Capital Market Law

Purpose and scope

• Regulates the capital market, the issuing and trading of securities and the protection of investors from unfair or misleading practices; the Capital Market Authority applies it (Article 4).

Key rules, rights and obligations

• Any act creating a false or misleading impression of the market or of a security's price or value is prohibited, including fictitious trades and pre-arranged matching orders (Article 49).
• A person with inside information may not trade on it or disclose it to others for that purpose (Article 50).
• Acquiring half or more of the shares of a listed company is subject to the takeover rules set by the Authority (Article 54).
• The issuer and those who prepared a prospectus are liable for untrue or incomplete statements in it, and anyone who made misleading statements or manipulated prices must compensate the injured party (Articles 55, 56 and 57).

Violations, penalties and common problems

• The Authority may ask the Committee to impose sanctions including a warning, an order to stop the violation, compensation, disgorgement of gains, trading suspension, a ban from working in the market, attachment and a travel ban (Article 59 as amended).
• Breaching the bans on manipulation and insider trading can lead to up to five years in prison (Article 57).
• Carrying on securities business without a licence is punishable by a fine of ten thousand to one hundred thousand riyals per violation, prison of up to nine months, or both (Article 60).

Procedures and key deadlines

• A complaint goes first to the Authority; the Committee for the Resolution of Securities Disputes hears the case only after ninety days from filing, unless the Authority allows otherwise (Article 25).
• A Committee decision may be appealed to the Appeal Committee within thirty days of notification; all means of proof, including electronic evidence, are accepted (Article 25).
• A compensation claim is not heard if the complaint reaches the Authority more than one year after the claimant learned of the violation, and never after five years from the violation (Article 58 as amended).

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.