The Capital Market Authority’s (CMA) board approved the regulatory framework for the offering of Saudi depositary receipts (SDRs) in the capital markets, which was announced on 7 July 2025. The SDRs represent a significant regulatory development aimed at deepening the Saudi capital markets in alignment with Saudi Vision 2030, which seeks to make the Saudi capital markets attractive to both local and foreign investors.

SDRs are securities listed on the Saudi Exchange, that represent ownership in listed companies outside of the KSA (ListCo(s)). The SDRs will be traded in SAR in the KSA, allowing investors in the Saudi market access to international markets without the need for a portfolio in each respective jurisdiction.

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The Mechanics

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• Mechanically, the SDRs are issued by a “depository bank”, which is a foreign financial institution. The depository bank would appoint a custodian (a foreign financial institution in the relevant jurisdiction) which would hold the shares of the ListCo for the benefit of the SDRs’ holders, and under the supervision of the depository bank. In the Kingdom, the SDRs would then be maintained and settled by the Securities Depository Center, known as “Edaa”.
• The depository bank would appoint a local agent in the KSA, a CMA licensed capital markets institution, to run local transactions and to be the main contact point in the KSA. The depositary bank’s agent would act to facilitate the rights of SDRs’ holders such as disclosures, voting, dividends distribution, etc.
• The relationship between the ListCo, depository bank, its agent, the SDRs holders, would all be regulated by various contractual agreements.
• Each SDR would have an exchange ratio i.e., how many ListCo shares the SDR represent (e.g., 1:1).
• SDRs holders would have voting rights and all rights attached to the shares, and will be able to exercise them through the depository bank and the custodian, as to be further elaborated on in the prospectus.
• SDRs will be subject to the same trading mechanism applicable to shares in the KSA (e.g., fluctuation limits, free float, liquidation requirements, etc).

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The Offering Process

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• The offering of SDRs will be the same as a typical registration and offering of shares, akin to an IPO process in Saudi Arabia.  The SDRs will be offered to retail and institutional investors, require underwriting, bookrunners and so on.
• The offering of SDRs will include the preparation and publication of a prospectus with disclosure about the ListCo, including risks, business and financial information.
• Although the framework did not detail this, the prospectus would likely need to include full disclosure of the mechanics of the SDRs and how its holders can exercise their rights. The disclosure would also need to cover any material information about the impact of various corporate actions of the ListCo on the SDRs (e.g., cases where the ListCo could delist or liquidate and how the SDRs would be treated in such case, bonus shares, share buyback/cancellation, etc). The prospectus would also likely need to discuss risks related to currency, political and tax risks.
• The filing for the registration and offering of SDRs will require all the typical supporting documents, including due diligence reports. Applying this could require more in-depth analysis if the ListCo is already listed before the SDRs issuance.

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Other Considerations

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The rules currently contemplate listing the SDRs on the main market only, so it would not be allowed on the parallel market (Nomu).

Issuers of SDRs will also be subject to the same continuing obligations applicable to a foreign company that lists its shares on the main market under the Listing Rules. The Saudi Exchange would issue additional requirements and standards applicable to the ListCo, and will publish it and amend it as needed. These additional guidelines were not yet issued. 

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Final Remarks

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The introduction and facilitation of SDRs are aligned with the objectives of Saudi Arabia’s Vision 2030, which seeks to broaden the scope of the domestic capital market, enhance investment diversification, and integrate the Kingdom more closely with global financial markets.