CME-1 Saudi Capital Market Law 1 — Questions and Answers
Question 1: Which law governs the Capital Market Authority (CMA) in Saudi Arabia?
- Companies Law
- Capital Market Law (Royal Decree M/30) (Correct answer)
- Banking Control Law
- Investment Fund Regulations
Correct answer: Capital Market Law (Royal Decree M/30)
The Capital Market Law issued by Royal Decree M/30 in 2003 established the CMA and governs the regulation of the Saudi capital market.
Question 2: What is the primary objective of the Capital Market Authority (CMA) in Saudi Arabia?
- Collecting taxes on investments
- Regulating and developing the capital market to protect investors and ensure fairness (Correct answer)
- Managing the government's investment portfolio
- Setting monetary policy
Correct answer: Regulating and developing the capital market to protect investors and ensure fairness
The CMA's primary mandate is to regulate and develop the Saudi capital market, ensure its efficiency and transparency, and protect investors from unfair practices.
Question 3: Which entity operates the Saudi Exchange (Tadawul) and is overseen by the CMA?
- Saudi Central Bank (SAMA)
- Ministry of Finance
- Saudi Exchange (Tadawul) (Correct answer)
- Public Investment Fund (PIF)
Correct answer: Saudi Exchange (Tadawul)
The Saudi Exchange (Tadawul) is the national stock exchange of Saudi Arabia and operates under the oversight of the Capital Market Authority.
Question 4: What is the minimum capital requirement for a company to list on the Saudi Exchange Main Market?
- SAR 10 million
- SAR 50 million
- SAR 300 million (Correct answer)
- SAR 1 billion
Correct answer: SAR 300 million
Companies seeking a listing on the Saudi Exchange Main Market must meet a minimum paid-up capital requirement of SAR 300 million.
Question 5: Under the Capital Market Law, which of the following constitutes a 'security'?
- Real estate title deeds only
- Shares, bonds, sukuk, investment fund units, and derivatives (Correct answer)
- Bank deposits
- Insurance policies only
Correct answer: Shares, bonds, sukuk, investment fund units, and derivatives
The Capital Market Law defines securities broadly to include shares, debt instruments, sukuk, investment fund units, and other financial instruments specified by the CMA.
Question 6: What is the role of the Securities Dispute Resolution Committee (SDRC) in Saudi Arabia?
- Issuing new securities licenses
- Adjudicating disputes arising from CMA regulations and violations (Correct answer)
- Setting listing requirements
- Conducting market surveillance
Correct answer: Adjudicating disputes arising from CMA regulations and violations
The SDRC is the specialist judicial body that hears and resolves disputes related to CMA regulations, securities violations, and investor complaints.
CME-1 Saudi Capital Market Law 1
Which law governs the Capital Market Authority (CMA) in Saudi Arabia?