Private placement —
this is a regulated offer

01

First the offer is determined, then the document title

Communication aimed at acquiring securities may be included in the offer perimeter, regardless of the name “investment proposal”, “term sheet” or “presentation”. The instrument, issuer, addressees, territory, method of distribution, the role of intermediaries and the possibility of subsequent trading are analyzed.

Equity

Ordinary/preference shares and convertible instruments

Debt

Bonds, notes, sukuk and other debt instruments

Funds

Units/interests taking into account Investment Funds Regulations

Hybrid

Instrument is classified by rights, not by marketing label

02

Private route exists only outside of public, parallel and exempt offer

According to the current rules, an offer qualifies as a private placement if it does not relate to an exempt, public or parallel market offer and is limited to Institutional and Qualified Clients or meets the conditions of a limited offer. An error in route changes approval, disclosure, marketing and liability.

03

Limited offer - these are two simultaneous limits

The offer is addressed to a maximum of 100 persons, excluding Institutional and Qualified Clients, and the amount that each other offeree can pay does not exceed SAR 200,000. The same class of securities cannot be offered via the limited route more than once in twelve months.

04

Placement is conducted through a licensed Capital Market Institution

Offer attracts CMI with permission to arrange. The intermediary helps to qualify the route, carry out investor classification, prepare notifications and materials, conduct controlled distribution, subscriptions and closing. Corporate adviser without the appropriate license does not replace the arranging institution.

05

CMA receives the package at least 10 days in advance

The Offeror, through the CMI, notifies the CMA of the proposed private placement at least ten days in advance and attaches the required declarations and copies of the offer documents. A significant change may trigger a new ten-day period. The notice should not be described as an endorsement of the investment qualities of the instrument.

06

The Investor pack must be complete, clear and consistent

Term sheet

Instrument, price/yield, use of proceeds and conditions

Offering document

Issuer, business, risks, financials, conflicts and selling restrictions

Corporate approvals

Board/shareholder resolutions, capacity and authorized signs

Subscription

Representations, classification, payment and closing

KYC/AML

Investor, beneficial owner, source of funds and sanctions screening

Register

Offerees, recipients, versions, acknowledgements and allocations

07

Investor classification is confirmed by documents

Institutional and Qualified Client status is verified by CMA definitions and not by the investor's self-description as “professional”. File contains the applicable criterion, confirmation and review date. For a limited offer, ordinary-offeree count and SAR 200,000 cap are separately controlled.

08

Marketing should not turn private placement into a public offer

Website, social media, conference, introducer, press release and teaser are analyzed before publication. The advertisement contains mandatory disclaimers, is not misleading and is distributed in accordance with the Securities Business Regulations and the chosen route. Success fee and solicitation may affect the licensed-activity perimeter.

09

Closing connects money, corporate register and CMA report

1. 01
   Conditions

   Approvals, KYC, classification and signed documents.

2. 02
   Funds

   Payment route, escrow/collection and reconciliation.

3. 03
   Issue

   Allotment, certificates/register and instrument records.

4. 04
   Report

   Within ten days after completion - categories of acquirers and proceeds; if unsuccessful, a notification is also given.

10

Transfer restrictions follow the tool

Subsequent transfer of privately placed securities is carried out through CMI and must comply with the permitted conditions, including the transfer of Institutional/Qualified Client or the applicable price limit and other cases according to the rules. The restrictions are transferred to the subscription, register, legends and instructions to the intermediary.

11

Saudi private placement does not exempt from the rules of other countries

If the investor, introducer or marketing is located outside the KSA, the securities laws of each country are checked separately: professional-investor exemptions, financial-promotion rules, placement-agent licensing, data transfer, sanctions and tax. One global deck gets country legends and a controlled distribution matrix.

12

Before the first investor approach

1. 01

   Qualify security, offer route and all countries.

2. 02

   Assign licensed CMI and approve responsibilities.

3. 03

   Collect corporate approvals, financials and risk disclosures.

4. 04

   Create offeree list, classification and distribution controls.

5. 05

   Plan CMA notice, closing report and transfer legends.