Qualified Foreign Investors are foreign investors who in order to invest in shares listed on the Saudi Stock Exchange are obliged to be registered with the Capital Market Authority (CMA) of Saudi Arabia.
Through its announcement on 4 September 2016, the Saudi Arabian Capital Market Authority expanded the access to the Saudi capital market for QFIs as follows:
- The minimum value of assets (under global management) that are required for every asset manager to be qualified as a QFI in Saudi Arabia has been reduced from SAR 18.75 billion (USD 5 billion) to SAR 3.75 billion (USD 1 billion). Therefore, reducing the barriers to entry for Qualified Foreign Investors.
- The current QFI direct ownership ceiling for Saudi single listed companies has been increased by 5%. Specifically, from effective 4 September 2016, the QFIs will be allowed to directly own 10% of a single listed Saudi company. Previously, they were allowed to directly own only 5% of a single listed Saudi company.
- For the first time, foreign governments and government-related entities can start operating as QFIs within the Saudi jurisdiction.
- For the first time, a QFI will be allowed to engage either with a Saudi or a non-Saudi portfolio manager to manage its investment in the Saudi Capital Market (before QFIs could only engage with Saudi portfolio managers).
- The restriction which limited the total ownership of Qualified Foreign Investors in a listed entity in Saudi Arabia to 20% has been eliminated.
- The restriction which stated that Qualified Foreign Investors could hold maximum only 10% of the market value of the issuers listed on the Saudi Stock Exchange has been eliminated.
- The requirement of annual reports and consolidated accounts alongside some additional material information and annual assessments by QFIs has been removed. Nowadays the QFI only need to inform the CMA of notifiable events, five days after the relevant event occurs.
- The concept of “approved QFI Client” has been eliminated. An "approved QFI client" was defined as a Client of a Qualified Foreign Investor that has been approved by the CMA and, therefore, a client whose funds could be invested by the QFI – without the acquisition of a "Client Approval" by the CMA, the QFI could not invest the funds of their Client in shares listed on the Saudi Stock Exchange. With the removal of this concept, the legal processes revolving around new client acquisitions and Clients' fund investments, has been facilitated for Qualified Foreign Investors.