SCA warns against pre-IPO sales

Securities and Commodities Authority (SCA) has warned founders of private stock companies against taking steps to sell a stake in the firms in any initial public offering prior to meeting requirements of IPOs stipulated in Federal Law No 8 of 1984 and obtaining its approval.

SCA warned any sale by founders before meeting the requirements of IPOs would be considered "null, void and illegal".

The law bans private joint companies from offering shares in an IPO and SCA said founders of private stock companies who take such action would be subject to punitive actions according to Article 323 of the law.

The law also bans selling any stake in private stock companies before at least two fiscal years from the date of announcing the foundation of the company and accordingly, any sale before the elapse of this period will be considered illegal.