Types of securities in Saudi Arabia and how they are traded

Types of securities in Saudi Arabia and how they are traded

Types of securities in Saudi Arabia

The Kingdom of Saudi Arabia applies the provisions of Islamic Sharia in financial and commercial transactions with the aim of ensuring the provision of financial and investment services free of suspicion and usurious transactions.

The Securities System and its executive regulations are responsible for determining the types of securities tradable within the Saudi market, regulating its provisions, supervising the trading process, and resolving securities disputes.

What are securities?

They are papers or bonds that can be traded in the financial market and have a financial value like money, and are used as an important source of financing projects and enabling investors to invest in a number of companies and provide them with the necessary financing.

Properties of securities

Properties of securities

• Ease of trading in financial markets.
• Diversity of investment sources.
• Possibility of buying and selling.
• Get returns and profits.

What are the types of securities in Saudi Arabia?

Article Two of the Saudi Securities Law stipulates the types of securities permitted to be traded within the Saudi market, which are:

• Shares of convertible and tradable companies.
• Bonds and tradable debt instruments issued by companies or government agencies.
• Investment units issued by investment funds.
• Instruments that represent the rights to shareholding profits or asset distribution.

What is the difference between securities and commercial papers?

Purpose and purpose

The goal of securities is long-term investment and financing.

Commercial papers aim to ensure the maturity of debts and the payment and settlement of financial transactions, and their ownership can be transferred from one person to another, such as a check to its holder.

Main species

Stocks, bonds, and notes are types of securities issued by companies or government agencies and offered on the stock market for investment purposes.

Commercial papers are issued by companies or banks and include checks, bills of exchange, and promissory notes.

Trading mechanism

Securities are traded on the financial market and stock markets, while commercial securities are traded within banks, companies, and in commercial transactions.

Legal protection

Securities are subject to the regulations and executive regulations of the Saudi Stock Exchange, while commercial papers are subject to the provisions of the Commercial Papers Law and the provisions of the Implementation Law.

Who issues securities?

Securities are issued by government agencies, companies, public institutions, or investment funds licensed by the Capital Market Authority.

What are the rules for offering securities?

It is the issuance of securities by those licensed to do so by inviting the public to subscribe through promotion or issuing a statement directly or indirectly.

Securities offering cases

• Exempt offering: Securities issued by the government are offered exceptionally under specific conditions.
• Private offering: The offering is limited to a category of qualified clients or founders.
• Public Offering: The offering shall be public by joint-stock companies if all approvals required under the Companies Law and other relevant regulations are obtained.
• Offering in the parallel market: registering the shares of the joint stock company in the parallel market.

Which authority is responsible for examining securities disputes?

The Saudi Securities Law stipulates that the Securities Disputes Resolution Committee has the jurisdiction to consider lawsuits related to securities disputes and violations of the provisions of the law.

What is the jurisdiction of the Securities Disputes Resolution Committee?

What is the jurisdiction of the Securities Disputes Resolution Committee?

The Securities Disputes Resolution Committee is competent to consider the lawsuits stipulated in Article 30 of the Securities Law, which are:

• Public rights lawsuits against violators of the provisions of the system.
• Private rights claims filed by investors against securities trading licensees.
• Grievance claims against the decisions of the Capital Market Authority.
• Urgent claims requesting immediate action.

Steps to file a lawsuit related to securities disputes

Before filing a lawsuit before the Securities Disputes Resolution Committee, the beneficiary must first file a complaint with the General Administration for Follow-up and Implementation “Investor Complaints Department” at the Capital Market Authority.

The beneficiary can file a lawsuit if 90 days have passed from the date of filing the complaint or if he has been notified to go directly to the committee and follow the following steps to file the lawsuit:

• Log in to the website of the General Secretariat of Securities Disputes Resolution Committees.
• Select “File a Claim”
• Enter the complaint number issued by the Capital Market Authority.
• Fill in the plaintiff and defendant’s data and case details.
• Attach the required documents.
• Submit the application.

It is important to appoint a specialized lawyer from the office of Lawyer Abdul Majeed Al Rashid in securities cases who has experience in financial market provisions and trading methods to preserve your rights and understand your legal obligations.

A commercial lawyer from the office of Attorney Abdul Majeed Al Rashid is responsible for providing legal services, including studying and analyzing cases, drafting contracts and reviewing their terms, filing a complaint with the Capital Market Authority, representing clients before securities dispute resolution committees, and other services.