Introduction
Accessing the Saudi stock market is no longer exclusive to large corporations or companies with complex IPO procedures.
Today, the Parallel Market “Nomu”, managed by Tadawul, offers a modern and flexible alternative — Direct Listing — a method that allows growing companies to trade their existing shares publicly without issuing new ones.
This mechanism opens new opportunities for small and medium-sized enterprises (SMEs) seeking to grow, enhance liquidity for shareholders, and strengthen their corporate reputation.
In this article, we explain the key requirements and conditions for direct listing in Saudi Arabia’s Parallel Market, along with its benefits, challenges, and strategic considerations.
What is the Parallel Market “Nomu”?
The Parallel Market (Nomu) was established as a regulated investment platform to support emerging and medium-sized companies wishing to access capital markets under simplified listing requirements compared to the Main Market.
It primarily targets qualified investors, offering a structured environment that promotes growth and innovation while maintaining investor protection and market integrity under the supervision of the Capital Market Authority (CMA).
Key Advantages of the Parallel Market (Nomu)
Nomu provides multiple advantages that make it a key driver of Saudi Arabia’s economic diversification and capital market development:
Expands investment tools and deepens financial market liquidity.
Offers flexible and simplified listing criteria.
Maintains effective financial supervision to ensure transparency and investor confidence.
Limits participation to qualified investors, reducing risk exposure.
Strengthens Saudi Arabia’s financial openness and global investment connectivity.
Enables listed companies to move to the Main Market once they meet all CMA requirements.
In short, Nomu provides a regulated, growth-oriented environment that helps SMEs expand their investor base and build credibility.
What is Direct Listing?
Direct Listing allows a company to make its existing shares tradable on the market without issuing new shares, unlike a traditional IPO.
In this model, current shareholders can sell or purchase shares at market prices, providing liquidity and transparency. It’s an ideal route for companies that have already raised private funding and now seek to establish market presence.
Why Do Companies Choose Direct Listing?
- Capital Expansion and Growth
Direct listing enables companies to raise capital through public share sales — financing expansion projects, product development, debt repayment, or acquisitions — enhancing competitiveness and long-term stability.
- Shareholder Liquidity
Shareholders gain the ability to sell part of their holdings easily, increasing the tradability and market valuation of the company’s shares while allowing portfolio diversification.
- Brand Reputation and Market Visibility
Being listed enhances corporate credibility, attracts new investors and business partners, and strengthens brand positioning. Financial transparency also builds investor and customer trust.
- Governance and Transparency Improvement
Listing encourages companies — particularly family-owned or early-stage firms — to adopt stronger governance practices, improve accountability, and ensure compliance with disclosure standards.
Direct Listing Requirements in the Parallel Market (Nomu)
The CMA and Tadawul set clear regulatory requirements to balance flexibility with investor protection. The most important include:
The company must be a Saudi Joint Stock Company (JSC).
The minimum market capitalization is SAR 10 million.
The public float must be at least 20% of total shares or shares worth SAR 30 million, whichever is lower.
The company must have at least one full year of operational and financial activity.
Appointment of a financial advisor is mandatory, while appointing a legal advisor is optional but recommended.
Submission of audited annual financial statements and semi-annual reports, with full disclosure of material information.
Major shareholders are prohibited from selling their full holdings within one year of listing.
The company must have at least 50 shareholders at the time of listing.
These requirements ensure that growing businesses can access the market while maintaining transparency, governance, and investor protection standards.
Potential Risks and Challenges
While the Parallel Market offers opportunities, it also carries certain risks, including:
Lower disclosure obligations compared to the Main Market.
Higher price volatility due to smaller trading volumes.
Less stringent corporate governance requirements.
Greater exposure to operational or management risks.
For that reason, investors are advised to carefully evaluate company performance and financial health before investing in Nomu-listed entities.
Strategic Advice for Companies Considering Direct Listing
- Early Financial and Administrative Preparation
Prepare audited financial statements covering at least one year, and strengthen internal governance structures to enhance investor confidence.
- Choosing the Right Advisory Team
Engage a qualified financial advisor experienced in Nomu listings to handle valuation, documentation, and compliance with CMA and Tadawul requirements.
It is also advisable to appoint a legal advisor to review disclosure obligations, shareholder rights, and regulatory responsibilities.
- Commitment to Transparency and Disclosure
Develop a proactive disclosure plan covering financial and operational risks. Timely submission of annual and semi-annual reports reinforces credibility and prevents penalties.
- Managing Market and Investor Expectations
Adopt a realistic valuation approach and craft a clear communication strategy highlighting the company’s vision, growth model, and long-term profitability.
- Preparing for the Post-Listing Stage
Create a post-listing plan to manage expected price volatility, maintain regular communication with shareholders, and strengthen presence in investor relations and market events.
Conclusion
Direct listing in Saudi Arabia’s Parallel Market (Nomu) represents a strategic opportunity for ambitious companies to expand, attract investors, and gain market recognition.
However, success requires thorough preparation, strong governance, transparent reporting, and disciplined execution.
Companies that approach direct listing with a long-term strategic mindset — not just as a funding mechanism — are best positioned to achieve sustainable growth and investor confidence in the Saudi capital market.