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New rules regulating foreign investment in the main market are now in effect, allowing foreign individuals and companies to invest in Saudi securities, debt, and funds, according to new Capital Market Authority (CMA) regulations (pdf) published in the official gazette on Friday. The new regs, which generally exempt GCC citizens, amend a host of old regulations, including the Authorised Persons Regulations, Qualified Foreign Financial Institutions Investment rules, and Investment Accounts Instructions.
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The new rules allow six categories of non-resident foreigners to invest: Qualified foreign investors with at least SAR c.1.87 bn in assets, foreign strategic investors, ultimate beneficiaries under swap agreements, clients of licensed asset managers with full discretion, individuals residing in a GCC country, and former residents of Saudi Arabia or a GCC country who opened investment accounts during their residency.
Restrictions: The rules place a 10% ownership cap per non-resident foreign investor (excluding strategic investors) and a 49% aggregate cap for all foreign investors in any single listed company. Foreign strategic investors are also barred from selling shares for two years after acquisition.
Tighter investment account rules: Financial institutions must update client information periodically, conducting a full review at least once every five years. Clients must receive 90 days’ notice and a one-month warning before document expiry, and accounts will be frozen if information is not updated during that period. The new rules also outline procedures for sensitive cases, such as a client’s death, to ensure secure and orderly asset liquidation for heirs.
This joins a sweep of capital market reforms: The CMA has overhauled fund regulations to open the market to foreign funds and fintech distributors while strengthening risk rules, and it is also making it easier for GCC retail investors to invest directly in the main market. Meanwhile, Tadawul is proposing amendments to its Nomu parallel market to expand investor eligibility and is launching Saudi depositary receipts (SDRs) to allow local trading of foreign company shares. The CMA is also studying the creation of a new platform for mortgage-backed securities.
