CME-1 Equity Markets 2

Question 1

What is a Rights Issue (Haq Al-Awalawiya) in the Saudi capital market?

Accepted Answer

An offering of new shares to existing shareholders at a discounted price

Answer

A Rights Issue allows existing shareholders to purchase additional shares proportional to their current holdings at a discounted price. In Saudi Arabia, these rights are tradeable on Tadawul during the subscription period.

Question 2

What is the minimum number of shareholders required for a company to list on the Main Market of Tadawul?

Accepted Answer

200 shareholders

Answer

Companies seeking to list on the Main Market must have at least 200 public shareholders at the time of listing. This requirement ensures adequate distribution and liquidity of shares.

Question 3

How are dividends typically distributed to shareholders of Saudi-listed companies?

Accepted Answer

Through the Tadawul Depository Center (Edaa)

Answer

Dividends are distributed through Edaa, the Securities Depository Center Company, which manages the deposit, transfer, settlement, clearing, and registry of securities ownership in Saudi Arabia.

Question 4

What does the term 'Sukuk' refer to in the Saudi capital market?

Accepted Answer

Islamic financial certificates similar to bonds

Answer

Sukuk are Sharia-compliant financial certificates that represent ownership in an underlying asset, usufruct, or investment. They function similarly to bonds but comply with Islamic finance principles that prohibit interest (riba).

Question 5

What is the role of the Listing Authority in Saudi Arabia?

Accepted Answer

It reviews and approves applications for listing securities on Tadawul

Answer

The CMA's Listing Authority is responsible for reviewing listing applications, ensuring compliance with listing rules, and approving or rejecting applications for listing on the Saudi Exchange.

CME-1 Practice Test

CME-1 Practice Test

CME-1 Equity Markets 2