General Information
Detailed information on the trading systems, including details of recent enhancements that have increased the level of protection for investors.
Frequently asked questions
Intro Questionsback to top
Non-resident foreign investors that do not qualify as QFIs may enter the Saudi capital market through the Swap Agreements Framework or investment funds, in accordance with the procedures issued by the CMA in this regard
As per the Saudi Income Tax Law, QFIs are subject to a 5% withholding tax from the total dividends distributed by the listed company. Capital gains are not subject to tax. The Saudi Income Tax Law and its Implementing Regulations may be viewed through the following link: https://www.gazt.gov.sa/
Listed companies are responsible for deducting the withholding tax from dividends that they distribute to QFIs
Yes, in accordance with the relevant IPO prospectus.
No, GCC citizens and foreign residents are prohibited to invest in listed securities through the QFI Framework. Both GCC citizens and foreign residents, by virtue of the rights already offered to them, can invest directly in Saudi listed securities in accordance with regulations set by the Authority.
Qualification Conditions for QFIsback to top
Yes, conditioned by the fulfillment of the qualification requirements specified in the Rules, given that the minimum asset under management requirement apply on the assets of the applicant or the group. If the applicant is an investment fund, this include also the assets of the foreign portfolio manager or its group.
No, this will not cancel affiliates and managed funds qualification as they will be considered as an independent QFI.
No, the foreign financial institution can be qualified with its affiliates and managed funds in one application
The assessing authorized person and the QFI or foreign fund manager can determine the appropriate procedure.
Yes, the QFI can deal with a GCC portfolio manager for the management of its investments in the Saudi Stock Exchange.
Qualification Process for QFIsback to top
An applicant becomes a QFI from the date of the AAP accepting the applicant according to the Rules.
Yes, the applicant can re-apply and there is no specific time period which must lapse before the applicant can resubmit the application.
Yes, the QFI may delegate the foreign portfolio manager to process the application for qualification and sign the assessment agreement with the AAP, providing a proof of such delegation to the AAP when submitting the application.
Yes, the AAP can rely on a third party to conduct Know Your Client “KYC” process in accordance with the relevant laws and
The QFI is not required to obtain authorisation by the CMA in relation to carrying on dealing as principal activity to invest in securities listed in the Saudi Stock Exchange.
Tradingback to top
If the international broker’s role is limited to sending orders issued by the QFI to the AP, then the international broker is not required to qualify as a QFI, provided that the international broker must have the authority to send such orders.
A QFI can establish a DPM with an AP in relation to its investments.
No, there is no specific period to open an account with depositary after being qualified to invest in Saudi Stock Exchange.
Yes, every QFI shall open an independent account. After that, the QFI can open several investment portfolios that are linked to the account
The concerned AP shall open an account with the Depositary Center for the pursuant to the applicable procedures set forth by the CMA and the Saudi Stock Exchange, which may be viewed through the following link: https://cma.org.sa/en/Market/QFI/Pages/default.aspx
SWAPsback to top
Yes, the foreign investor is allowed to transfer some of the securities from the ultimate beneficiary swap account to the QFI account and vice versa during the twelve months period.
The cost of transferring is 20 SAR for the securities of each listed company (not per security).
Transferring securities from a Swap Agreement account to a QFI account does not affect the market value of the securities.
The shares shall be transferred within 2 business days from the date on which all the requirements were completed.
Yes, a QFI can be the Foreign Counterparty in Swap Agreements.
Investment limitsback to top
No, Foreign Strategic Investors can own more than 49% as per the QFI rules and Foreign Strategic Investors rules.
The QFI is responsible of complying with investment limits and disclosure requirements and abide by the Capital Market Law and its Implementing Regulations and the rules of the Exchange and other relevant laws.
The Saudi Stock Exchange (Tadawul) shall publish on its website statistical information reflecting ownership percentage as per the paragraphs (a/2) of Article 14 of the Rules. In addition, according to the information received from listed companies, the Saudi Stock Exchange shall also publish on its website the limits stated in paragraphs (a/3) and (a/4) of Article 14 of the Rules.
The following ownership limits will be automatically controlled by the Saudi Stock Exchange:
• Each QFI may not own 10% or more of the shares of any issuer whose shares are listed or convertible debt instrument of the issuer.
• The maximum proportion of the share 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%
No, foreign investor ownership through the QFI account and the ultimate beneficiary swap account shall not exceed 10% of the shares of any issuer whose shares are listed or convertible debt instrument of the issuer for both accounts aggregated. Foreign investor must comply with the investment limitations provisions in the Capital Market Law and its Implementing Regulations, as well as the Rules and Regulations of the Exchange and other relevant laws.
- Didn’t find the answer?
- Visit our Help page