• GL
Choose your location?
  • Global Global
  • Australia
  • France
  • Germany
  • Ireland
  • Italy
  • Poland
  • Qatar
  • Spain
  • UAE
  • UK

Saudi Arabia's Capital Market's Authority do away with limitations on foreign strategic investors owning shares in listed companies

04 July 2019
Commercial Law
In what is being hailed as a landmark move, Saudi Arabia's Capital Markets Authority (the "CMA") has recently cleared the way for certain foreign investors to own controlling interests in publically listed companies.  

Whereas, previously all foreign investment was limited to a maximum of 49% of a listed company on the Saudi Stock Exchange (the "Tadawul"), the CMA issued instructions on 26th June 2019 (the "Instructions"), effectively removing (subject to certain conditions) such limitations.

In summary, the Instructions:  

  • do not apply to Qualified Foreign Financial Institutions (QFI) (i.e., foreign banks, insurance companies and brokerage and securities companies that can qualify pursuant to the Rules for Qualified Foreign Financial Institutions Investment in Listed Companies dated 15/7/1436H corresponding to 4/5/2015G), GCC nationals and companies that are majority owned by GCC nationals, GCC government entities or companies that fall under the definition of GCC entities as set out in the resolution of the Supreme Council of the in its 15th session approved by the Council of Ministers Resolution number (16) dated 20/1/1418H. 
  • define a Foreign Strategic Investor as a foreign investor (other than a QFI) that has a direct ownership percentage in the shares of a listed company with the intention of contributing towards promoting the financial and operational performance of such company.
  • require that a Foreign Strategic Investor satisfy the following conditions in order to own shares (without any limitations) in a listed company:
    • it must be established or licensed in a country that applies regulatory and supervisory measures similar to those applied by the CMA or are accepted by it. In this regard the CMA has sole discretion in determining whether any regulatory and supervisory measures adopted in the home country of a Foreign Strategic investor are similar to those applied by it. 
    • it must have both a client account and a Depositary Center Account (means an account with the Saudi Arabian Depositary Center Company (Edaa)). 
    • fulfil any other conditions that the CMA requires.
  • a Foreign Strategic Investor will have to abide by any limits on investment as set forth in the constitutional documents of the listed company it wishes to invest in.
  • a Foreign Strategic Investor will also have to abide by any other legislative limitations on foreign ownership. Traditionally, other regulators such as the Saudi Arabian Monetary Agency applied restrictions on foreign ownership in banking and insurance sectors (amongst others) and it remains to be seen how such regulators will apply the Instructions. 
  • the Instructions place restrictions on the disposal of shares owned akin to a lock up period (traditionally placed on founding shareholders of a listed company) whereby a Foreign Strategic investor cannot dispose of any owned shares until the lapse of two years from the date of ownership of the shares.

Although the issuance of the Instructions by the CMA opens up the doors for foreign investors to come into what was a very closed market it remains to be seen how the CMA will implement the Instructions given that it still has wide authority to decide on whether a particular Foreign Strategic investor meets its conditions. 

Further Reading

We use cookies to give you the best user experience on our website. Please let us know if you accept our use of cookies.

Manage cookies

Your Privacy

When you visit any web site, it may store or retrieve information on your browser, mostly in the form of cookies. We mainly use this information to ensure the site works as you expect it to, and to learn how we can improve the experience in the future. The information does not usually directly identify you, but it can give you a more personalised web experience.
Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change permissions. However, blocking some types of cookies may prevent certain site functionality from working as expected

Functional cookies


These cookies let you use the website and are required for the website to function as expected.

These cookies are required

Tracking cookies

Anonymous cookies that help us understand the performance of our website and how we can improve the website experience for our users. Some of these may be set by third parties we trust, such as Google Analytics.

They may also be used to personalise your experience on our website by remembering your preferences and settings.

Marketing cookies

These cookies are used to improve and personalise your experience with our brands. We may use these cookies to show adverts for our products, or measure the performance of our adverts.