Class Action Against a Saudi Listed Company: How to Join

You bought 3,000 shares of a Saudi listed company after it announced strong profits. Later the financial statements were restated, the profits turned out not to be real, and trading in the shares was suspended. Your loss is about SAR 45,000, and thousands of investors are in the same position. Suing the board alone feels too heavy. Then you see a notice on the Capital Market Authority (CMA) website about a "class action" and a deadline to join.

The direct answer: yes, Saudi law provides for class actions in securities disputes. They are heard by the Committee for Resolution of Securities Disputes under Chapter Thirteen of the Securities Disputes Resolution Proceedings Regulations (Articles 53 to 77), based on Article 30 of the Capital Market Law, which leaves the class action rules to the CMA's regulations. You join by filing a joining request within the announced window, normally 90 days from the announcement that the request was accepted, and the case is certified as a class action if at least ten requests are received (Article 57 of the Regulations).

What is a securities class action in Saudi Arabia and who hears it?

It is one case that combines the claims of many investors against the same defendant, because they rest on the same legal basis, the same facts and the same requests. It covers private-right claims in securities disputes (Article 53), meaning compensation claims, not penalties. Most class actions are based on:

• A prospectus that contained an untrue material statement or omitted a material fact (Article 55 of the Capital Market Law).
• A misleading statement, announcement or financial statements that led investors to buy or sell (Article 56).
• Price manipulation or insider trading that harmed those who traded in the same period (Article 57).

The competent body is the Committee for Resolution of Securities Disputes; the Committees' General Secretariat registers the requests and keeps the class action register.

How does a class action start?

1. Any person may file a request to bring a class action, setting out the facts and circumstances that show their claim matches other existing or potential disputes in legal basis, facts and requests (Article 54). Since the 2022 amendments, the Committee may also decide on a class action directly when it finds matching disputes before it.
2. The panel decides on the request within 30 days. Acceptance is at its discretion: it considers whether common issues outweigh individual ones, and whether a class action is more effective than separate claims (Article 55).
3. The General Secretariat records the request in the class action register and announces it on its website or by other means. The announcement gives the lead claimant, the defendant and the case number, without naming the other investors (Articles 56 and 62).
4. The joining window opens: if at least ten requests are received within 90 days of the announcement, the panel issues its decision certifying the class action. It may extend the window up to a maximum of 180 days (Article 57).
5. The defendant may object to the certification before the panel within 30 days of being notified, and the panel's decision on the objection is final (Article 60).

How do I join an announced class action?

Read the announcement carefully: it defines who may join. In the General Secretariat's announcement of November 2021 accepting a class action request against some board members and employees of a listed insurance company, the right to join belonged to investors who bought the shares after certain financial results were announced and held them until trading was suspended. The window was 90 days from the announcement, and requests were made through a link on the CMA website.

• Check that your purchase and holding dates fall within the period stated in the announcement.
• Prepare your portfolio statement showing dates, prices and quantities of purchases and sales.
• File before the window closes; after that, only an individual claim remains, if it is not time-barred.
• Keep your request number and follow the register's announcements, where developments are published.

Am I bound by the result? Can I opt out?

When a class action is certified, the panel suspends matching individual claims so they can be joined to it. Anyone who does not want to stay may withdraw by written notice within 30 days of the certification announcement and keep the right to pursue their own claim separately (Articles 58 and 59). After the defendant has filed its defence, withdrawal needs the defendant's consent.

If a settlement is proposed, the panel approves it only if it is fair to the members of the claimant group. Members are notified and may opt out of it in writing within 30 days (Articles 70 and 71). The Regulations also deal with how the costs of the class action are shared between the parties (Article 76).

Does a class action stop my claim from becoming time-barred?

Chapter Thirteen contains no provision that suspends the limitation period for group members. The general rule remains: a private-right claim under Articles 55, 56 and 57 is not heard if the complaint was filed with the CMA more than one year after you became aware of the facts, unless the defendant acknowledges or the Committee accepts your excuse, and in no case after five years from the violation (Article 58 of the Law, Article 10 of the Regulations). So if no class action has been announced yet, do not wait: file your own CMA complaint within the year, then join if one is announced.

In 2019 the CMA announced the registration of a class action concerning violations during the IPO period of a listed company, and opened a 90-day window for harmed investors who had bought before a specified date.

If you bought 1,000 shares at SAR 50 in the covered period, your joining request needs the portfolio statement proving the purchase in that period. In prospectus cases, compensation is the difference between what you paid, capped at the offer price, and the value of the share on the date the claim was filed or the price at which you could have sold before it; any part the defendant proves was due to other causes is excluded (Article 55).

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

Practical steps for both sides

If you are an investor who suffered a loss:

• Follow the class action register and the announcements of the CMA and the General Secretariat about the company where you lost money.
• Download your portfolio statement now; purchase and holding dates are the condition for joining.
• Do not let the one-year period pass waiting for a class action; an individual CMA complaint protects your right.
• If your claim is large or your situation is special, weigh staying in the group against withdrawing within the 30 days to pursue your own claim.
• Read any proposed settlement carefully before deciding to stay in it.

If you are a listed company or a board member being sued:

• Review the certification conditions; you may object to the certification within 30 days of notification (Article 60).
• Gather evidence that part of the price fall was due to causes unrelated to the statement, as that part is excluded from compensation (Article 55).
• A board member can avoid liability for the prospectus by proving reasonable investigation.
• A fair settlement recorded before the Committee can save years of dispute and cost.

Before joining, make sure your dates fall within the covered period and that the one-year period has not passed. You can send us your portfolio statement and the announcement you saw on WhatsApp, and we will review with you whether you can join and what you need.