Saudi Arabia Opens Stock Market to GCC Residents 

Saudi Arabia has opened its stock market to investment from individual residents of the UAE and other GCC countries.

Under the new Investment Law effective February 2025, eligible investors can now directly invest in listed and unlisted Saudi companies.

Saudi Arabia has announced a major step to deepen regional investment ties by allowing citizens and residents of Gulf Cooperation Council (GCC) countries to directly invest in its main stock market, the Saudi Exchange (Tadawul). This eliminates the need for intermediaries and complex swap agreements that previously limited investor access.

Removing entry barriers: What has changed

The Capital Market Authority (CMA) of Saudi Arabia now allows residents of GCC countries to directly invest in the Saudi stock market. This includes individuals, companies, and funds based in UAE and other GCC nations, even if they are not citizens. Investors can trade listed securities on the Saudi Exchange (Tadawul), provided their funds originate from within the GCC.

Previously, only GCC citizens could own shares directly, and all others had to route investments through qualified foreign investor (QFI) channels. The new framework removes this restriction and grants GCC-based professionals, businesses, and asset managers expanded access to the region’s most active stock market.

What investors need to know

The Saudi Exchange is one of the most liquid in the region, with total market capitalization exceeding SAR 9 trillion (US$ 2.4 trillion). GCC-based funds and family offices can now participate more freely in primary offerings and secondary market trades, subject to certain conditions.

But the funds must be sourced from a GCC country, and any non-GCC-origin funds must still go through the QFI program.

The new rules come after a public consultation phase initiated in November 2024. The CMA released a draft regulation titled “Facilitating the Procedures for Opening and Operating Investment Accounts for Various Categories of Investors.”

In tandem with expanding access, the CMA introduced several updates to its investment fund framework. These include allowing fund units to be distributed via licensed digital platforms and fintech firms, an approach designed to meet changing investor preferences and promote wider participation. Other changes include, CMA granting approval, a 60-day transition period when fund managers change, and increased flexibility for Real Estate Investment Trusts (REITs) on the parallel market.

Legal framework: The investment law

The broader shift toward openness is backed by Saudi Arabia’s Investment Law, issued under Royal Decree No. M/19 dated 22 July 2024 and effective from 12 February 2025. This law replaces the two-decade-old Foreign Investment Law and standardizes treatment across domestic and foreign investors.

The law’s Implementing Regulations (IRs), issued on 7 February 2025 and published in April, lay out the operating framework for foreign and GCC investors. The registration model has replaced the older licensing process. Foreign investors need to now register with the Ministry of Investment (MISA), while local investors may do so voluntarily.

The registration requires a certified copy of the parent company’s commercial registration and recent financial statements, both authenticated by a Saudi embassy.

Read more: Saudi Arabia New Property Law Opens Real Estate Market to Foreigners 

Investor rights and guarantees

The IRs offer equal treatment to local and foreign investors in comparable situations. The law guarantees the right to transfer capital and profits freely, and protection from indirect expropriation. These rights are of particular interest to GCC investors exploring joint ventures, minority stakes, or exits through public markets.

Also covered are intellectual property (IP) protection and trade secrets, in addition to assistance from MISA in accessing market-related data.

Excluded and conditional sectors

Not every sector is open. The IRs identify two types of activities that may be off-limits: “Prohibited Activities” require prior approval from a ministerial committee, while “Restricted Activities” come with specific conditions. The full list of these sectors is periodically updated and published in the Investor Guide by MISA.

Registration and setup requirements for investors

To invest in Saudi Arabia, foreign investors, need to follow a five-stage setup process. This begins with obtaining an investment license and proceeds through commercial registration and operational readiness. The steps are as follows:

Investment license application

To apply for an investment license, the following documents are mandatory:

• A copy of the company’s commercial registration from its home country, certified by the Saudi Embassy; and
• Audited financial statements from the most recent fiscal year, also certified by the Saudi Embassy and prepared by a reputable international legal or accounting firm.

Depending on the nature of the business and the specific license category, MISA may request additional documentation.

Documentation of memorandum of association

For foreign branches, a board resolution authorizing the opening of a branch in Saudi Arabia must be submitted to proceed with the commercial registration.

Commercial registration

Investors are required to provide:

• A certified copy of the parent company’s commercial registration;
• A board resolution for branch establishment (applicable to foreign branches);
• A signed Memorandum of Association (for new company formations);
• Appointment documentation for the general director; and
• Identity verification documents for shareholders and the general director.

Opening statutory files

Investors must open accounts with these Saudi authorities:

• The General Authority of Zakat and Tax;
• The Ministry of Human Resources and Social Development; and
• The General Organization for Social Insurance.

These registrations are needed before hiring employees or conducting business operations.

General director visa issuance

Final setup involves obtaining the general director’s visa and this needs documents like:

• An official appointment letter for the general director; and
• Verified identification documents.

Enforcement and penalties

A revised penalty framework now distinguishes between serious and minor violations. Lesser infractions may avoid fines if corrected within 30 business days of a warning. For repeated or serious breaches, penalties can reach SAR 300,000 (US$80,000) and may include deregistration.

Investors are encouraged to consult the Investor Guide regularly for updates on compliance categories.

Why this matters now

For regional fund managers, family businesses, and corporate investors based in Dubai or Abu Dhabi, this change opens up road to expand their Saudi footprint without navigating the older licensing complexities.

At the same time, Riyadh’s policy coordination across ministries via MISA, the CMA, and other bodies shows its intent to back capital with governance. As Saudi Arabia positions itself as a capital destination, GCC investors are well-placed to participate.

(US$1 = SAR 3.75)

See also: Saudi Arabia’s New Work Permit Rules and How to Check Your Iqama Profession Code  

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