Saudi Stock Exchange (Tadawul) will implement new procedures and laid out instructions related to listed companies with accumulated losses reaching 20 per cent or more of its share capital as of April 22, said a report, citing the kingdom's top bourse.

    

The Capital Market Authority (CMA) has announced the new framework for companies with three ranges of accumulated losses: 20-35 per cent, 35 per cent to less than 50 per cent, and 50 per cent or more, stated The Saudi Gazette in its report.

 

Under the new regulations, the company should immediately disclose to the public the total accumulated losses, its percentage of the capital, and the main reasons that caused the losses, said the report, citing the Saudi Press Agency (SPA).

 

Also Tadawul shall add a flag next to the company’s name on the website indicating that the firm had reached accumulated losses.

 

In case the accumulated losses reaches 50 per cent of capital or more, according to article (150) of the companies’ law, the company should immediately announce the board’s recommendation to the extraordinary general assembly of an increase or decrease of the capital, or a recommendation to dissolve the company before the prescribed date in its by-laws, stated the SPA report.

 

After restoring its position and upon receiving an external auditor’s report, the company should immediately disclose to the public the reduced accumulated losses and the steps taken to see that reduction through.

 

Accordingly, Tadawul shall delete the accumulated losses flag.

 

As per new rules, Tadawul said that if a company’s accumulated losses plunge to another level of the three ranges the framework covers (20-35 per cent, 35 per cent to less than 50 percent, and 50 percent or more), steps 1, 2, 4, and 5 would be implemented again.

 

A company’s shares will be delisted if the company is dissolved by the force of law or when the extraordinary general assembly decides to dissolve the company before the prescribed date in its by-laws, it added.