Dubai: Saudi Arabia is working on a plan to allow non-resident foreign investors to own strategic stakes in listed companies as the kingdom opens up its economy.

The Capital Market Authority and the Saudi Arabian General Investment Authority signed a memorandum to set up a framework to boost foreign ownership to 10% or more with voting rights, according to a statement on 22 October. It wouldn’t be valid for sectors that prohibit such ownership by law.

Saudi Arabia is opening up its markets and implementing reforms, including selling stakes in companies from Saudi Arabian Oil Co. to its stock exchange, to diversify the Middle East’s biggest economy away from oil. In June, index provider MSCI Inc. put the kingdom on its watch list for potential inclusion to emerging markets.

In 2015, Saudi Arabia said it would allow qualified foreign investors (QFIs) with a minimum of five years’ experience and $5 billion of assets under management to apply for licenses to trade equities directly. The regulator set a 5% limit for a single QFI in a company, and a 20% ceiling for QFI holdings in a single stock. Since then, the authorities reduced the asset-under-management requirement to $1 billion, and raised the single-stock limit to 10%.

The regulator said on Sunday that the plan for non-resident strategic foreign investors will be different from its QFI rules in terms of scope and application. Bloomberg