Saudi Arabia Opens Main Market Access to All Foreign Investors While Retaining Key Ownership Controls

The amendments to the Rules for Foreign Investment in Securities (“FIS Rules”) permit non-resident foreign investors to invest directly in shares and convertible debt instruments listed on the Main Market, removing the historical requirement to access the market through QFI status or swap arrangements. At the same time, the CMA abolished the swap framework, replacing indirect exposure mechanisms with a direct investment model.

While these reforms significantly expand access to the Main Market, they do not eliminate foreign ownership controls. The amended framework retains key limitations, including a 10% cap on ownership by any non-resident foreign investor (other than a foreign strategic investor) and a 49% aggregate cap on foreign ownership in a listed issuer, excluding foreign strategic investors.

What Changed
The CMA has removed the QFI regime and the concept of QFI status, replacing the prior qualification-based access model with a unified framework permitting direct foreign investment in Main Market securities.

Foreign investors, both institutional and individual, may now invest directly in listed shares and convertible debt instruments without meeting prior eligibility thresholds or undergoing QFI registration. In addition, the CMA has eliminated the swap-based framework, which previously served as a principal indirect route for foreign investors to obtain economic exposure to Saudi-listed securities.

As a result, foreign investors are now able to hold legal title to securities and exercise associated shareholder rights, subject to applicable regulatory requirements. Operationally, foreign investors must continue to access the market through licensed Saudi intermediaries and comply with applicable account-opening, custody and trading requirements.

These changes simplify market entry and align the Saudi capital market more closely with international practices, marking a further step in the Kingdom’s capital markets development under Vision 2030[, Saudi Arabia’s national strategy to diversify its economy and promote private sector growth.

What Has Not Changed
Despite this liberalization, foreign investment in Saudi-listed securities remains subject to important safeguards under the FIS Rules.

In particular, a non-resident foreign investor (other than a foreign strategic investor) may not own 10% or more of any listed issuer’s shares or convertible debt instruments. In addition, total foreign ownership in a listed issuer remains capped at 49% in the aggregate, excluding foreign strategic investors.

Foreign investment also continues to be subject to company-specific constitutional restrictions, sector-specific ownership limits and other applicable regulatory caps.

The framework for foreign strategic investors remains in place. Such investors may exceed certain ownership thresholds, subject to regulatory approval and conditions, including minimum holding periods (typically two years).

Related Measures
The January 2026 reforms build on earlier CMA initiatives aimed at facilitating foreign participation in the Saudi market. In July 2025, the CMA introduced measures to simplify the opening and operation of investment accounts for certain foreign individuals, including residents of Gulf Cooperation Council (GCC) countries and individuals with prior residency in Saudi Arabia or other GCC states.

The CMA has also highlighted the continued growth of foreign participation in the Saudi capital market, with foreign ownership reaching significant levels in recent years, reflecting increasing international investor interest.

Why This Matters
For foreign investors, the amendments substantially reduce the regulatory barriers historically associated with accessing the Saudi Main Market. The removal of QFI eligibility requirements is expected to broaden participation, including by smaller asset managers and individual investors.

For Saudi issuers and market participants, the reforms are likely to expand the investor base and support market liquidity. However, the continued application of ownership caps and sectoral restrictions means that careful monitoring of foreign ownership levels remains essential.

Investors, issuers and intermediaries will need to ensure that systems and processes are in place to track ownership limits, manage compliance obligations and account for any issuer-level or sector-specific restrictions.

Transactions that would result in a breach are generally prevented through exchange- and depository-level controls, including order rejection or partial execution. Notwithstanding these controls, investors remain responsible for monitoring their ownership positions, particularly where holdings are aggregated across multiple accounts or structures.

Breaches of applicable ownership thresholds may result in regulatory and practical consequences, including rejection or unwinding of transactions, restrictions on voting rights attached to excess holdings or requirements to divest down to permitted levels. The CMA retains broad enforcement powers, and non-compliance may expose investors to regulatory action under the Capital Market Law and its implementing regulations.

Conclusion
The CMA’s elimination of the QFI regime represents a significant milestone in the progressive liberalization of Saudi Arabia’s capital markets, transitioning from a qualification-based access model to a direct investment framework.

However, the retention of ownership limits and other regulatory constraints underscores a calibrated approach to market opening. Foreign investors should reassess their market entry strategies, including brokerage, custody and compliance arrangements, while Saudi-listed companies and intermediaries should review foreign ownership monitoring and disclosure processes in light of the new regime.