident foreign investors on the main market, simplifying direct listings could maximize liquidity and valuations by tapping into this broader pool of international capital.

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