Rules for Pricing Mechanism in Public Offering of Shares

Decision
No. E/43/2021
Issuing the Rules for Pricing Mechanism in Public Offering of Shares ;Based on the Capital Market Law enacted by Oman Sultani Decree No. 80/1998 ;and Commercial Companies Law enacted by Oman Sultani Decree No. 18/2019 ;and Executive Regulation of the Capital Market Law issued by Oman Decision No. 1/2009 The Regulation for Public Joint Stock Companies No. 27/2021 and In the interest of the public It has been decided
Article 1
The attached rules shall have effect with regard to Pricing Mechanism in Public Offering of .Shares
Article 2
Anything infringing this decision or inconsistent with its provisions shall be repealed
Article 3
.This decision shall have effect from the date of issuance Issued on: 28 Shaban 1442 H Corresponding to: 11 April 2021 AD Abdullah salim Abdullah Al Salmi Executive President Rules for Pricing Mechanism in Public Offering of Shares
Chapter 1
Definitions and General Provisions
Article 1
In the application of this rules, words and expressions shall have the same meaning assigned to them in the Commercial Companies Law and Regulation for Public Joint Stock Companies and the following words and expressions shall have the meaning respectively assigned to them unless

:the context otherwise requires
MSX: Muscat Stock Exchange Co. SAOC .1
Related Parties: Related parties as defined in the Capital Market Authority's (CMA) Code of .2 .Corporate Governance for public listed companies System: Part of MSX trading system for the purposes of book building or alternative electronic .3 (system for bookbuilding provided by Muscat Clearing and Depository Company (MCD Collecting Agents: Banks operating in the Sultanate, MCD and the companies licensed to carry .4 .out brokerage business, appointed to collect bids and subscriptions in a public issue Book building stage: Stage for subscription of large subscribers on book building rout to .5 .determine the offer price .Price range: The higher and lower limits of the offer price in the book-building route .6 Subscription Application: The form for subscription in offered shares under the terms and .7 .conditions in the prospectus Small Subscribers: Subscribers applying up to the maximum quantity of shares permitted for .8 .small subscribers, as per the Prospectus Large Subscribers: Subscribers applying for more than the maximum quantity of shares .9 .permitted for small subscribers, as per the Prospectus
Article 2
Minimum reservation for small subscribers in all IPOs shall be 50% up to issue sizes of 30 million Omani Riyals or less and 40% for issues bigger than that. Computation of issue size shall be based the lower end of the price band for an issue through the book building route. Any unsubscribed shares from those reserved for small subscribers must be added to the pool .available for allotment to the large subscribers
Article 3
Issue managers may provide firm allotment to one or more institutional investors (Anchor investor/s), as a carve out from the shares available for allotment to large applications, up to a maximum of 20% of the entire issue, (and subject to Article 6), provided Issue Manager has obtained irrevocable commitments from such investors to subscribe at the top end of the price range. The orders from the Anchor Investor and their earmarked quantity will not be included in .the book
Article 4
The allotment to the Anchor investor(s) that has been mention in Article (3) above shall be at the cut-off price arrived in the book building process and the same shall be locked-in for a minimum period of ninety (90) days from the day of listing but the issuer may also specify a longer lock-in period. Issue manager shall disclose sufficient information on such investors, shares to be allotted to them and justification for their selection and intended benefits for the .company and the other shareholders, in the final prospectus
Article 5
Floating the issue and listing the shares in the MSX must be completed within six (6) months of the date the issue manager submitting the complete and signed prospectus to the CMA unless .this period is extended by CMA in writing
Article 6

The issuer and issue manager may organize the subscription either as fixed price offer or through the book-building route. Further, allotment to any one investor shall not exceed 10% of any issue. In case of oversubscription, at the fixed price or the top end of the price range in book building, the issuer shall have the right to allot or sell, up to an additional 15% of the number of .shares offered in the IPO, across the subscribers
Chapter 2
Pricing Mechanism for the Offer
Section 1
Fixed Price Route
Article 7
Issue manager must provide the completed prospectus as per the form prescribed by CMA and signed by the issue manager, issuer and legal advisor including the offer price and its .justification
Article 8
CMA shall appoint in the case of companies under transformation a third party from among the entities licensed by CMA for issue management or audit firms which are accredited by the CMA and are having the relevant expertise, to conduct an independent valuation exercise and .recommend a suitable price for floating the shares in the IPO, at the expense of the issuer
Article 9
The issuer shall be required to extend full cooperation to the independent valuer and submit all .information and statements required to perform their job
Article 10
The independent valuer must complete the valuation exercise and issue the final report to the Issuer with a copy to CMA, within thirty (30) days from the date on which the issuer submits all .the details required by the valuer
Article 11
The issuer shall be obliged to offer the shares to the public at the price in the valuation report or .the prospectus filed with the CMA, whichever is less
Article 12
If the valuation report recommends a lower price than what was proposed by the issue manager, the issue manager shall update the prospectus and offer price in accordance with the report of the independent valuer and resubmit to CMA. The disclosures on valuation proposed earlier in .the Prospectus, must be retained
Article 13
The issuer may withdraw the offer, if it disagrees with the proposed offer price provided it has obtained the approval of the competent government entity, if the offer was under any obligation .to offer such percentage to the public
Article 14
Any issue which is able to collect or underwrite at least 90% of the issue size mentioned in the Prospectus would be considered as successful and allowed to get listed on MSX subject to

satisfaction of any other conditions mentioned in the Prospectus. In case of issues that are unable to reach the minimum subscription level of 90%, the Issue Managers shall have the .option to extend the issue with a reduced offer price, or get it withdrawn
Section 2
Book Building Route
Article 15
Book building process for companies under transformation shall be conducted through the system
Article 16
:The issue manager shall opt for one of the following methods in case of book building route :Two stage process .1 a. In the first stage (book building stage), applications from large subscribers will be received containing bids for various quantity of shares at various prices within specified the price .range B. The cut-off price shall be fixed at the maximum price at which the entire issue is .subscribed in full
C. The second stage would be for small subscribers and the subscription price shall be the
cut-off price arrived in the previous stage or even lower, If the issuer wants to provide any discount. The Issue manager must announce the subscription price through MSX website .before the subscription opens for this stage D. Any unsubscribed shares from the quantity of shares reserved for small subscribers must be added to the quantity available for large subscribers for proportionate allotment at offer .price E. Refund to unsuccessful bidders at the end of first stage shall be processed before the .close of the second stage to allow them to participate in the second stage if they desire :A parallel tranche process .2 .a. Subscription for both small and large subscribers will open simultaneously b. Only large subscribers will be allowed to enter their applications in the System. The Issue Manager shall coordinate with MCD to ensure that in case of any investor applying both .large and small subscriber, the application as small subscriber is cancelled .c. Small subscriber must submit their applications at the upper end of the price range d. The Issue Manager must ensure that adequate publicity and information are provided through the public media especially aimed at small investors to address any expected .concerns including those on applying at the top of the range, with the approval of the CMA e. Any unsubscribed portion of shares reserved for small subscriber, at the end of the subscription period, must be added back to the quantity available for allotment to large subscribers before determination of the cut-off price and deciding if the round of bidding .has been successful
Article 17

Related parties of the issuer cannot participate in the book building stage except where such relationship is due to common shareholding or control exercised by the administrative .apparatuses of the Government
Article 18
Subscribers in the book building stage may submit three bids in terms of price and quantity. The :bid price shall follow the rules of MSX on tick size as follows (Bid unit (Baisa (Bid price (Baisa 1 1-300 2 302-600 4 604-1000 5 Above 1000
Article 19
Employees of issue manager and accounts/portfolios/funds managed by issue manager can place .their bids in the System only on the last day of the book building stage
Article 20
Banks acting as collecting agents may enter their bids into the System through their own broking divisions or if they do not have the license for brokerage activity, operate through other broking firms. However, if any entity acting as the Issue Manager for any issue does not have the license for brokerage activity on MSX, it may obtain temporary access to the system after satisfying the .conditions prescribed by MSX/MCD
Article 21
Complete bid table showing the total bid quantity at the various prices shall be displayed live through MSX or MCD websites, as the case may be, as well as the websites of collecting agents if .possible
Article 22
Bids once submitted cannot be cancelled. However, all bids in the book building segment can be modified for higher quantity or higher price or both. Each collecting agent shall be responsible .for verifying if the bids in the application form are in line with the instructions in the prospectus
Article 23
The issuer may also withdraw the offer if the issue is not fully subscribed at the end of the first round after providing evidence to CMA that it has obtained the approval of the competent government entity, if the offer was under any obligation to offer such percentage to the public. They must also make full disclosure of the causes and results of the book building stage through .the MSX and MCD websites
Article 24
The issue manager must disclose the dates of second round to the public through MSX and MCD websites at least one day before the start of the second round. The prospectus shall include, in case of second round, the right of subscribers who applied in the first round to keep their bids or .cancel or modify them
Article 25
If the shares offered in the IPO are not fully subscribed during a round of book building, the issue manager shall complete a second round of book building within 15 days from the end of the first round in which the price range must be lowered by the issuer considering the amount of bid

received at the floor price, as compared to the quantity on offer. In case the issue is not subscribed fully even in the second round, the IPO will be considered as failed and the issuer .must withdraw the offer and file a fresh application if it desires to pursue again
Article 26
In case of funds are to be collected by MCD for the book building stage, The total amount required to support all bids or modifications thereof must be remitted by each collecting agent to the bank account specified by MCD as required by the standard operating procedures .agreement
Article 27
Before submitting any bid or subscription in the system, all collecting agents must ensure that the required application amount from the bidder/subscriber is available with them or is backed by demand drafts issued by any of the banks operating in Oman except for cases referred to in .article 39 bellow
Article 28
The Prospectus must include adequate disclosures for investors to submit their bids / :applications such as ,(Aligibility conditions and restrictions (if any -1 ,Names and addresses of all collecting agents -2 ,Timelines for submission -3 Procedure for upward modification of bids, interpreting the bid table, bid increment levels, -4 ,(method of arriving at the cut-off price, allotment and refund process (with helpful illustrations .Any other information required by CMA -5 The Issue Manager must ensure that, the chapter related to valuation in the Prospectus contains accurate and adequate information for prospective investors to objectively assess the price .range, in order to place their bids
Article 29
Issue manager shall initially submit as per the form prescribed by CMA and duly signed and completed Red Herring Prospectus (RHP) to the CMA. RHP shall contain the required disclosures without specifying any price range and mention prominently on the front page that it is an Red Herring Prospectus that has been filed with CMA but has not been approved by CMA as the final .prospectus
Article 30
.The RHP, at this stage, may not contain any financial projections for future
Article 31
After obtaining the CMA's approval for the RHP, the issue manager may engage with prospective .investors, financial analysts and researchers to arrive at the price range for book building
Article 32
For the purpose of obtaining CMA's approval on the final prospectus, the issue manager shall disclose the final price range and include in the prospectus and any additional data or information or financial projections exchanged with any prospective investor or financial

.analysts
Article 33
The issuer and its related parties and issue manager shall observe a quiet period from the date of filing the final prospectus, up to thirty (30) days after the listing of the shares on the MSX, during which no disclosure of any information or data regarding the issue except those mentioned in the Prospectus, shall be made, unless approved by CMA and also disclosed .through the point of electronic disclosure as per the regulation of public listed companies
Article 34
Issue manager shall prepare, in consultation with MSX, MCD and collecting agents, the standard operating procedures detailing the role of each of the entities involved in the subscription .process and submit the same to CMA, before approving the final prospectus
Chapter 3
Collecting subscriptions
Article 35
All collecting agents must open separate bank accounts for collecting the proceeds of .subscription
Article 36
MCD and/or issue manager whoever is entrusted with managing the funds collected in the IPO, reconcile any differences, refund the amount for excess or failed applications after allotment process, settle issue expenses based on advice of the issue manager and finally transfer the net .proceeds to the issuer
Article 37
All collecting agents must ensure their systems and staff are adequate to collect and submit applications from subscribers as per the standard operating procedures agreed in the collecting .agent's agreement and the prospectus
Article 38
Applications through nominee accounts (trust accounts) can be accepted by collecting agents provided that, they are able to ensure that none of the underlying subscribers applying through the nominee accounts are also applying in their names or their personal establishments. The issue manager shall be responsible for ensuring that multiple applications from same investors are not allotted and no undue changes are made in the names of the investors underlying such .trust accounts
Article 39
In case it is desired that bidding amounts are not to be collected from reputed and highly solvent institutional investors, Anchor Investors etc. and only the final application amount has to be collected just before allotment, the issue manager is free to make such arrangements with the respective collecting agents. However, the issue manager and the issuer must provide written undertaking to the CMA that they have made the necessary arrangements for resolving default by one or more applicants, so as to ensure the completion of allotment and listing the securities .within the specified timeline
Article 40
The collecting agents must make the required payments for the bids entered by them in the

system for each subscriber to MCD or the issue manager as per the standard operating procedures agreement, irrespective of any dispute or default by the subscriber. In case MCD or the issue manager does not receive the full amount of funds within the specified deadlines, all .bids submitted by the specific subscriber who defaulted will be cancelled
Chapter 4
Final Provisions
Article 41
Founders of the issuer are not permitted to apply for subscription in the IPO
Article 42
.Issue manager for any IPO must not be a related party of the issuer or any of the sellers
Article 43
The issue process must be completed within 15 days. Any extensions must be permitted only by the CMA. The allocation of the subscription time period for book building is left to the issue manager. In case of oversubscription in the category of small subscribers the shares reserved for them shall be allotted on a proportionate basis subject to any minimum quantity advised by .CMA
Article 44
The Issuer or the Issue Manager shall invite all collecting agents to participate in the issue process as per the same terms and shall ensure that all of them receive fair incentives without .any discrimination
Article 45
All applications for fixed price and applications of small subscribers in book build offers must be collected through the MCD eIPO system. However, the funds for applications in the book building stage can be collected by either the issue manager or MCD. All refunds must be completed .within five (5) working days of the final subscription period for any issues
Article 46
Any attempt to manipulate the cut-off price in the book building stage artificially in breach of the laws, regulations, directives and the prospectus shall be deemed an offence requiring .punishment of the committer and colliders as provided for in the Capital Market Law
Article 47
Any breach of this rule shall be deemed an offence requiring punishment as provided for in the Commercial Companies Law