SAUDI ARABIA Law and Practice Contributed by: Dana Halwani and Leanne Farsi, Derayah LLPC
An application for the Investment Registration Certificate 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 shareholder; • the activities that will be carried out by the company 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-Con - cealment Law (Royal Decree No M/4 of 1 Muhar - ram 1442 Hejra corresponding 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 commer - cial registration cancelled and be prohibited from practising 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 . 2.3 Commitments Required From Foreign Investors Depending on the industry for which the Invest - ment Registration Certificate is issued, certain restrictions may be imposed upon the inves - tor. For example, an investment by a non-Saudi
interest in retail and wholesale activities with a Saudi shareholder would be subject to the fol - lowing requirements: • at least 25% Saudi Arabian participation; • a minimum foreign investment of SAR20 mil - lion (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 million (USD80 million), with a minimum of 30% Saudi employees trained each year. • Alternative 2 – foreign investment of SAR200 million (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 restrict - ed activity may apply to MISA for approval. Such a request will be referred to The Standing Ministerial Committee for Examination of For - eign Investments (the “Examination Commit - tee”). MISA will notify the foreign investor of the
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