Saudi Arabia’s New Investment Law aims to attract international investments and ensure equality between domestic and foreign investors. Effective six months after its publication, the law will replace the existing Foreign Investment Law. Implementing regulations are expected by the same time.
Key Points
The New Investment Law introduces several significant changes:
Local and Foreign Investors: Unlike the previous law, this one applies to both local and foreign investors.
Licensing/Approvals: It simplifies the process by eliminating the need for foreign investment licenses, moving to a registration process instead, unless the activities are on the Negative List requiring prior approval.
Investment Incentives: The law allows for investment incentives based on clear criteria, to be detailed in the implementing regulations.
Investor Rights: Emphasizes protecting investors through transparent complaint mechanisms, safeguarding intellectual property rights, and addressing expropriation of capital transfers.
Violations and Penalties: Differentiates between serious and non-serious violations, with penalties applied progressively.
Settlement of Disputes: Disputes between investors and authorities will be resolved by local courts unless both parties agree to alternative dispute resolution methods like arbitration or mediation.
Conclusion
This law is expected to make Saudi Arabia’s business environment more attractive. While further details will come with the implementing regulations, it’s advisable to consider these changes in future joint ventures or M&A deals, particularly regarding shareholding and completion arrangements.