SAUDI ARABIA Trends and Developments Contributed by: Zain Satardien, Chadi Hourani and Hayel Hourani, Hourani & Partners
assets reached USD445 billion in May 2024, which was above its end-of-2023 level. The Kingdom continues to prioritise private sector expansion as a central pillar of Vision 2030. Regu - latory reforms aim to streamline foreign participation across logistics, advanced manufacturing, financial services, and renewables. Labour market reforms, including new mobility rules for expatriates, aim to enhance competitiveness and strengthen talent eco - systems available to foreign investors. Saudi Arabia achieved a budget surplus of USD27 billion in 2022 due to elevated oil prices and fiscal policies. It invested USD50 billion in renewable energy, with ambitions to become the largest global produc - er of green hydrogen. Labour market reforms have significantly reduced unemployment among nation - als to 4.9%, and female workforce participation now exceeds 35%. Key Legal Developments Saudi Arabia’s new Investment Law Saudi Arabia has enacted a modernised Investment Law that replaces the historic foreign investment licensing system with a unified national investor regis - try applicable to both domestic and foreign investors. The new framework is built on equal treatment, trans - parency, and regulatory predictability. It abolishes the requirement for a separate MISA licence and intro - duces a simplified registration mechanism supported by sectoral approvals only where required. The law codifies investor protections relating to expropriation, repatriation of capital, and access to dispute reso - lution mechanisms, enhancing certainty for foreign investors. The existing law maintains a strict Negative List of sectors closed to foreign investment, including oil production, fisheries, and real estate in Mecca and Medina. While a Restricted Activities List remains in place for strategically sensitive sectors (including defence-linked activities and real estate in Mecca and Medina), the new framework incorporates condi - tional entry pathways for foreign investment subject to compliance with sectoral regulatory requirements. Implementing Regulations will further detail proce -
dural rules, classification standards, timelines, and approval criteria. A further innovation is the unification of investment rules across local and foreign investors, ensuring comparable treatment under similar conditions. The Implementing Regulations are expected to introduce detailed mechanisms to operationalise these princi - ples. The new law also affirms compulsory investor guar - antees, including protection against expropriation except for public benefit with fair compensation, free - dom to repatriate profits and capital, transparency in regulatory decision-making, and access to dispute resolution pathways. The forthcoming Implementing Regulations will pro - vide detailed procedural guidelines, making compli - ance more predictable and less cumbersome. They will also improve mechanisms for resolving disputes, ensuring foreign investors can operate with greater confidence. Saudi Arabia’s new Companies Law The new Companies Law of Saudi Arabia (CL) came into effect on 31 December 2022 and represented a major overhaul of the Kingdom’s corporate law frame - work. The CL introduces significant updates to com - pany governance, ownership structures, and share - holder rights, aligning with Saudi Arabia’s Vision 2030 objectives to create a more competitive and attractive business environment. Key updates under the CL include the introduction of new corporate structures, enhanced shareholder agreements (SHAs), greater governance flexibility, and clarifications around mergers and restructurings. Key highlights of the CL Ownership rights Historically, companies in Saudi Arabia were required to have a percentage of ownership by Saudi Arabian nationals, with variations based on the sector. How - ever, with the opening of the retail and wholesale sec - tors to 100% foreign ownership in 2016 and the issu - ance of the Investment Law, most sectors are now fully accessible to foreign investors.
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