The CMA’s latest draft rules would make Tadawul’s worst-performers fix themselves in public

The Capital Market Authority (CMA) wants to put Saudi Arabia’s weakest listed companies under a public turnaround regime. Under a draft overhaul (pdf) of the corporate governance rules, out for consultation on the Istitlaa platform since Thursday, any listed firm that has run up accumulated losses of half its capital or more would face a stack of new disclosure duties. They kick in the moment it reports crossing that line, and only come off once losses fall back below 20%.

First, they’d have to open the books. Any company in that bracket would post on Tadawul the name and stake of every holder above 1% — or its 20 biggest shareholders, whichever list runs longer.

Then the recovery goes on the clock: Any investor holding 5% could put a loss-remediation plan on the general-assembly agenda, and the board would then have 60 days to disclose it: root causes, the fixes, measurable targets, and a timeline. Monthly or quarterly progress reports would follow, filed within five days of each period’s close, each measuring progress against the targets and explaining any slippage.

Minority shareholders get some leverage too: Shareholders representing at least 5% could demand an in-person general assembly running alongside the virtual one, with the board obliged to comply. The CMA could also order in-person meetings whenever it sees fit. Boards would have to field shareholder questions as a standalone agenda item and post assembly minutes on their website within 10 business days.

The draft tightens the ring around related-party dealings and board seats. It widens the definition of “related parties” to pull in the controlling persons behind corporate shareholders, subsidiaries’ executives, and relatives of both, and makes audit committees and boards prove those agreements are priced fairly and carry no preferential terms. On board picks, nomination committees would have to say why they turned a candidate down and give them a chance to close the gap. Every listed company would also need an independent director running its audit committee.

Fourteen listed companies would fall under the regime as it stands. Tadawul’s register of firms whose accumulated losses have already reached 50% currently include Methanol Chemicals, Takween Advanced Industries, Saudi Cable, Saudi Vitrified Clay Pipes and Saudi Industrial Export, alongside Saudi Printing and Packaging, AFG International, Naseej International Trading, Thimar Development Holding, Raydan Food, Tabuk Agricultural Development and Al Kathiri Holding, Gulf General Cooperative Ins. and United Cooperative Assurance. Seven companies sit in the 35-50% orange zone.

The bigger picture: This draft is the latest in a run of CMA moves since Mazen Al Sudairi took over as chairman, all pulling toward a market whose numbers investors can rely on and whose capital pools run deeper. In September, the regulator moved to rewire the IPO process, requiring banks to firmly underwrite offerings and large book-building bids to be backed by verified cash, after a year in which heavy oversubscription kept failing to carry through to aftermarket performance. Weeks earlier it capped public money market funds’ offshore holdings at 5% of net assets, steering liquidity into local deposits, murabaha, sukuk, and short-term paper.