JEDDAH, 20 March 2007 — The Council of Ministers yesterday approved the establishment of the Saudi Capital Market Company with a capital of SR1.2 billion, converting Tadawul into a joint stock company fully owned by the state-owned Public Investment Fund, an official Cabinet statement said.

The Cabinet meeting, chaired by Custodian of the Two Holy Mosques King Abdullah, also reviewed preparations for the March 28-29 Arab summit in Riyadh and hoped that it would realize the hopes and aspirations of the Arab people and deal with Arab issues with credibility, frankness and transparency.

Abdul Rahman Al-Tuwaijri, acting chairman of the Capital Market Authority, said the establishment of the new capital market company would have a positive impact on the market as it would carry out executive responsibilities. “This is a decision that goes in line with international stock markets,” he added.

He said he expected the company to play a greater and more effective role in the management and development of the Saudi stock market, the largest in the Middle East in terms of capitalization, by setting out necessary rules and regulations and carrying out the requirements for listing on the market.

Tuwaijri also expected that the formation of the new joint stock company would lead to an improvement in the level of transparency in the market and capital market information and quicker measures for settlement, deposits and clearance.

He also disclosed that the CMA would soon introduce a new stock exchange system that would improve the efficiency of the market. The Cabinet statement said the new company would have 120 million shares with equal value.

“Part of the company’s shares will be floated for public subscription at a time fixed by an extraordinary meeting of its general assembly,” the Saudi Press Agency said, quoting the statement.

The new capital market company will be based at the King Abdullah Financial District (KAFD) in Riyadh, which is designed to become the largest financial center in the Middle East.

Culture and Information Minister Iyad Madani said the Cabinet meeting had made a number of important decisions including one to expand the role of the private sector in carrying out infrastructure, health, education and social development projects. It also decided to activate the development role of banks by setting out policies and mechanisms to meet financial requirements of productive sectors, he added. The Cabinet also wanted to expedite preparation of the national water plan.

Referring to the Arab summit, the Cabinet said the two-day conference would lead to the strengthening of the Arab nation and its cultural identity and promoting economic integration by expanding trade exchange among the 23 Arab League member states. “We hope that the Riyadh meeting will herald a new beginning for joint Arab work,” the Cabinet added.

The Cabinet urged influential countries to recognize the new Palestinian unity government and lift the economic siege.

King Abdullah, meanwhile, held talks with Arab League Secretary-General Amr Moussa in Riyadh on the summit’s preparations and agenda.