SAUDI ARABIA Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Khaled al-Khashab and Shahad Al-Humaidani, GLA & Company
In addition, the GAC board of directors, in its meeting No 84 dated 23 October 2023, announced new requirements for an economic concentration’s eligibility for notification before the GAC, making Saudi Arabia a minimum threshold jurisdiction. As well as this financial threshold established by the Executive Regulations, the parties must also meet the following requirements. • Target entity sales threshold: the annual sales of the target entity (in and outside Saudi Arabia) in an economic concentration must exceed SAR40 million. • Local sales threshold: the combined total sales realised locally (within the territory of the Kingdom of Saudi Arabia) by the parties to the economic concentration must exceed SAR40 million. The Guidelines have clarified that the target entity must contribute to the local sales thresh - old. This is a requirement that was absent from previous versions of the Guidelines. Through discussions with the GAC, it has been deduced that even minimal revenues of SAR1 from the target will be considered a contribution meeting the local sales threshold. The Guidelines clarify the application of all three financial thresholds to mergers and joint ven - tures as follows: • the total worldwide annual sales value of the economic concentration parties exceeds SAR200 million; • the total worldwide annual sales value at least two of the parties (in a merger or a joint ven - ture) exceeds SAR40 million; and • the total annual sales value in Saudi Arabia of all parties exceeds SAR40 million.
Article 12 (2) of the Executive Regulations also provides that where it is impossible to estimate the annual sales value of the entities or where the entities’ business activities do not extend for a full fiscal year, then the annual sales value for the whole year will be estimated based on the
firms’ activity, as the case may be. 2.6 Calculations of Jurisdictional Thresholds Threshold and Calculation
The KSA Competition Law bases the notification threshold on “the total annual sales value of the entities seeking to participate in the economic concentration”. “Total annual sales value” In most cases, the “total annual sales value” will be the total gross revenues of the relevant entity. These are the amounts obtained by the entity from the sale of products and services falling within the entity’s ordinary business and related activities. For most entities that have financial statements prepared under the standards of the Saudi Organisation for Certified Public Account - ants (the ”SOCPA”) or the equivalent prevailing accounting standards in the relevant entity’s place of incorporation, the annual sales will be the entity’s revenue appearing in the entity’s income statement, as reflected in the entity’s most recent audited financial statement. Where the entity is not required to produce audit - ed financial statements, the annual sales will be the entity’s revenue appearing in its most recent annual statement of income and expenses regu - larly prepared in line with the SOCPA standards or the equivalent accounting principles adopted by the entity, as the case may be. In the event that the relevant undertaking is an individual or a natural person, the GAC will gen -
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