Menu Search through site content What are you looking for?

KSA: the first ever Class Action Suit filed against the Board of Directors of Al-Mojil Group

  • Market Insight 5 March 2019 5 March 2019
  • Middle East

  • Commercial Disputes

In December 2017, in a first for the region, the Capital Market Authority in Saudi Arabia introduced a new class action regime for claims by shareholders of listed companies in KSA.

KSA: the first ever Class Action Suit filed against the Board of Directors of Al-Mojil Group

The CMA introduced detailed Regulations for the new class action regime, granting the Committee for the Resolution of Securities Disputes ("CRSD"), which is a specialist tribunal for securities disputes, a range of new powers to accept and administer shareholder class actions in the Kingdom.

The first class action to be approved under this new regime became clear when the General Secretariat of the Committees for Resolution of Securities Disputes (CRSD) published an announcement on its website on 19 February 2018 linking to a decision by the CRSD dated 4 February 2019 under which the CRSD had used its power under Article 52 of the Regulations to approve the first shareholder class action. The CRSD accepted the request by a shareholder to register a class action lawsuit against the former Board of Directors of Mohammad Al-Mojil Group (MMG), its senior management and its auditor for alleged violations committed during the subscription in the company's shares as part of its 2008 IPO. 

The CMA has previously taken regulatory action on related issues.  On 8 February 2017 the Appeal Committee for Resolution of Security Disputes, issued a final and conclusive decision convicting seven former members of MMG's board and their auditor for breach of Article 49/a of the Capital Market Law and Article 7 of the Market Conduct Regulations. The Appeal decision concluded that those former board members conducted practices that created a false and misleading impression regarding the value of the company's share, during the subscription stage. The class action therefore seeks to consolidate shareholder claims that have already been brought against the MMG Board before the CRSD to order the defendants (MMG board members) to pay a compensation for damages sustained, resulting from these offences. 

The CRSD invited concerned investors who had subscribed to MMG's shares prior to its IPO on the Capital Market on 12/07/2008, to submit a request via the Capital Market Authority (CMA) website in order to join the class action within 90 days of the announcement. 

It should be noted that the class action related to the investors before the IPO stage described above. Violations allegedly committed after the IPO stage for misleading and manipulating their financial statements relating to MMG's shares are still under the CRSD and the CMA's investigation.

In our last update, we set out a summary of the new regime and its impact on the investment environment in KSA; see link here.


Stay up to date with Clyde & Co

Sign up to receive email updates straight to your inbox!