SAUDI ARABIA Law and Practice Contributed by: Dana Halwani and Leanne Farsi, Derayah LLPC
2.2 Procedure and Sanctions in the Event of Non-Compliance Up until recently, foreign investors were required to obtain a foreign investment licence from MISA called a “MISA Licence”. In the last year, MISA licences have been replaced by ”Invest - ment Registration Certificates”. The process for obtaining an Investment Registration Certificate requires the submission of several documents by each shareholder; the required documenta - tion may differ depending on the activity of the company to be incorporated. For example, the following documents are required for a company to obtain an Investment Registration Certificate from MISA in connection with a limited liability company: • a commercial registration certificate; and • articles of association. In the past, these documents had to be authen - ticated in accordance with the authentication process in their 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, docu - ments now only require an apostille in the coun - try of origin and an Arabic translation to be con - sidered 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 plat - form.
various limitations on foreign ownership of joint stock companies, which can vary depending on the nature of the activity carried out by such companies. For example, foreign ownership limits apply to banks, insurance companies and telecommunications companies. In addition, the Negative List sets out a number of activities that foreign investors are prohibited from undertaking, such as real estate develop - ment in the holy cities of Makkah and Madinah. Until June 2019, foreign investors could not gen - erally own more than 49% of the issued shares or convertible debt instruments of a listed com - pany. The Capital Market Authority has now lifted the maximum foreign ownership limit, permitting foreign investors to increase their investments in some sectors, with the restriction that their shares cannot be sold until they have owned them for two years. In February 2025, the Investment Law (Royal Decree M/19 of 16 Muharram 1446 Hejra cor - responding to 22 July 2024) came into effect. The Investment Law differs from the previous Foreign Investment Law which it replaces (Royal Decree No M/1 dated 5 Muharram 1421 Hejra corresponding to 10 April 2000) in that while the Foreign Investment Law mainly applied to non-Saudi investors, the New Investment Law applies to both Saudi and non-Saudi investors alike. The New Investment Law is intended to pro - mote equal treatment between Saudi and foreign investors who are in similar circumstances, and is intended to re-evaluate restrictions on eco - nomic activities to treat domestic and foreign investors equally without jeopardising public order in Saudi Arabia.
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