Listing Family Businesses on the Saudi Nomu Market: Legal Requirements, Governance, and Transparency 2026 | Nova Legal

Concept of the Nomu Parallel Market and Its Advantages for Saudi Family Businesses

The Nomu Parallel Market is a parallel financial market to the main market on Tadawul, launched by the Capital Market Authority (CMA) to provide a suitable environment for listing and trading shares of emerging, small, medium, and family companies. Nomu features reduced listing requirements compared to the main market, making it an attractive option for family companies wishing to gradually transition from a closed framework to the public framework of listed joint stock companies, benefiting from the advantages of listing on the financial market without the heavy regulatory burdens of the main market.

Key advantages offered by the Nomu market for family businesses include: reduced listing requirements suitable for growth-stage companies (no minimum profit history, capital requirement, or specified percentage of shares offered for trading required), faster listing process compared to the main market, lower listing and advisory costs, a flexible regulatory environment allowing the company to gradually adapt to governance and disclosure requirements, building an institutional reputation that enhances trust with customers, suppliers, and partners, providing liquidity to existing shareholders and offering them the opportunity to monetize part of their investments, and paving the way for transition to the main market (TASI) in the future after meeting its requirements. Nomu is not just a final destination for listing; it can be a transitional station toward the main market as the company grows and meets its requirements.

Requirements for Listing Family Businesses on the Saudi Nomu Market

Requirements for listing on the Saudi Nomu market for family businesses include a set of regulatory, financial, and governance conditions that must be satisfied before submitting a listing application. These requirements are designed to be less stringent than main market requirements while ensuring an adequate level of investor protection and market transparency:

• Regulatory Requirements: The company must be a closed joint stock company (or convert to a joint stock company before listing); the company's purpose must comply with Saudi regulations and legislation; the company must not have been subject to material penalties from the CMA in the past five years; and board members and key officers must not have been subject to criminal judgments in financial or commercial cases in the past five years.
• Financial Requirements: Nomu does not require a minimum capital or a specific track record of profitability (unlike the main market). However, financial statements must be audited by an external auditor licensed by the CMA for the past three financial years at least (or since establishment if less). Financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS).
• Governance Requirements: Formation of a board of directors including independent members (at least two independent members), establishment of specialized committees (audit committee, nominations and remuneration committee), application of the Corporate Governance Code issued by the CMA, and development of clear policies for disclosure, dealing with material information, and related party transactions.
• Disclosure Requirements: Preparation of a prospectus containing comprehensive information about the company, its activities, financial data, risks, and shareholder structure; disclosure of any related party transactions (including dealings of the founding family with the company); and disclosure of ownership structure and major shareholders.
• Financial Advisor Requirement: Appointment of a financial advisor licensed by the CMA to provide advice on the listing and oversee the preparation and submission process. The financial advisor is primarily responsible for assessing the company's readiness for listing and submitting the listing application to the CMA.
• Minimum Shares Offered: There is no specific minimum percentage of shares to be offered for public subscription on Nomu (unlike the main market which requires at least 30%). However, a sufficient percentage must be offered to ensure an active trading market, typically ranging from 10-20% of the company's shares.

It is important to note that these requirements are subject to change and update by the CMA. We recommend contacting a licensed financial advisor and a capital markets lawyer to obtain the latest information and requirements before commencing the listing process.

Impact of Nomu Listing on Family Company Governance

Listing on the Saudi Nomu market brings about a fundamental transformation in the governance of the family company, as the company moves from a family governance environment (often based on personal trust and family traditions) to an institutional governance environment (based on written rules, independent oversight, and full transparency). This transition can be a major challenge for owning families accustomed to managing the company with limited transparency and only internal family oversight.

Key governance changes after listing include: a more diverse board of directors including independent (non-family) members with diverse expertise in financial, legal, and administrative fields, with clear powers defined in the company's bylaws. Clear separation between family ownership and company management, with the board becoming accountable to all shareholders (not just the owning family). Mandatory formation of an audit committee to oversee financial reporting, monitor the internal control system, and ensure auditor independence. Adoption of written and approved policies for disclosure (material information disclosure policy), related party transactions (to prevent the owning family from exploiting the company), corporate governance, and risk management. The general assembly of the company exercising its actual powers in electing board members, approving financial statements, appointing auditors, and approving related party transactions.

The biggest challenge for owning families is accepting the fact that after listing, the company is no longer the family's private property. It has become a public company owned by a group of shareholders (from the family and outside) and subject to CMA oversight. This requires a change in mindset and family culture, and a willingness to accept external oversight and disclose information that was previously confidential within the family sphere. Successful listing requires family leadership that believes in governance and transparency and invests in building strong institutional systems before, during, and after listing.

Transparency and Disclosure Requirements for Nomu-Listed Companies

Transparency and disclosure on the Nomu market are the cornerstones of investor protection and market integrity. The CMA imposes on Nomu-listed companies a set of ongoing disclosure requirements that must be complied with throughout the listing period:

• Periodic Disclosure: Submission of annual audited financial statements within 90 days of the fiscal year-end; submission of quarterly reviewed financial statements within 45 days of each quarter-end; preparation of the annual board report including analysis of company performance, activities, risks, and future plans.
• Disclosure of Material Information: Immediate disclosure (without delay) of any material information concerning the company that may affect the share price or investor decisions, such as major contracts, changes in senior management, cash distributions, change of principal activity, material litigation, and general assembly meeting results.
• Disclosure of Related Party Transactions: Disclosure of any transactions between the company and related parties (including board members, key officers, founding family members, and their affiliated companies), stating the nature, value, and terms of the transaction. This requirement is particularly important for family companies where transactions between the company and the owning family are common.
• Disclosure of Ownership and Shareholder Changes: Disclosure of the company's ownership structure and any material changes therein, including changes in the ownership of board members and key officers (more than 5% of the company's shares).
• Transparency in Investor Relations: Establishment of an investor relations department or function responsible for communicating with investors, financial analysts, and media, and providing accurate and equal information to all investors without discrimination. Effective investor relations practices include quarterly conference calls to discuss financial results, organizing site visits for investors, and participating in investment conferences organized by Tadawul and the CMA.

Compliance with transparency and disclosure requirements is not merely a regulatory obligation that may result in fines and penalties (including delisting) for violators, but also an opportunity to build a positive reputation for the company that increases investor confidence, improves stock valuation, and reduces the cost of future financing.

Practical Procedures for Listing a Family Company on the Nomu Market

Procedures for listing a family company on the Saudi Nomu market go through several main stages typically taking 6 to 12 months, depending on the company's readiness and the complexity of its structure and family relationships. The practical steps for listing are:

1. Initial Readiness Assessment: The company, in cooperation with the financial advisor, assesses the extent to which it meets listing requirements, identifies gaps that need to be addressed, and develops a timeline for preparation. The assessment includes reviewing the legal status (company structure and licenses), financial status (financial statements and cash flows), governance (board of directors, committees, and policies), and family relationships (family governance and shareholder agreements).
2. Legal and Administrative Restructuring: Converting the company to a joint stock company (if not already), amending the company's bylaws to comply with listing requirements, restructuring the board of directors by adding independent members, forming specialized committees (audit committee, nominations and remuneration committee), and developing required policies (disclosure policy, related party transaction policy, corporate governance policy). This stage may be the most complex for family companies as it requires fundamental changes in management and oversight structures.
3. Prospectus Preparation: The financial advisor, in cooperation with a specialized lawyer, prepares the prospectus containing all required information about the company, its activities, financial data, and risks. The prospectus must be accurate, complete, and comprehensive, covering all information needed by investors to make an informed investment decision. Family companies need accurate disclosure in the prospectus regarding family relationships, related party transactions, and potential family conflict resolution mechanisms.
4. Listing Application Submission: The financial advisor submits the listing application to the CMA, including the prospectus and all required documents. The CMA reviews the application and documents within a specified period (typically 45-90 days) and may request additional information or amendments to the prospectus.
5. Marketing and Promotion: After obtaining initial CMA approval, the company (with the financial advisor's assistance) conducts promotional activities to attract investors, including meetings with institutional investors, participation in investment conferences, and distribution of the prospectus to potential investors.
6. Offering and Trading: After completing all procedures and obtaining final approval, the company's shares are offered for trading on the Nomu market on a specified date. The company's shares begin trading, and the company becomes subject to all ongoing disclosure and governance requirements.

We recommend family companies begin preparing for listing well in advance (12-18 months) to ensure all requirements are met and to avoid pressure and hasty decisions on critical matters. We also recommend involving the owning family in the listing process through awareness workshops on listing requirements and their impact on family relationships, ownership, and management, to ensure all family members understand the fundamental changes that will accompany the listing.

Role of the Financial Advisor and Lawyer in Listing Family Companies

The financial advisor and lawyer are essential partners in the family company's listing journey on the Nomu market. The financial advisor licensed by the CMA is primarily responsible for managing the listing process and providing professional advice to the company. Key tasks include: assessing the company's readiness for listing and developing a roadmap, assisting in selecting independent board members and committee members, overseeing prospectus preparation and ensuring its accuracy and completeness, submitting the listing application to the CMA and following up, coordinating with the lawyer, auditor, and other parties, managing the marketing and promotion process for the offering, and providing advice on pricing and timing. Selecting a financial advisor with experience in listing family companies is crucial, as family listings have unique characteristics and complexities that differ from listings of startups or companies without family relationship complexities.

The capital markets lawyer handles: comprehensive legal review of the company's structure, bylaws, contracts, and licenses to ensure compliance with listing requirements, drafting and reviewing the prospectus from a legal perspective, assisting in converting the company to a joint stock company and amending its bylaws, drafting shareholder agreements and family agreements in compliance with listing requirements, advising on ongoing disclosure and compliance requirements, and handling any legal inquiries from the CMA during the listing application review. Close collaboration between the financial advisor, lawyer, auditor, and family management team is key to the success of the listing process.

Challenges and Opportunities in Listing Family Businesses on Nomu

Family businesses seeking listing on the Saudi Nomu market face unique challenges that distinguish them from other companies, including: resistance to change from some owning family members who fear losing control of the company, difficulty in separating family ownership from professional company management, the need to change institutional culture from secrecy to full transparency, complexity of family relationships and decision-making mechanisms that may not align with formal governance requirements, the financial cost of listing (financial advisory, legal, and audit fees), and fear of disclosing financial and family information previously within the family's privacy sphere.

Conversely, significant opportunities exist for family companies that successfully overcome these challenges: access to new funding sources through the financial market (capital increases, sukuk issuance), enhanced company reputation and credibility with customers, suppliers, and partners, attraction of professional management talent thanks to improved governance and transparency, provision of liquidity to existing shareholders allowing them to diversify their investments, paving the way for transition to the main market (TASI) in the future, and ensuring company continuity across generations through the separation of ownership and management and sound institutional governance. Successful listing can be a transformative milestone in the family company's history, unlocking growth and development potential that was limited under the closed framework.

Frequently Asked Questions About Listing Family Businesses on the Saudi Nomu Market

Below are answers to the most common questions about listing family businesses on the Saudi Nomu market:

Conclusion: A Qualitative Leap for Saudi Family Businesses Through Nomu Listing

Listing family businesses on the Saudi Nomu market represents a historic opportunity for owning families to take their companies to new horizons of growth, professionalism, and sustainability. Listing is not merely a financial transaction; it is a comprehensive institutional transformation journey that changes the way the company is managed, governed, and relates to shareholders and society. Family companies that prepare well for this journey, invest in building strong governance systems, embrace transparency and full disclosure, and involve family members in the change process will be most successful in listing and reaping its long-term benefits.

We invite all owning families considering listing their companies on Nomu to begin early preparation, engage specialized financial advisors and lawyers experienced in listing family companies, and invest in developing governance, financial, and administrative systems well before submitting the listing application. At Nova Legal for Law and Legal Consulting, we offer specialized legal services for listing family businesses on the Nomu market, including legal restructuring, drafting and reviewing the prospectus, advising on governance and disclosure requirements, and coordinating with the financial advisor and CMA throughout the listing process. We look forward to accompanying your family company on the listing journey toward a more professional, transparent, and prosperous future.