Saudi regulator targets loss-making firms with 50% capital threshold

Summary

• Saudi Arabia's CMA proposed governance amendments giving minority shareholders new powers over loss-making listed companies
• Firms with accumulated losses of 50% or more of capital would face mandatory shareholder disclosure and remedy plans
• Public consultation runs 30 days, with the rules reshaping disclosure duties across the entire listed market

The latest

Listed Saudi companies whose accumulated losses reach 50% or more of capital would be forced to name their significant shareholders and produce a formal loss-remedy plan under amendments proposed by the Capital Market Authority, Argaam reported on Thursday 29 October. The draft changes to the Corporate Governance Regulations were opened for public consultation for 30 days, ending 28 November 2026.

Details

• The 50% trigger: The heaviest obligations attach to companies whose accumulated losses equal or exceed 50% of capital, according to Argaam. That threshold switches on a package of disclosure and remediation duties that do not apply to profitable issuers, effectively creating a separate governance tier for distressed listings on Tadawul.
• Shareholder disclosure: For companies crossing the threshold, Tadawul would publish the names and ownership percentages of holders of at least 1% of shares, or the 20 largest shareholders, whichever discloses the greater number. The dual test is designed to prevent a concentrated register from hiding behind a single percentage cut-off.
• The remedy plan: Shareholders owning 5% could add an item to the general meeting agenda requiring a plan to address accumulated losses, Argaam said. The company would then have to disclose that plan on Tadawul within 60 days of the general meeting resolution, placing a fixed deadline on management response.
• Progress reporting: Companies would issue monthly or quarterly progress reports on the remedy plan, published within five days of the end of each period. The reporting obligation continues until accumulated losses fall below 20% of capital, meaning the lighter threshold governs the exit, not the 50% entry point.
• In-person meetings: Across all listed companies, holders of at least 5% of voting shares could require a general meeting to be held in person alongside any virtual session. The board would be obliged to respond, and the CMA itself would gain the power to mandate physical attendance.
• Audit committees: The proposal would require an independent board member to chair the audit committee, and strengthens the responsibilities of audit committees and boards in reviewing the fairness of transactions involving related parties.
• Related parties: The scope of related parties subject to the rules would be widened, according to Argaam, extending the categories of transactions that fall under enhanced board and committee scrutiny rather than ordinary approval channels.
• The timetable: The consultation window closes on 28 November 2026. The CMA has not announced a date for a final decision on the amendments or an effective date for implementation.

Background

Accumulated losses have long been a disclosure trigger on the Saudi market, but obligations have centred on announcing the loss ratio itself. The proposal shifts the emphasis from announcing the problem to documenting and reporting a path out of it.

Between the lines

The two thresholds do most of the work here. Requiring disclosure of 1% holders or the top 20 shareholders makes the ownership structure of distressed companies visible precisely when control questions matter most, and the gap between the 50% entry trigger and the 20% exit trigger means a company cannot escape the reporting regime by marginally improving its position.

What's next

Market participants can file comments until 28 November 2026. After that, watch for the CMA board's decision on whether the amendments are adopted as drafted, amended, or withdrawn, and for any transition period granted to companies already above the 50% threshold.

Source: Capital Market Authority