Qatari companies to increase cap on foreign ownership to 49%

Qatar’s emir has instructed all companies listed on the country’s stock exchange to raise their limit for foreign ownership to 49 percent in a move that could attract more liquidity to the buoyant bourse.

The order announced in a bourse filing on Tuesday comes days before index compiler MSCI upgrades Qatar to emerging market status, but the changes will not be immediate because they are subject to companies amending their articles of association, requiring shareholder approval.

All citizens of the other Gulf Cooperation Council (GCC) countries – Kuwait, Saudi Arabia, Oman, Bahrain and the United Arab Emirates – will be treated the same as Qatari nationals, while non-GCC citizens will be allowed to own up to 49 percent of a company’s shares, according to instructions from Sheikh Tamim bin Hamad al-Thani.

Foreign ownership is usually limited to 25 percent in listed Qatari companies, though some have raised the ceiling above this level.

Al Khaliji Commercial Bank said in February that its shareholders had approved an increase to the limit on the amount of stock foreigners can own to 49 percent, citing the MSCI upgrade as the reason for the change.

The limits to foreign ownership will be calculated according to a company’s total capital, not only its free float, the bourse filing stated.

Qatar’s main share index hit a record high on Monday and is up 29 percent this year.

MSCI said this month that 10 Qatari companies would be included in its emerging market index from the end of May. These include Industries Qatar, Qatar National Bank  and Islamic lender Masraf Al Rayan.

The upgrade by MSCI, announced in June last year, had been close for a number of years but had been held up by technical factors such as the low caps on foreign ownership.