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Find out moreThis Edition of Law Update, From Africa to Asia: Legal Narratives of Change and Continuity, takes you on a journey through dynamic markets.
Africa is undergoing a tech-driven transformation, overcoming regulatory challenges while its startup ecosystem thrives. India’s legal framework is evolving rapidly, keeping pace with its expanding economy and diverse business environment.
We also dive into China’s regulatory shifts, particularly how they are shaping investments in the MENA region, and explore Korea’s innovative global partnerships, which are driving advancements in industries across the UAE and beyond.
Read NowThe CMA issued its Rules for Foreign Investment in Securities (“Rules”). These rules significantly liberalise the parameters for foreign investors investing in securities listed on the Saudi Stock Exchange (Tadawul).
The significant changes included the removal of a formal assessment process for QFIs, expanding the number of foreign investor categories that can qualify as a QFI without meeting the specified monetary threshold and adding a new channel for foreign investment in securities by enabling all foreign natural and legal persons to invest in securities listed on the main market through discretionary portfolios management by CMIs.
There has been a significant widening of the definition of a QFI under the Rules. While the earlier requirement of having assets under its management or custody of SAR 1,875,000,000 remains in place, there are a number of instances where this requirement does not apply. Under Article 7(b) of the Rules, the minimum assets under management condition does not apply to the following categories of investors:
There does not appear to be any requirement to undergo an assessment process as there was under the previous Rules for Qualified Foreign Financial Institutions Investment in Listed Securities (issued under CMA Resolution Number 1-42-2015). Previously, CMIs were entering into assessment agreements with QFIs in order for the foreign investor to qualify.
Furthermore, the Rules clarify that a QFI may engage with foreign investment firms, foreign portfolio managers and custodians or advisors for the purposes of investing in listed securities. Foreign investment firms can provide asset management, custody services and advise QFIs in respect of securities listed on the Tadawul without any authorisation from the CMA.
The Rules included developing conditions on the investment of the non-resident foreign investors in listed securities through Swap Agreements, including removing the requirement on the duration of such swap agreements, as well as removing the requirement to notify the CMA prior to entering into a Swap Agreement.
Our Banking & Finance team are equipped to provide advice and guidance to investors in navigating the recently liberalized rules for foreign investment in securities listed on the Saudi Stock Exchange.
Partner, Banking & Finance (Bahrain, KSA & UAE) Head – Debt Capital Markets
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