Post by : Rameen Ariff

RIYADH – In a big move to grow its economy and welcome more regional investors, Saudi Arabia has allowed citizens and residents of Gulf Cooperation Council (GCC) countries to directly invest in its main stock exchange, Tadawul. This new rule removes earlier restrictions and makes it easier for people and businesses from countries like the UAE, Kuwait, Qatar, and others to buy and trade Saudi stocks.

This change will help Saudi Arabia build stronger ties with its neighbors and support its long-term plan to diversify the economy, known as Vision 2030.

What Has Changed?

Before this rule, only GCC citizens could buy Saudi stocks directly. Others had to use a Qualified Foreign Investor (QFI) system, which was more complex and costly. Now, even GCC residents, whether individuals, companies, or investment funds, can buy shares directly in Saudi Arabia’s stock market. This includes people living in the GCC, even if they are not citizens.

The main condition is that the money used to invest must come from inside a GCC country. If the money is from outside the GCC, the investor must still use the QFI method.

Why This Matters

Saudi Arabia’s Tadawul stock market is the biggest and most active in the region. It has a market value of more than SAR 9 trillion (about US$ 2.4 trillion). This new rule means that investors from places like Dubai, Abu Dhabi, Doha, and Kuwait City can now take part in the Saudi market more easily, and without middlemen.

It also makes it simpler for them to join IPOs (Initial Public Offerings) and buy or sell shares more freely, bringing more business into the Saudi economy.

Key Details Investors Need to Know

• Funds must come from GCC countries

• No need for intermediaries or swap deals

• Applies to individuals, businesses, and asset managers

• Certain rules and documents still apply

• Some sectors are still restricted or need special approval

Legal and Investment Rules

This change is part of Saudi Arabia’s new Investment Law, which began in February 2025. It replaced an older law that had been in place for over 20 years. The new law treats local and foreign investors equally, giving them the same rights and protections.

Now, foreign investors register with the Ministry of Investment (MISA) instead of applying for a special license. This system is simpler and faster. Investors just need a few key documents like:

• A copy of the company’s business registration

• Recent financial statements

• Approval letters for setting up offices or branches in Saudi Arabia

Benefits and Rights for Investors

The law also protects capital and profits, meaning investors can move their money freely. It protects intellectual property (IP) and helps investors with access to market data. Investors are also protected from unfair treatment or hidden expropriation by the government.

For people looking to partner with Saudi firms or buy small shares in local businesses, this is a major benefit.

Not All Sectors Are Open

Some sectors in Saudi Arabia are still marked as “Prohibited” or “Restricted”. These need special permissions or may not be available to foreign investors at all. MISA provides a full and regularly updated list of such sectors in its Investor Guide.

Steps to Invest in Saudi Arabia

To invest in Saudi Arabia, foreign investors must go through five main steps:

1. Apply for an Investment License – This needs business registration and financial documents.

2. Submit Company Documents – Like memorandums and board resolutions.

3. Complete Commercial Registration – With proof of identity and official appointments.

4. Register with Government Authorities – Such as tax and social insurance departments.

5. Apply for a Visa for General Director – Needed to start operations and manage the business locally.

New Rules for Fund Managers and Digital Platforms

Saudi Arabia is also making changes to how investment funds work. These changes include:

• Allowing digital platforms to sell fund units

• Giving fund managers 60 days to switch or update details

• Adding more freedom for Real Estate Investment Trusts (REITs) on the smaller markets

These updates are aimed at encouraging more fintech firms and younger investors to take part in the market.

Penalties for Breaking Rules

A new penalty system has been set up. Small mistakes can be fixed within 30 business days to avoid a fine. But serious violations can bring penalties of up to SAR 300,000 (around US$ 80,000) or even business deregistration.

Investors are advised to read the Investor Guide and stay updated on any changes.

Final Thoughts

This new rule is a huge opportunity for investors in the GCC region. Businesses and individuals in the UAE, Kuwait, Qatar, and other Gulf countries can now join the Saudi stock market directly, helping to grow regional cooperation and economic activity.

For Saudi Arabia, this step shows its clear intent to open up, modernize, and attract more capital to support its long-term economic goals. As more regional funds and investors take advantage of this rule, the entire GCC region stands to benefit from a more connected and active investment space.