CMA Chair suggests reviewing foreign ownership caps as part of market reform 

Mohammed ElKuwaiz, Chairman of the Capital Market Authority (CMA), said the next move after scrapping the Qualified Foreign Investor (QFI) system and opening the Main Market (TASI) to all non-resident foreign investors should be a review of foreign ownership limits, currently capped at 10% per investor and 49% in aggregate.

Addressing a panel discussion at the 2025 Private Capital Forum (PCF), ElKuwaiz noted that foreign ownership ceilings are the last remaining restrictions facing international investors in the market.

He explained that recent IPOs have seen lower allocations for retail investors, resulting in reduced demand and fueling volatility in the secondary market.

Accordingly, the CMA is currently discussing increasing retail allocations with companies planning upcoming IPOs. This is because maximizing absorption of demand from individual investors during the IPO stage minimizes disruption in the secondary market and leads to more effective pricing and quicker market equilibrium.

According to the top executive, Saudi Arabia’s asset management industry has grown at an annual rate of nearly 20% over the past five years, with assets under management now exceeding SAR 1.2 trillion.

He indicated that the sharpest growth was observed in the real estate sector, alongside venture capital (VC) and private financing — both of which advanced by over 10x during the five-year period.

In addition, more VC-backed startups are considering moving their headquarters to Saudi Arabia to become local companies and capitalize on the Kingdom’s economy and financial market, the chairman concluded.

ElKuwaiz said the next step in this ongoing market reform is transitioning from a large, highly liquid domestic market to one that serves the wider region and other emerging markets.

He added that the goal is to attract more foreign enterprises to relocate their headquarters (HQs) to Saudi Arabia and be listed on the Saudi stock market.

The chairman revealed two major developments underway, the first being the external licensing framework, which expands the current system, originally designed for firms operating and raising capital within Saudi Arabia, to include companies establishing a base in the Kingdom to secure capital or do business internationally.

He explained that the external licensing framework aligns with the regional HQs initiative, enabling companies based in Saudi Arabia to offer international services more easily. This marks the first step toward transforming the financial sector from being domestically focused to becoming globally oriented.

While still under public consultation, ElKuwaiz said the international investment community’s feedback has been highly positive and encouraging.

The second development is the simplified funds framework, which introduces a third category of funds alongside public and private ones, targeting a narrow group of highly sophisticated institutional investors to allow more flexible regulation and a stronger focus on contractual obligations.

He noted that by focusing on these investors, the CMA can ease regulatory oversight, shifting toward a more contractual model.

Both frameworks, he said, are part of Saudi Arabia’s plan to become a regional financial hub, especially in private equity and investment ventures.

ElKuwaiz concluded that while the Saudi capital market has seen rapid growth in recent years, the CMA must balance its dual roles — market development and investor protection — in order to maintain financial stability.

He emphasized that achieving the right balance between regulation, capital allocation, and business innovation is key to sustainable and successful market growth.