On 6 January 2026, the Capital Market Authority (CMA) announced amendments to the Rules for Foreign Investment in Securities (the "New Foreign Investment Rules"), which took effect on 1 February 2026 following a public consultation held in October 2025. The New Foreign Investment Rules build upon earlier CMA reforms permitting natural foreign investors residing in any Gulf Cooperation Council (GCC) member state, as well as those who previously resided in the Kingdom or any GCC member state, to invest directly in Saudi-listed equity securities. The New Foreign Investment Rules aim to streamline access for non-resident foreign investors and enable direct ownership of shares listed on the Main Market of the Saudi Exchange (Tadawul).
Key takeaways:
- The New Foreign Investment Rules open the Main Market of the Saudi Exchange (Tadawul) to all foreign investors, allowing direct ownership of listed shares regardless of residency or investor category.
- The reforms remove the Qualified Foreign Investor (QFI) framework and the swap agreement framework previously used to access Saudi-listed shares.
- Existing ownership limits remain in place for non-resident foreign investors (excluding Foreign Strategic Investors): a 10% cap per issuer and a 49% aggregate foreign ownership cap per issuer.
- Foreign Strategic Investors are subject to a two-year lock-up and are excluded from the calculation of the 49% aggregate cap.
Overview of the reforms
The CMA's July 2025 amendments to the Rules for Foreign Investment in Securities (the "Previous Foreign Investment Rules") permitted foreign investors to participate in the Saudi capital markets but imposed categorical restrictions, requiring non-GCC investors to fall under specific permitted categories – such as Qualified Foreign Investors, Foreign Strategic Investors, or swap agreement beneficiaries – to invest in shares listed on the Main Market. The framework also allowed swap agreements for economic exposure and, in some cases, required securities to be held through a local capital market institution.
The New Foreign Investment Rules represent a major liberalisation by allowing all foreign individuals and entities – regardless of residency or investor category – to invest directly in shares listed on the Main Market of the Saudi Exchange (Tadawul). The New Foreign Investment Rules remove categorical restrictions imposed under the Previous Foreign Investment Rules, including the Qualified Foreign Investor (QFI) framework, the swap agreement framework and the requirement to hold securities through a local capital market institution, thereby enabling direct ownership for foreign investors.
Key restrictions remaining in effect
- Non-resident foreign investors (excluding Foreign Strategic Investors) may not hold 10% or more of the shares or convertible debt instruments of any Saudi issuer listed on the Main Market.
- The total aggregate ownership of shares or convertible debt instruments held by all foreign investors (whether resident or non-resident, excluding Foreign Strategic Investors) in any Saudi issuer remains capped at 49%.
- Foreign Strategic Investors are subject to a two-year lock-up period, during which they may not sell their shares. The ownership of Foreign Strategic Investors in listed companies is not counted within the 49% aggregate foreign ownership cap.
- Additional restrictions or limitations may apply based on the company's bylaws or sector regulators' requirements.
Looking ahead
These regulatory reforms mark a significant milestone in the liberalisation of the Saudi market. The New Foreign Investment Rules aim to advance the CMA's objectives of broadening and diversifying the investor base, attracting foreign capital, and enhancing market liquidity. These changes further the CMA's overarching goal of positioning the Saudi market as a leading international financial centre, capable of attracting increased flows of foreign investment. As the largest stock exchange in the MENA region and consistently ranked among the top ten globally, the Saudi market is well-placed to benefit from these reforms, which are expected to further strengthen its global standing.
Importantly, these changes will streamline the process and entry of non-resident foreign investors and enable direct ownership, making the Saudi market more accessible and attractive to international investors. In practice, they replace category-based access routes with a single unified framework for direct participation, reducing structural and operational friction for inbound investors, subject to the ownership caps described above. We will continue to monitor developments in this area.
For further information on any of the matters discussed in this client alert, please contact the White & Case team.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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