Foreign investors will be allowed to own up to 49 per cent of shares on the Saudi stock market, according to a document published by the national regulator.

The Capital Market Authority (CMA) has stated that a single qualified foreign investor (QFI) would be allowed to hold as much as 10 pe rcent of shares in a company or debt instrument.

In aggregate, foreign investors will be allowed to hold up to 49 per cent of shares or debt, according to the CMA document.

Each QFI “may not own 10 per cent or more of the shares of any issuer whose shares are listed or convertible debt instrument of the issuer,” the CMA said.

The CMA said in May 2016 it would raise the limit on how much of a single company can be owned by a single QFI to 10 per cent from 5 per cent.

“The maximum proportion of the shares of any issuer whose shares are listed or convertible debt instrument of the issuer that may be owned by all foreign investors (in all categories, whether residents or non-residents) in aggregate is 49 per cent,” it said in a statement published recently.

With the exception of government and government-related entities, applicants must have assets under management or custody of SAR1.875bn ($500m), the CMA said.

MEED understands that the relaxation of rules pertaining to foreign investment in Saudi stocks is directly related to make Saudi Aramco’s planned initial public offering (IPO) and subsequent share flotation attractive to overseas entities.

Participation of foreign players in the Aramco IPO, a portion of which will launch on Tadawul, will fetch the state energy giant a diversified source of financing from foreign investors, as well as award global accreditation to the Riyadh bourse by elevating its status and market capitalisation.