The CMA Calls for Public Consultation on Enhancing Merger and Acquisition Processes in the Capital Market

The Capital Market Authority (CMA) called upon relevant and interested persons participating in the capital market to share their feedback on the development of merger and acquisition transactions in the Saudi capital market and the enhancement of their mechanisms through the amendment and introduction of a number of regulatory concepts in the Merger and Acquisition Regulations and the Rules on the Offer of Securities and Continuing Obligations. The consultation period will last for 45 calendar days, ending on 25/12/1447H, corresponding to 11/06/2026. 
The Draft aims to deepen the capital market and strengthen its role in capital formation, and to facilitate the procedures for executing merger and acquisition transactions, thereby contributing to expanding the scope of merger and acquisition activities, enabling companies to establish partnerships and efficiently restructure their businesses, and enhancing the competitiveness of mid-sized and growing companies.
Among the key proposed regulatory amendments is the introduction of a “shelf registration for the purpose of acquiring a company or purchasing an asset” mechanism. This mechanism enables listed companies to register new shares with the CMA for subsequent use in acquiring a company or purchasing an asset, whether in a single transaction or multiple transactions, without the need to seek new approvals. The offering period shall not exceed three years, thereby expediting the completion of transactions, reducing procedural burdens, and providing companies with greater flexibility and enhanced opportunities to capture growth prospects.
To further enhance investor protection against unfair practices in voting on the approval or rejection of merger and acquisition transactions, the proposed regulations provide that where a shareholder in the offeree company, or in either company, has a current or potential personal, financial, or commercial interest beyond their ordinary interests as a shareholder, such shareholder shall be counted toward the quorum of the Extraordinary General Assembly to avoid the lack of quorum and the non-convening of the meeting. However, the shareholder shall be prohibited from voting and shall not be counted in respect of agenda items relating to the offer, while being permitted to vote on the remaining agenda items.
The proposed draft also addresses the regulation of information sharing during the negotiation or assessment of merger and acquisition transactions. It permits the disclosure of information at such stages to certain key shareholders in specified cases and subject to strict controls, in a manner that provides them with the necessary information to support the successful completion of the transaction and reduces the risks of trading based on such information. This, in turn, enhances the prospects of successfully completing the transaction and ensures the requirements necessary for its efficient and transparent execution, provided that the CMA is notified and an undertaking is obtained not to trade on the basis of such information in any form prior to its official announcement. This measure supports improving the quality of negotiations and financial evaluation, reduces the risk of information manipulation, enhances confidence, and mitigates the risks of trading based on such information.
With respect to the voting of a shareholder who holds shares in both the offeror and the offeree company, the proposed draft enables such shareholders to vote in both companies on the merger or acquisition resolution, whereas previously their voting was limited to only one company. This right is granted provided that the shareholder in the offeree company is not a related party, in order to prevent undue benefit, thereby enhancing transparency and fairness in the capital market.
The draft is expected to contribute to improving the efficiency of capital allocation in the national economy, in addition to enhancing the attractiveness of the Saudi capital market by increasing transparency and strengthening the transaction execution environment.
The CMA emphasized that the comments of relevant and interested persons, including individuals, government entities, the private sector, and CMA's supervised entities, shall be taken into full consideration for the purpose of approving the final proposed Draft, which in turn shall contribute to the aim of enhancing and developing the regulatory environment. Opinions and comments can be received through any of the following:
•    The Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the Saudi Competitiveness & Business Center through the following link: istitlaa.ncc.gov.sa
•    The prescribed form through the following email: Laws.Regulations@cma.org.sa 
The Draft can be viewed via the following links:
The Draft Amendments to the Merger and Acquisitions Regulations, the Implementing Regulation of the Companies Law for Listed Joint Stock Company, the Rules on the Offer of Securities and Continuing Obligations and the Glossary of Defined Terms Used in The Regulations and Rules of The Capital Market Authority
Prescribed form for providing comments