Saudi Arabia has changed the status of its national energy giant Aramco to a joint-stock company as of 1 January, in an important development in apparent preparation for the 5 per cent initial public offering (IPO) planned for later this year.

The change, which was published in a cabinet decree in the kingdom’s official bulletin, is a requirement for local companies in Saudi Arabia ahead of stock flotations, a senior Aramco source, who declined to be named, told Reuters.

“This (change) establishes the framework to allow future investors to hold shares in the company alongside its shareholder, the government,” the source said.

Aramco has a fully paid capital of SR60bn ($16bn) divided into 200 billion ordinary shares, according to the company’s bylaws published in the official bulletin.

The company’s board will have 11 members and the power to list the company in domestic and international markets, it said. The government will propose 6 members of Aramco’s board, but shareholders with a more than 0.1 per cent stake will have the right to propose a member to the general assembly.

The government will have the right to appoint or change the company’s chairman, a position currently held by Saudi Energy Minister Khalid al-Falih.

The government will remain the major shareholder of Aramco and retain the ultimate decision on output levels and production capacity, it said.

‘The state will remain the only responsible entity to make the final decisions regarding the maximum levels of hydrocarbons that can be produced at any time’, it said.

Saudi officials have said domestic and international exchanges such as New York, London, Tokyo and Hong Kong have been looked at for a partial listing of the state-run oil behemoth. They also left the door open for other options including an exclusive listing on the kingdom’s bourse Tadawul and an IPO coupled with a private placement to a strategic investor as a precursor to an international IPO.

Aramco’s IPO will comply with regulations of the Saudi stock exchange and also regulations of the international market where it will be listed, the official bulletin said.

The change in the corporate structure is an important step as it shows the IPO process, which could be the biggest in history raising up to $100bn for the kingdom’s giant Public Investment Fund (PIF), is moving ahead despite market speculation it could be delayed or totally shelved.

Crown Prince Mohammed Bin Salman told Reuters in October last year that the IPO was still on track for 2018.