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RIYADH: Investors enjoyed enhanced affordability and liquidity as 42 businesses on Saudi Arabia’s main index and parallel market benefited from the nominal value split mechanism in 2023, according to government data. In its most recent statement, the Capital Market Authority stated that the Kingdom’s parallel market, Nomu, showed strong momentum in stock split operations last year, with 24 companies, or 37% of listed firms, taking the step.
This follows the CMA’s implementation of the Companies Law and its Executive Regulations on January 19, 2023, which allows listed companies to split stock par values from SR10 ($2.67) to different lesser levels.
As part of the method, a firm divides its current shares into multiples to increase trading volume and accessibility for investors while maintaining its entire market capitalization.
“The Companies Law allowed every company more flexibility to increase or decrease its stock nominal value, which is different from the previous mandatory ones that encompassed all companies with a unified nominal value,” according to CMA.
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It clarified: “The nominal value split of a share can be defined as increasing the number of a company’s shares to a larger number of shares with a lower nominal value, without any impact or change in the shareholders’ rights.”
This regulatory activity, which aims to reduce per-share prices and increase the number of tradable shares, assesses possible trading possibilities for a large number of investors.
Last year, however, the mechanism benefited 18 companies, which accounted for 8% of the listed enterprises on Saudi Arabia’s Tadawul All Share Index.
The most recent update also revealed that seven publicly traded firms reconsidered their split decisions for a variety of reasons.CMA plays an important role in furthering Saudi Arabia’s Vision 2030 goals by executing a variety of steps to make the Kingdom a more appealing investment destination.
In its June report, the CMA noted considerable expansion in the Kingdom’s sukuk and debt capital markets since 2019, topping SR30 billion with an annual growth rate of 7.9 percent.
The report also stated that net foreign investments in the Saudi capital market reached SR198 billion in 2023, up 7.7 percent from the previous year.
Furthermore, Saudi Arabia’s capital market gained significant global recognition in 2023, placing first among G20 countries in the Board of Directors Index.
CMA noted that these achievements underscore the Kingdom’s advancements in governance, market accessibility, investor protections, and overall market vibrancy.
