Introduction:

Establishment of the first stock company in the Kingdom goes back to the third decade of the 20^th century, but stock trading found its way in the Kingdom by the end of the nineties, which witnessed substantial increase in the number of stock companies. In the year 1403H (1984), a Royal decree was promulgated for regulating of stock trading through local banks, and forging of ministerial panel for supervision of the market, which has among its members the Minister of Finance, the Minister of Commerce and the governor of Saudi Monetary Agency. The Saudi Monetary Agency was entrusted with day-to-day control and supervision of the market activities, effective as from the first half of 1405H. In the year 1990, the first electronic integrated system, known by the name of ESIS, was introduced for settlements and clearing, and launching of TADAWUL system in October 2001 with its cut-edge technology added new dimensions to trading system. As a part of the extensive regulatory developments which are mainly designed for keeping pace with the world developments, and for enhancing of the investment environment, the Kingdom has reviewed and upgraded many of the already existing regulations and systems, and new regulations, that cope with the development and modernization process, were issued. At the top of these regulations is the enactment of the "Capital Market Law", which is mainly designed for restructuring of the capital market at the Kingdom, benefiting from the most up to date international applicable standards.

Capital Market Law

The "Capital Market Law" was promulgated by Royal Decree No. (M/30) dated 2/6/1424H, coinciding with 31/7/2003, and was put into effect after (180) days from publication thereof in the official gazette. The law is mainly designed for restructuring of the capital market in the Kingdom by introducing of new concepts that may contribute towards protection of investor, enhancing of the confidence in the market and attract more investors, which shall be positively reflected on the disclosure process and market fairness and transparency. For the first time, the law provides an umbrella and integrated regulatory reference for the market, that explains structures, regulatory, supervisory and operational entities and clearly define their duties and powers, by separation between the control and supervisory and operational role of the market, through creation of new firms and dispute settlement committees as follows:

1)     Capital Market Authority.

2)     Capital Market (Securities Market).

3)     Depositary.

4)     Securities Disputes Settlement Committee.

5)     Appeals Committee.