Competencias para la lectura y la escritura

The protection of these rules must be supported by other Saudi regulations as Article 1 stipulates:

These Rules shall be read in conjunction with and in addition to the Capital Market Law and its Implementing Regulations, including, the Listing Rules, the Market Conduct Regulations, the Authorised Persons Regulations, the Merger and Acquisition Regulations and the Anti-Money Laundering and Counter-Terrorist Financing Rules (p.2).

To demonstrate consistency and integration between the qualified foreign investments rules and the other Saudi regulations, there are some examples that can be dividend in three categories, based in the CMA data and Argaam’s report (2015c):

First of all, at the present there are some companieson the Saudi listed market that do not permit foreigners to own shares because of company law. For example, foreign investors cannot own shares in the National Shipping Company of Saudi Arabia (Trading name: Albahri). Based on Article 8 of the Company Statute the owners of its shares must be citizens and non-Saudis are only allowed to own shres in the case of inheritance. Similarly, the Saudi Real Estate Co (Trading name: Akaria) does not allow foreign investors to own shares as stated in the statutes of the company Article (9): The nominal stock may not be owned by a non-Saudi. Moreover, Saudi Pharmaceutical Industries and Medical Appliances Corp prevent foreign investors owning shares in accordance with the provisions of Article 10 of its Statute.

Secondly, there are also some companies that have conditions in their rules to restrict foreign investment. For instance, the SABIC Company has stated thatone person is not allowed to own more than 1% of the company's capital. Another example is the Saudi

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Investment Bank (Trading name: SAIB) which states in its statute, Article 13, that the stocks held by Saudi persons must not be less than 65% of the total bank's shares.

Finally, companies that are subject to trading restrictions based on the foreign investment law, regulations and instructions of the competent authorities in Saudi Arabia. There are three examples of such companies: Makkah Construction and Development Co, Taiba Holding Co, and Jabal Omar Development Co.

Looking at other countries in the GCC, there are some companies that restrict the percentage of foreign ownership for example, Salam international, Ooredoo, and VodaFone of the Qatar listed companies (QSE 2016) and 19 out of the 73 companies listed on the Abu Dhabi Securities Market did not allow foreign investors to own shares (ADSE 2016).

6.4.1 Does Islamic law provide enough Attraction and Protection for

Investors?

As mentioned in chapter 3, all Saudi regulations have been derived from Islamic Sharia law. To highlight this, the current regulations state the right to appeal in Article 4: “Any person subject to these Rules may appeal to the Committee in respect of any decision or action that the Authority takes under these Rules” (p.3).

Sharia' law which is based on the Koran and Sunnah has cared about the protection and the rights for all people whether Muslims or non-Muslims (Habachy 1962). However, there are some concerns that may arise when analysing the protection provided by the Sharia' law. For instance, it can be argued that the sharia law has uncodified form in Saudi Arabia and other countries in the region which resulted from uncertainty about the scope of the law (Karl 1992; PWC 2015). Although, this is partly true, it is noted that other related regulations have been written by royal decrees, such as the foreign

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investment law and company law (Asherman 1982). These regulations equally protect the rights of local shareholders and foreign investors. In order to analyse the level of protection in the current regulations it is necessary to clarify the power of Islamic law and other regulations. Therefore, it is appropriate to start with what might be considered the strengths of the Saudi legislation.

First of all, the judges are required to follow sharia law no matter was the case in order to administer justice (Asherman 1982). Secondly, all investors whether local or foreign have to be controlled by the Saudi regulations. However, foreign investors can be exempted from Saudi law when the contract has a clause requiring dispute resolution through international arbitration (Asherman 1982). But even with this case, in accordance with Law of Procedure before Sharia Courts 2013 Article 1, the Saudi court will not accept foreign judgments that contravene Islamic law. By comparison, in other GCC countries foreign investors can resort to international arbitration for disputes in accordance with investment agreements (OECD 2011). Although, it appears complicated, it appears that the Saudi court is keen to follow Sharia law. Finally, while preserving its foundations, Saudi law has recently become more open toward international commerce and more rapprochement with Western law (Karl 1992).

In recent years the Islamic finance model has been questioned, particularly after the weakening of the Gulf real estate market (Jones 2009). However, it could be argued that Islamic finance became a boon for the Kingdom of Saudi Arabia and helped to protect the Saudi economy. This is proven by the deliverance from the global credit crunch in 2007-2008 (Austrade, D & Trends 2010). Thus it could be said that Islamic finance has helped to improve the security of the market (Parker 2006). One of the most important aspects of Islamic finance is that its “maysir”, “gharar” principles prevent speculation which conflicts with Sharia law (Schmith 2010). Islamic finance requires urgent reports

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in the event of an violation of trading in stock exchange markets (Girard & Hassan 2008).

As the current rules of foreign investment in the local stockexchange market are built on Islamic law which the Kingdom of Saudi Arabia has followed in all its regulations, the aim of this discussion is to show how Islamic finance may help to attract and protect foreign and local investors. This overview rely on the Islamic assets that confirmed the rights of each person whether is Muslim or non-Muslim.

The stock exchange market which follows Islamic law has been assumed to reflect the actual stock prices and provide relevant information to all shareholders (Guyot 2011). Transparency must also include providing information about market liquidity, stock price resilience, and transaction costs (Guyot 2011). It has been noted that, all the trading characteristics of the Saudi Stock Exchange Market have been provided by the Capital Market Authority.

In summary, it should be noted that the moral values of Islamic law insisted on protecting investors’ rights. The application of Shariah law criteria can provide efficient investment and protect all types of investors (Guyot 2011).