The Capital Market Authority has approved a request from Al Kathiri Holding Company to reduce its share capital by 91.5 per cent, a step that would leave the Saudi building materials group carrying less than ten million riyals of nominal capital. The regulator published its decision on 21 October 2026.
Under the approved plan, capital falls from 113,022,000 riyals to 9,649,705 riyals. The share count drops from 226,044,000 to 19,299,410, with 206,744,590 shares cancelled at a ratio of 0.915 shares for every share held. The approval is conditional on the company's extraordinary general assembly voting in favour and on the completion of the remaining regulatory procedures. Before that meeting the company must publish a disclosure setting out the method of the reduction and its expected effects, with enough time for shareholders to consider how to vote. The regulator added its standard caveat that approval is not an endorsement of the merits of the reduction, only a confirmation that the requirements of the Capital Market Law and its implementing regulations have been met.
The size of the cut is the product of two revisions in three months. The board first recommended a reduction of 61.27 per cent, to 43.78 million riyals, to write off accumulated losses. In early September it withdrew that recommendation and replaced it with the larger figure after preliminary results for the first half of the year showed the losses had grown. Accumulated losses stood at 103.37 million riyals at the half year, equivalent to 91.46 per cent of the capital then in issue. The reduction is to take effect at the end of the second trading day following the assembly's approval.
For boards, the sequence matters more than the arithmetic. A capital reduction of this kind raises no cash, changes no part of the business and alters no shareholder's proportionate stake. It is an accounting step that resets the balance sheet so that accumulated losses no longer sit against capital, and in the Saudi market it also moves a company away from the disclosure and trading consequences attached to issuers whose losses breach set proportions of capital. What is instructive here is that the board had to return to its shareholders with a materially larger number because the first estimate was overtaken by the next reporting period. Directors asked to approve a loss absorption figure drawn from preliminary numbers should expect to be asked why the figure is durable.
For investors and for finance teams at listed peers, the practical reading is about sequencing. The headline percentage will dominate the coverage, but the shareholder vote, the pre-meeting disclosure and the effective date are the points at which anything actually changes. Readers holding the stock should model the consolidation effect on per-share measures rather than on the nominal capital figure, since earnings per share and book value per share are both restated on a far smaller base. Readers at other small and mid-cap issuers carrying accumulated losses should treat this as a template for what the regulator will require of them: a stated method, a quantified expected effect, and a vote taken on current rather than stale figures.
