Santos managing director, John Ellice-Flint, said the decision would enable Santos to continue pursuing its strategy of becoming a leading Australian-based, Asian-focused energy company.

“This decision represents the removal of an artificial brake on Santos' growth that has been in place for almost three decades,” he said.

“Santos will now be able to maximise its efficiency in accessing capital markets and pursue the opportunities created by the growing demand for energy in Asia on a level playing field with other listed companies operating in the region.”

Ellice-Flint is reportedly now looking for more growth opportunities.

The company will now find it easier to raise money for its PNG Highlands and Gladstone LNG projects.

Takeovers are also on the agenda, although Santos has reportedly given up on acquiring Anzon Australia.

Announcing the shareholder cap decision, Santos said it was legally bound to fulfil several undertakings, which if breached would see the company forced cough up to $100 million in compensation to the government.

These conditions involve Santos maintaining a strong corporate presence in South Australia and committing $60 million to community programs and sponsorships.

But it will take some time until the cap is removed, as the government’s decision is subject to Parliamentary review and approval, followed by a 12-month-long transition period.

South Australian Premier Mike Rann said the government would soon introduce legislation into parliament that would ensure the shareholding cap would be lifted 12 months after the repealing legislation comes into effect.

"The Government has consistently stated that it would only consider the removal of the share cap if the State could be assured that it was in the interests of the people of South Australia," Rann said.

"The Santos Deed of Undertaking provides a platform for the future growth and development of the company, while also providing assured ongoing benefits to South Australia."

Santos chairman Stephen Gerlach welcomed the decision, reiterating the company’s position that the cap – which was introduced in 1979 to protect it from being taken over by Alan Bond – was no longer relevant.

He said the removal would mark an exciting new era for the company, as it pursued several growth opportunities.

“Santos has changed dramatically since it was founded in 1954 – from a small explorer in the Australian outback to an international oil and gas producer,” Gerlach said.

“We have long argued that removal of the shareholder cap is in the best interests of Santos and its shareholders.

“In arriving at its decision to remove the shareholder cap, the South Australian Government sought assurances it believed were important to protect the State’s interests.”

The state government began reviewing the cap in May following a long campaign by Santos for its removal.