Saudi market trading screen
Starting today, Sunday, February 1, 2026, the financial market will be opened to all categories of foreign investors and enable them to invest directly, after the Authority’s Board approved the draft regulatory framework to allow non-resident foreign investors to invest directly in the main market, so that the financial market in all its categories becomes available to various categories of investors from around the world to enter directly.
The approved amendments aim to expand and diversify the base of investors who may invest in the main market, in a way that supports the flow of investments and enhances the level of liquidity.
The approved amendments abolished the concept of the qualified foreign investor in the main market, allowing all categories of foreign investors to enter the market without the need to fulfill the qualification requirements, in addition to canceling the regulatory framework for swap agreements that were used as an option to enable non-resident foreign investors to obtain only the economic benefits of listed securities, and allowing direct investment in stocks listed in the main market..
The Market Authority had indicated that these approved amendments come in line with the Authority’s gradual approach to opening the market after a number of previous stages, which will be followed by complementary stages to enhance the opening of the financial market and make it an international market that attracts more foreign capital.
It is noteworthy that the ownership of international investors in the financial market reached more than 590 billion riyals by the end of the third quarter of 2025, while international investments in the main market recorded about 519 billion riyals during the same period, that is, an increase from the size of their ownership at the end of 2024, which then amounted to 498 billion riyals, and it is expected that the approved amendments will contribute to attracting more international investments..
According to the new rules that will be implemented, foreign investors have been classified into: the following:
Resident alien: An individual residing in the Kingdom of Saudi Arabia who holds a valid residence permit or resident ID.
Foreigner residing in the Gulf Cooperation Council countries: A foreign person residing in one of the Gulf Cooperation Council countries.
Non-resident alien: A person who does not reside in the Kingdom of Saudi Arabia or in any of the Gulf Cooperation Council countries.
Foreign legal person: An entity established outside the Kingdom and permitted to open an investment account for the purpose of investing in securities in accordance with the regulations and instructions issued by the Capital Market Authority..
Foreign strategic investor: A special category of foreign investors own strategic stakes in listed companies and are subject to their own regulatory instructions.
Foreign Fund: Investment fund established outside the Kingdom.
Below are the most important questions about the entry of foreign investors and their ability to invest directly In the market:
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The most important questions about opening the market
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the details
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What restrictions are foreign investors’ investments subject to?
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A non-resident foreign investor (except a foreign strategic investor) may not own 10% or more of the shares of any issuer whose shares are listed.
Foreign investors combined, whether residents or non-residents, with the exception of foreign strategic investors, are not allowed to own more than 49% From the shares of an issuer whose shares are listed.
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When opening an investment account for a foreign investor, or when relying on a third party to open an investment account for a foreign investor, is the market institution required to obtain copies of the identities of its owners, managers, persons authorized to sign on his behalf, and persons authorized to manage the account?
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When opening an investment account for a foreign investor, the Market Institution is not required to obtain copies of the identities of its owners, managers, persons authorized to sign on his behalf, and persons authorized to manage the account, without prejudice to the Financial Market Institution’s duty to identify and verify their identities using documents, data, or information from a reliable and independent source in accordance with the relevant laws, regulations, and instructions. This includes cases in which the financial market institution relies on a third party to open an investment account for a foreign investor, if in this case the market institution takes sufficient measures to ensure that identification data and other documents related to due diligence measures will be provided upon request and without delay from the other party that has been used in accordance with the relevant laws, regulations and instructions.
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What are the available ways for a foreign strategic investor to own strategic shares in companies?
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This can be done via:
Purchase directly through the market.
Purchase through a special deal.
Submit an offer to acquire shares
Participation in initial offerings according to the prospectus.
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Does a foreign investor have the right to vote in general assemblies? Can they vote electronically?
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Yes, the foreign investor has the right to vote in accordance with the approved regulations.
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Is a non-resident foreign investor subject to the income tax system?
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A non-resident foreign investor is subject to the income tax system through the imposition of a withholding tax of 5% Of the total distributed profits, capital gains are not subject to tax.
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Who is responsible for adhering to ownership restrictions when appointing a foreign portfolio manager?
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The non-resident foreign investor is the person responsible for this and must abide by the system.
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Who is responsible for withholding tax on dividends distributed to a non-resident investor?
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The responsibility of withholding tax lies with the listed company that distributed the profits.
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Is it permissible for a foreign investor to run for corporate boards?
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Yes, according to the companies’ system.
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Can a foreign investor subscribe to initial public offerings?
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Yes, subject to the relevant provisions, and in accordance with the prospectus.
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Can a foreign investor invest in listed financial derivatives? And in the parallel market?
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Yes, he can.
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Can a non-resident foreign investor deal with more than one portfolio manager?
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Yes, he can do that, whether he is a financial market institution licensed by the Authority or a foreign portfolio manager, including a Gulf portfolio manager.
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Can a foreign investor obtain financing from local banks for his investments in listed securities?
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Yes, in accordance with the controls of the Authority and the Central Bank of Saudi Arabia
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Does a non-resident foreign investor need to obtain a license from the Authority to practice dealing activity when dealing as a principal in listed securities?
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There is no need to obtain a license from the Authority
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Must a foreign investor provide notices to the market regarding its ownership?
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Any person must notify the market when he becomes an owner or has an interest in 5% or more of any class of the issuer’s listed shares with voting rights or the issuer’s convertible debt instruments with voting rights, and the market notification must not exceed the end of the third trading day following the execution of the deal or the occurrence of the event that led to the realization of this ownership.
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