What's Down: Saudi Arabia's market regulator fines five companies 100,000 riyals for not disclosing their annual financial results within the allowed time frame.
Saudi regulator fines firms for late reports
Saudi Integrated Telecom was one of several public companies to be fined by the market regulator late on Sunday for not disclosing annual financial results in time.
The Capital Market Authority (CMA) has placed a 100,000 Saudi riyals fine on the fixed-line operator, along with Buruj Cooperative Insurance Company, Al-Baha Investment & Development, Allied Cooperative Insurance and Saudi Fisheries due to their "violation of clause (A) of Article (45) of the Capital Market Law and clause (E) of Article (26) of the Listing Rules."
The companies "failed to inform CMA or announce to the shareholders, during the specified period, [their] annual financial statements for the period closing 31/12/2011."
Saudi Arabia has introduced a series of regulations as it prepares to open up to foreign investors. At the moment, foreign investors can only buy shares through swap-agreements with international banks.
Fund managers say the kingdom's regulator has become a role model for the wider Gulf markets, adopting strict regulations and requiring corporates to be transparent and comply with local laws.
"The role of the regulator is to make sure that companies disclose information to their shareholders around the same time," said Tariq Qaqish, a senior fund manager at Al Mal Capital in Dubai.
"They can't just keep it open." When companies in the UAE do not disclose their quarterly and annual results on time, they are usually suspended from trading.
The Security and Commodities Authority requires companies to report their annual results within three months and quarterly results within 45 days. By contrast, Saudi Arabia's regulator requires companies to report their annual results within 40 days and quarterly results within 15 days.
"The UAE can learn some lessons from Saudi Arabia's strict adoption of its regulations," Mr Qaqish said. "If they reduce the allowed number of days to disclose at a specific reporting period, investors can exercise better judgement when making decisions," he added.