SAUDI ARABIA Law and Practice Contributed by: Dana Halwani and Leanne Farsi, Derayah LLPC
2.3 Commitments Required From Foreign Investors Depending on the industry for which the Investment Registration Certificate is issued, certain restrictions may be imposed upon the investor. For example, an investment by a non-Saudi interest in retail and whole - sale activities with a Saudi shareholder would be sub - ject to the following requirements: • at least 25% Saudi Arabian participation; • a minimum foreign investment of SAR20 million (USD5.3 million); • a restriction of opening a maximum of one shop per district; and • training a minimum of 15% Saudi employees each year. Non-Saudi interests can invest in a wholly owned trading venture subject to the following requirements. • Alternative 1 – foreign investment of SAR300 mil - lion (USD80 million), with a minimum of 30% Saudi employees trained each year. • Alternative 2 – foreign investment of SAR200 mil - lion (USD53 million), with a minimum of 30% Saudi employees trained each year, coupled with one or more of the following: (a) manufacturing – a proportion of not less than 30% of products distributed locally to be manufactured in the Kingdom; (b) research and development programmes – a minimum of 5% of total sales to be allocated to the establishment of research and development programmes in the Kingdom; or (c) logistical services and distribution – a centre to provide such services and after-sales services to be established. 2.4 Right to Appeal A foreign investor seeking to engage in a restricted activity may apply to MISA for approval. Such a request will be referred to The Standing Ministerial Committee for Examination of Foreign Investments (the “Examination Committee”). MISA will notify the foreign investor of the Examination Committee’s deci - sion within five working days of receiving the decision. A foreign investor may, in the event that their applica - tion for approval to engage in a restricted activity is
country of origin, and attested by the Saudi embassy in the same country before being authenticated in Saudi Arabia. On 7 December 2022, Saudi Arabia acceded to the Convention Abolishing the Requirements of Legalisation for Foreign Public Documents, aka the Apostille Convention. Theoretically, documents now only require an apostille in the country of origin and an Arabic translation to be considered authenticated in the Kingdom; however, some government ministries have yet to adopt these changes. The name of the company would then have to be reserved through filling out the required form, through the Saudi Business Centre online platform. An application for the Investment Registration Certifi - cate takes place online, and requires the applicant to fill in certain information on the new company being incorporated, such as: • general information with respect to each share - holder; • the activities that will be carried out by the com - pany in Saudi Arabia; and • some general information with respect to the investment in Saudi Arabia, including the capital. MISA charges an annual services fee of SAR12,000 for the first year, and SAR260,000 for five years. Once the online application is complete, it can take up to five business days from the date all the required documents are submitted to obtain the licence. Carrying on unlicensed economic activities in Saudi Arabia is an offence under the Anti-Concealment Law (Royal Decree No M/4 of 1 Muharram 1442 Hejra cor - responding to 20 August 2020). The parties involved may be imprisoned and fined, and the proceeds of the business may be seized. In addition, a non-Saudi may be deported, and a Saudi may have their commercial registration cancelled and be prohibited from practis - ing the same activity for up to five years. Participation in unlicensed economic activities also often involves tax fraud, in respect of which please refer to 5.7 Anti- Evasion Rules .
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