‎A historical overview of nominal value changes in Tadawul

‎A historical overview of nominal value changes in Tadawul

The decision to allow splitting the stock’s nominal value on the Saudi Stock Exchange (Tadawul) came into effect with the start of the implementation of the new Companies Law on January 19, 2023.

In this report, Argaam highlights the historical stages of changing the nominal value of shares, as well as the nominal value definition and impact on companies and investors.

According to the Capital Market Authority (CMA), the nominal value is defined as the value recorded on a security upon issuance, whether represented in ordinary shares, preferred shares or bonds.

The nominal value of a security does not mean the value paid by the subscriber when the security is offered for subscription. A security may be issued at a premium or a discount (a price higher or lower than the nominal value).

Splitting the nominal value of shares leads to an increased number of company’s shares with a lower nominal value. The decline in the share nominal value and market value by the prescribed split percentage does not by any means affect or change shareholders’ equity.

Stock split is an action that aims at reducing share prices and increasing the number of tradeable shares. This maximizes the share trading opportunities for the largest possible