Article 52 of the Saudi Capital Market Law

This article directs the Capital Market Authority to issue rules governing two operations aimed at acquiring influential stakes in listed companies, and defines them for the purposes of the law:

• Restricted share purchase (paragraph a): buying shares that carry voting rights and are listed on the Market where, as a result, the buyer, or persons acting in concert with him, own or control 10% or more of the company's shares of the same class.
• Restricted share offer (paragraph b): making a public announcement in which the announcer offers to buy shares of a particular class that are listed on the Market and carry voting rights, where the number of shares sought would bring the holding of the announcer, or of those acting in concert with him, or what they control, to 10% or more of the shares of the company concerned.

Two important points emerge from the two definitions:

• What counts is not only what the buyer owns alone: the holdings of persons acting in concert with him are added, and control counts alongside ownership. Control, in Article 1, is the direct or indirect ability to exercise an effective influence over the business and decisions of another person.
• Both definitions are limited to shares listed on the Market that carry voting rights.

The 10% figure is not necessarily fixed: Article 53 gives the Authority the power to adjust the percentages set in this article and to approve exceptions to the two definitions, together with specifying the timing of announcements and the information to be disclosed. The detailed procedures are set by the Authority's rules. Anyone planning to buy a large stake in a listed company would be well advised to consult a lawyer specializing in securities and capital markets.