23/10/2017 05:33 AST
The Saudi Capital Market Authority (CMA) and the Saudi Arabian General Investment Authority (SAGIA) have signed a Memorandum of Cooperation to set up a collaborative framework to be followed by the CMA and SAGIA when preparing the regulatory directives for allowing non-resident strategic foreign investors to own strategic stakes in listed companies’ share capital. The move is a step that comes into play in light of the continuous coordination between the two bodies while taking into consideration the importance of achieving the highest level of cooperation that will serve to contribute to ensuring protection and fairness to capital market participants, and supporting the Kingdom’s investment environment in general.
The Memorandum, which has been signed by Mohammed ElKuwaiz on CMA’s behalf and by Eng. Ibrahim AlOmar on SAGIA’s behalf, is based on the power vested in SAGIA pursuant to the Foreign Investment Law, among which are its authority to regulate foreign investments in the Kingdom in terms of its conditions, procedures, privileges, and guarantees, as well as on the power vested in the CMA pursuant to the Capital Market Law, which includes its authority to regulate and develop the capital market, to supervise companies listed on the exchange, and to issue the rules and regulations governing their conduct.
Pursuant to the Memorandum, the CMA has undertook the mandate to prepare the regulatory directives for allowing non-resident foreign investors to own strategic stakes in listed companies’ share capital while coordinating with SAGIA in this regard. These directives will serve to set up an agreed upon regulatory framework, through which strategic foreign partners who enjoy the required experience and expertise, and who will contribute to transferring knowledge and technical know-how are attracted; thereby opening up new markets for companies listed on the exchange, and allowing them to realize their full potential.
For the purposes of the Memorandum, non-resident strategic foreign ownership means owning 10% or more of a company’s share capital that has voting rights attached to it, unless there are specific sectors prohibit such an ownership by law, and without prejudice to the negative list, which prohibits foreign investments in certain sectors.
Additionally, the scope of applying the planned directives, according to the signed Memorandum, will include buying, acquiring, or owning strategic stakes in the share capital of a company listed on the exchange by a non-resident foreign investor, while taking into account the aforementioned foreign investment restrictions.
The CMA said that it has already undertook the preparations to start drafting the required directives for allowing foreign investors to own strategic stakes in listed companies in accordance to the practices adopted in this regards, and in line with CMA’s gradual approach to liberalize the capital market.
The CMA has recently implemented a number of changes to the capital market’s foreign investment landscape pursuant to the Financial Leadership Program launched by the CMA as a part of its role within the national transformation plan and the Kingdom’s Vision 2030, the most recent of which included further flexing the QFI’s Rules and successfully completing a number of initiatives that will make the Saudi capital market more compatible with its international counterparts.
The CMA further said that the planned directives will be different from its notable QFI Rules in terms of scope and application, as they will be catered for strategic foreign partners looking forward to owning 10% or more in a listed company’s share capital, and this arrangement, through the planned directives, will not be exclusive to financial institutions.
The Chairman of the CMA’s Board of Commissioners Mohammed ElKuwaiz said during the event that most international capital markets welcome foreign direct
Saudi Gazette
Please wait...
