Introduction

In a merger or consolidation, it is essential to proceed in full compliance with the applicable laws, rules
and regulations while being cost-effective and time-saving.

What is Merger and Acquisition(M&A)?

Merger and acquisitions refer to the process of one company combining with one another. In
acquisition, one company purchases the assets of another. I

In merger two or more firms joins together to move forward creating a new legal entity under the
banner of one corporate name. While in acquisition, the acquired firm is owned by the parent company
without any change to its legal name.

What regulates M&A?

The most principal and relevant law to both public and corporate transactions is the Companies Law of
Saudi Arabia. Furthermore, mergers and acquisitions of public companies are subject to the regulations
issued by the Capital Market Authority (CMA), as well as the Public Merger and Acquisition Regulations
of 2007, the Listing Rules of 2004 and the Corporate Governance Regulations of 2006.

Field of application of M&A Regulations

M&A Regulations will apply to any purchase or sale of voting shares in a company listed in the Saudi
Stock Exchange wherein the resulting ownership or control of a person or entity exceeds 10% of the
voting shares of such company. Moreover, any offer to purchase the voting shares of such company
wherein the shares sought to be acquired would increase its ownership or control more than 10% of the
voting share of such company the regulations will also put into effect.

How is Merger done?

1. Merger is established by joining two or more companies with an existing company, or by joining
two or more companies to create a new company. A merger contract shall establish the
determination of the conditions including the valuation method of the liabilities of the merged
company as well as the number of its shares in the capital of the merging company or the
company resulting the merger.
2. Merger shall not be valid except after valuation of the net assets of the merged and merging
companies, in case the consideration for the shares of the merged company or a part thereof is
shares in the merging company.
3. The decision of merger must be issued by issued by each company who is a party to the merger.
4. A partner who owns shares in the merged and merging companies may vote on the merger
decision only in either company.

*All rights and obligations of the merged company shall be transferred to the merging company or
the company resulting from the merger after completing merger procedures and registering the
company in accordance with the Law. The merging company or the company resulting from the
 merger shall be considered a successor company of the merged company to the extent of assets
transferred thereto, unless agreed otherwise in the merger contract.

Documentation requirements

In a public merger and acquisition transaction, the merger offer is through an offer circular the requires
approval from the CMA. The offer circular shall be presented to the target’s board of directors and shall
inform the target’s shareholders of the offer to make recommendations. In accordance with the
takeover timetable of the CMA the merger offer and the offer circular must be published. The
agreement shall only be concluded when the offer is being announced.

In a private merger and acquisition transaction, the parties shall present to the Ministry of Commerce
and Industry a resolution from the target’s shareholders approving the sale including the fulfillment of
its statutory pre-emption rights along with a notarized share or transfer agreement. Where a foreign
buyer is involved, a foreign investment license issued by SAGIA is required.

Liabilities

Terms and Periods

The merger decision shall be effective after the lapse of 30 days from the date of publication.

Creditors of the merged company may, within said period, object to the merger by a registered letter
addressed to the company. In this case, the merger shall be suspended until the creditor waives his
objection, or until the company pays off the debt if due or otherwise provides sufficient guarantee to
pay it off.