Disclosure Requirements – Saudi Arabia
Disclosure Category: 1
According to the instructions for International Central Securities Depositories, approved by the board of the Capital Market Authority (CMA) pursuant to its Resolution number (1-57-2021) dated 22/9/1442H corresponding to 4/5/2021G, Clearstream Banking S.A. (Clearstream Banking) falls under a legal obligation to disclose, to the Securities Depository Centre Company (CSD), the identity and holdings of clients or the ultimate end beneficiary owner (UBO) of the Saudi Arabian securities held in Saudi Arabia as well as periodic reporting of internally settled transactions.
Consent
To comply with the legislation as mentioned above, clients holding Saudi Arabian securities or entering into transactions involving Saudi Arabian domestic securities, must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the relevant issuer or the CSD, as appropriate) as attorney-in-fact of such clients, under power of attorney to collect from Clearstream Banking the required information to be disclosed. Clients not willing to give this consent cannot hold such securities/shares in their accounts with Clearstream Banking.
Disclosure requirements
Clients are advised that, under local regulations, the CSD is entitled to require Clearstream Banking, through its local custodian, upon request and/or on a regular basis, to disclose information or documents relating to the ultimate beneficial owners of Saudi Arabian securities held in the omnibus account maintained by Clearstream Banking with its local custodian.
Clients who wish to access the Saudi market via the Clearstream Banking link should familiarise themselves with the local market requirements. In particular, clients should ensure that neither they, nor their underlying clients, are mentioned as nationally designated names in Saudi Arabia including sanctions requirements which will be applicable to clients who engage on the local market.
Background and legal basis
The monthly disclosure reporting requirement for Saudi Arabian securities is made in accordance with Section 6 of the Instructions for International Central Securities Depositories, approved by the board of the Capital Market Authority (CMA) pursuant to its Resolution number (1-57-2021) dated 22/9/1442H corresponding to 4/5/2021G to the CSD. Under these regulations, the CSD is entitled to require Clearstream Banking and/or its clients to disclose any data, information or document related to the positions recorded with the local custodian by Clearstream Banking on a monthly or ad-hoc basis. This obligation of disclosure covers, without being limited to, the identity and holdings of all underlying clients, as well as the identity of the ultimate beneficial owners of such recorded positions. Likewise, Clearstream Banking is required to provide the CSD with a daily report that discloses details regarding any internal settled transactions that have taken place within Clearstream Banking’s books.
Sanctions
Clearstream Banking will not be responsible for any penalties or sanctions or associated costs that could be imposed upon Clearstream Banking due to a client's failure to comply with one or more disclosure requirements. Such penalties, sanctions or associated costs will be automatically passed on to the failing client. The client undertakes to hold Clearstream Banking harmless and to indemnify Clearstream Banking from any loss, claim, liability or expense asserted against or imposed upon Clearstream Banking as a result of the client failure, whatever the failure, to comply with these disclosure requirements.
Obligation to report threshold crossings
It is each shareholder’s obligation to monitor their shareholding and shareholders must notify the Saudi Exchange if they become the owners of, or hold an interest of 5% or more in the form of any class of voting shares or convertible debt instruments of, the issuer. The notification has to be filed by the end of the third trading day following the execution of the transaction or the event which results in such ownership or interest. The shareholder should also notify the CMA and shall include a list of the persons who hold the shares or convertible debt instruments.
Shareholders could face regulatory action in the event of failure to comply with the above requirements. Such regulatory action could be in the form of legal action by the CMA.