Management Discussion in the Board Report: the CMA Draft | Hespah LLC [Skip to main content](#main-content)[![Hespah LLC](https://centralcdn.hespah.com/home_logolight_file2png.webp)](/en)Search More [Home](/en) [Learning Hub](/en/courses) [About us](https://hespah.com/who-we-are) [Blog](/en/blog) [Contact Us](/en/contact) Login[New Account](/en/register) 1. [Home](/en) / 2. [Blog](/en/blog) / 3. Management Discussion in the Board Report: the CMA Draft Management Discussion in the Board Report: the CMA Draft ======================================================== 2026-10-24 / 2 days ago What is the CMA proposing for management discussion? ---------------------------------------------------- On 2026-10-21 the Capital Market Authority (CMA) opened consultation on a draft requiring a separate management discussion section in every listed company's annual Board report. Comments close on 10/06/1448H (2026-11-20), after 30 days. On the Main Market, the requirement starts with the first Board report that follows the approval resolution. The draft calls the section "Discussion and Analysis of Financial and Operational Performance and Financial Position", and it covers both the Main Market and the Parallel Market. The analysis has to go beyond restating figures from the financial statements. It must explain the company's performance, results of operations, financial position and liquidity, while observing Article 87 of the Corporate Governance Regulations. Therefore a revenue table copied from the accounts with a line saying "revenue increased" will not pass if the CMA approves the text as drafted. What must the management discussion section contain at a minimum? ----------------------------------------------------------------- The draft splits the minimum management discussion content into three numbered areas, and the CMA's text spells out each one. Firstly, financial and operational performance during the year. Companies must explain material changes in revenue, costs, profitability and business volume against the previous financial year, including changes during the quarters of the same year where material. Besides the year-on-year explanation, the draft asks for the non-recurring or unusual items that materially affected results, material differences between operating results and the final financial results, and the effect of significant accounting estimates. In fact, that is the question an analyst asks when net profit moves against operating profit. In the same area, the analysis must, where material, rest on relevant financial and non-financial key performance indicators, compared with the previous year. For example, the draft lists "without limitation" profitability margins, return on capital or equity, revenue and profit growth rates, and operational efficiency indicators. On the non-financial side it mentions production or sales volume, number of customers or users, customer retention rates, production capacity or utilisation rates, and product or service quality. The second area is wider: liquidity, solvency, financial position and capital resources. The company must show its ability to meet short- and long-term obligations, the trends, events, commitments or uncertainties reasonably likely to materially affect liquidity or its ability to continue in business, and its available sources of liquidity, including material unused sources of financing. Moreover, it must analyse cash flows from operating, investing and financing activities, and explain material differences between net profit and net operating cash flow. Besides liquidity, the management discussion covers working capital, capital expenditure commitments and the financing structure, including equity, debt or off-balance-sheet arrangements, plus the company's plans to meet its short- and long-term financing needs. The third area looks ahead. It covers material trends, factors and uncertainties, internal or external, such as markets, demand, prices and costs, economic, regulatory and technological developments, and changes in competition or supply chains. Moreover, the draft asks companies to state "their quantitative effect where it can reasonably be estimated". Therefore the FP&A team should expect to be asked for a number. ![The three minimum content areas of the proposed management discussion section](https://centralcdn.hespah.com/uploads/emils/17928667850.jpeg "The three minimum content areas of the proposed management discussion section") When does it apply on the Main Market and the Parallel Market? -------------------------------------------------------------- The draft treats the two markets differently on timing, while it also touches certain existing paragraphs of the Corporate Governance Regulations. Item Main Market Parallel Market (Nomu) Separate management discussion section Mandatory Guidance first, then mandatory Start date First Board report issued after the date of the approval resolution First annual Board report issued in the year after the year of the resolution Paragraphs (15), (16), (17), (18), (19), (20) and (27) of Article 87 Not addressed by the draft Become mandatory Those seven paragraphs cover a description of the main activities of the company and its subsidiaries and each activity's effect on results, the company's important plans and decisions and its future outlook, and the risks it faces with its policy for managing them. They also cover a five-year summary of assets, liabilities and results (or since incorporation, whichever is shorter), a geographical analysis of total revenue, an explanation of material differences in operating results against the previous year or any forecast the company announced, and information on loans with a statement of total indebtedness. How does the timing work in practice? If the CMA approves the draft before a Main Market company publishes its Board report for the financial year, that report is the first one subject to the new management discussion section. A Nomu company, by contrast, treats the section as guidance first, and it becomes mandatory from the first annual Board report issued in the year after the year of the resolution. However, the CMA has not announced an approval date. Don't build a plan around an assumed one. ![When the management discussion section applies on the Main Market and Nomu](https://centralcdn.hespah.com/uploads/emils/17928667851.jpeg "When the management discussion section applies on the Main Market and Nomu") What to do now, before the management discussion consultation closes -------------------------------------------------------------------- This is still a draft. However, the annual Board report timetable leaves no room to build new content in its final weeks, so here are practical steps for finance, investor relations and governance teams: 1. Firstly, take your company's latest Board report and map every management discussion item in the three areas against it: present and explained, a figure without explanation, or missing. 2. Decide which key performance indicators the management discussion section will present, financial and non-financial, and make sure each one has a data source that reconciles to the audited statements and can be compared with the previous year. 3. Work with accounting on a schedule explaining the gap between net profit and net operating cash flow, and another listing non-recurring items and significant accounting estimates for each year. 4. Since treasury holds the data, collect from it the available and unused financing sources, capital expenditure commitments and any off-balance-sheet financing arrangement. 5. Next, ask FP&A for a list of material trends and uncertainties, and decide which ones have an effect that can reasonably be estimated. 6. At Nomu companies, review the seven paragraphs of Article 87, especially the five-year summary and the indebtedness statement, because the draft proposes making those paragraphs mandatory. 7. Submit your comments on the Istitlaa platform by 2026-11-20, because wording such as "where material" and "where it can reasonably be estimated" needs input from the people who actually prepare the report. For context, three days earlier, on 2026-10-18, the CMA opened a separate consultation on investment fund disclosure requirements, which closes on 2026-11-17. The CMA also amended its auditor rules this month; see [CMA auditor rules amended: what changed](https://hespah.com/en/blog/cma-auditor-rules-2026). For a grounding in capital market law, read the [CME-1B guide to Saudi capital market regulations](https://hespah.com/en/blog/cme-1b-guide), then the [map of professional certifications for accountants in Saudi Arabia](https://hespah.com/en/blog/professional-certifications-saudi). FAQs on management discussion in the Board report ------------------------------------------------- ### Is the management discussion section mandatory now? No, because the draft is still open for public consultation until 2026-11-20, and the CMA will study the comments with a view to approving the final wording. The obligation starts once the CMA issues the approval resolution. ### Does the new section replace Article 87? No. The draft requires companies to observe Article 87 of the Corporate Governance Regulations; it gathers performance disclosure into one separate section and adds requirements to it. ### How do I submit comments on the management discussion draft? Through Istitlaa, the Unified Electronic Platform for Consulting the Public and Government Entities, affiliated with the Saudi Competitiveness & Business Center, within the consultation period. ### Does the draft require forward-looking estimates? It asks for the quantitative effect of material trends and uncertainties "where it can reasonably be estimated". However, the company must explain the nature of their potential effect on its business, results and financial position in every case. Sources ------- - [Capital Market Authority · consultation announcement on enhancing disclosure in the management discussion section](https://cma.gov.sa/en/MediaCenter/NEWS/Pages/CMA_N_4139.aspx), published 2026-10-21 - [Capital Market Authority · text of the proposed regulatory provisions (Arabic)](https://cma.org.sa/RulesRegulations/Consulting/Documents/Enhancing_Disclosure_within_the_Management_ar.pdf) - [Istitlaa · project page for submitting comments](https://istitlaa.scbc.gov.sa/ar/Trade/CMA/RegulatoryProvisionsforEnhancingFinancialDisc/Pages/default.aspx) - CMA Corporate Governance Regulations, Article 87 Hespah Academy wrote this article on 2026-10-24 based on the CMA announcement published on 2026-10-21 and the draft text on the CMA website. This article is for general information only and does not replace the official sources or advice from a qualified professional before taking any action. 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