Middle-east Arab News Opinion | Asharq Al-awsat

CMA: International Standards Will Protect Saudi Companies | ASHARQ AL-AWSAT English Archive 2005 -2017
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Riyadh – At the time Saudi Arabia decided to mandate local companies with the international financial standards, the state is trying to fully adopt the standards in order to enhance its economic position and protect local companies.

This important step comes as accounting and auditing companies have shown more interest in implementing the international standards.

A series of workshops and seminars have been conducted to explain the standards, similar to the ones done by KPMG Saudi Arabia last year.

KPMG had an open seminar with members of regulation and legal accounting committees in addition to representatives of the General Authority of Zakat and Income Taxes. The representatives answered questions of the audience and explained the implications of shifting into international standards.

The workshops are an important economic decision which will lead to the increase of commitment level of the business sector especially that Saudi Arabia has announced Vision 2030.

In a related matter, Saudi Capital Market Authority (CMA) announced a publication on the Saudi Stock Exchange (Tadawul) and lists of rules, namely about market behaviors.

The publication was done to maintain transparency and justice in financial trades as well as to enhance the financial market and protect investors.

According to Article 50 subsection 1 of the Capital Market Law (CML): “Any person who obtains, through family, business or contractual relationship, inside information (hereinafter an “insider”) is prohibited from directly or indirectly trading in the Security related to such information, or to disclose such information to another person with the expectation that such person will trade in such Security.”

CML defines “Insider information” as ‘’information obtained by the insider and which is not available to the general public, has not been disclosed, and such information is of the type that a normal person would realize that in view of the nature and content of this information, its release and availability would have a material effect on the price or value of a Security related to such information, and the insider knows that such information is not generally available and that, if it were available, it would have a material effect on the price or value of such Security.”

CML also prohibits the “purchase or sell a Security based on information obtained from an insider while knowing that such person, by disclosing such insider information related to the Security, has violated paragraph (a) of this Article.”

CMA explained that pursuant to the high order to transfer the jurisdictions of the related parties and committees in relation to the investigation and prosecution of criminal offences to the Bureau of Investigation and Public Prosecution, an agreement was made with the bureau to investigate the violations of Article 50 of the Capital Market Law.

CMA announced that it is a criminal offense to trade based on insider information. The authority insures that it will not hesitate to apply penalties on violators of the Capital Market Law.

Applying international standards in financial reports will help the investments and improve transparency about the financial situation of each facility, thus creating a sort of censorship on them.