26 July 2019
In summary, the FSI Rules allow foreign strategic investors (FSIs) to own Saudi listed shares directly with the intention of “promoting the financial or operational performance of the listed company” (a Strategic Shareholding).
The requirements to become an FSI are very light, such that practically all well-established foreign legal entities can own Saudi listed shares as FSIs without being subject to any restrictions or limitations, other than a two-year lock-up on the shares purchased by the FSI.
While the FSI Rules contemplate that the listed shares should be owned with the intention of “promoting the financial or operational performance of the listed company”, the FSI Rules do not include any objective tests or requirements to measure whether the stake is in fact a Strategic Shareholding. It could therefore be the CMA's position that the FSI’s willingness to abide by the two-year lock-up period is sufficient evidence of its intention, by demonstrating a long term commitment to the relevant listed company.