The Capital Market Authority’s (CMA) Board approved the “Instructions for the Foreign Strategic Investors’ Ownership in Listed Companies” (“the Instructions”), which will be effective as of the date of their publication. These Instructions are aimed at the foreign legal person who intends to own a strategic shareholding in the listed companies, and for which the aim is to promote the financial or operational performance of the listed companies on the long-term (“foreign investor”).
Among the most prominent aspects and features of the Instructions are that they allow the non-financial foreign investor to invest in the Saudi capital market after it was focused on financial investors; in addition to not setting a maximum or minimum limit on the ownership percentage of the foreign investor in the listed companies, accompanied with the ease in the procedures for opening accounts and owning shares through the Authorized Persons. Further, the instructions takes into account the imposition of a prohibition period on the foreign strategic investor in respect of disposing of any shares he owned during the two years following the date of ownership of those shares.
In this regard, H.E. Mr. Mohammed bin Abdullah Elkuwaiz, Chairman of the Capital Market Authority mentioned, “the CMA has approved these Instructions as part of opening the capital market and the Saudi economy to the outside world, as we noticed a growing interest from foreign strategic investors to invest in companies listed on the Saudi Stock Exchange”.
Mr. Elkuwaiz further added, “the Instructions are complementary to the “Rules for Qualified Foreign Financial Institutions Investment in Listed Securities“, approved by the CMA in 2015G and which has witnessed numerous developments since they came into effectivity. However, while the Rules are targeting the qualified foreign financial institutions (Financial Investor), these Instructions are concerned with foreign strategic investors”.
It is worth mentioning that since the beginning of 2019, the Saudi Stock Exchange has witnessed increasing foreign cash flows after the beginning of the Saudi Stock Exchange inclusion tranches in the emerging markets indicators. The number of qualified foreign investors increased by 163.7 per cent to become 1,195 investors as of 20/06/2019G, after they were 453 investors at the beginning of the current year. Moreover, the ownership percentage of foreign investors in the Saudi Capital Market has reached 7% as of 20/06/2019G, compared to 4.7% at the beginning of this year.
The Instructions can be viewed via the following link: