Investment

FOREIGN INVESTMENT IN SAUDI ARABIA
 

The development strategy of the Kingdom recognizes the importance of foreign investment as a 
means  for  the acquisition and  development of technology and technical skills. The promotion and encouragement of   foreign investment in the different  sectors  of the economy, through various incentives and other   measures, have therefore been consistently pursued by the Kingdom within the framework of the new  Foreign Investment Act. (SFIA). 

The Kingdom of Saudi Arabia had finalized and approved a new Foreign Capital Investment Act that guarantees foreign investors equally with Saudi companies. This new law intends to attract foreign investment and diversify the activities existing within the territory. The text of this foreign investment law  is  in line with international standards allowing foreign investors to take 100 % ownership of companies if  desired.  

We, at DR. AL-OUFI LAW FIRM, endeavor to provide and update our local and international clients with  everlasting complete and sufficient information relating to secure and favorable investment opportunities  available in the territory. The Firm renders gratifying legal services in drafting, preparing and  submitting documents of foreign investment applications for license. We assist our clients, after obtaining the required license, to establish and register their legal entities pursuant to the valid regulations and directives in the Kingdom of Saudi Arabia. Generally, we take all required procedures before the competent authorities on behalf of our clients.

BASIC CHARACTERISTICS OF THE NEW (SFIA)

Outlined below are some significant basic characteristics of the new Saudi Foreign Investment Law formulated by the Royal  Decree dated 11/04/2000. 
 
Foreign Capital: Foreign input within this system including, if they are owned by the foreign investor, such items as money  and   securities, this profits if used in increasing the capital and expansion of the existing projects or establishment of new projects; machinery, equipment, spare parts, means of transportation and  requirements for production pertaining to investment; and  moral aspects such as licenses, intellectual  property, technical knowledge, administrative skills and production  methodology.       

Various Activities: In consideration of Article (2) of the (SFIA) the foreign investor has the right to obtain more  than one license  in various activities. The Statute determines the required restrictions.  

Reallocation of Shares: The foreign investor shall have the right to reallocate his share as derived from the  selling of his  equity,  or from the liquidation surplus or profits generated by the facility, out of the Kingdom or to use by any other legal means, and  he shall also be entitled to transfer the required documents to settle any contractual obligations pertaining to the project. 

Ownership: Licensed foreign investments can be either installations owned by national investor 
together  with a foreign  investor, or installations wholly owned by the foreign investor. The legal form for the installation is to be in the line with the system and  the directives.

Privileges & Guarantees: Projects licensed in the line with this system will enjoy all privileges, incentives and  guarantees of  national projects.

Ownership of real estate: The licensed foreign company has the right to own the required real estate for practicing the  licensed  activity or housing some or all of the personnel in line with Real Estates Regulations for Non-Saudis.

Sponsorship: The sponsorship of the foreign investor and his non- Saudis employees will be 
undertaken by  the licensed  company.

Taxes: All licensed foreign investments will be treated in the line with the rules of taxes implemented in the Kingdom of Saudi Arabia.

Duration for investment application: The authority shall make a decision about the investment application within 30 days after  completion of the documents provided for in the Implementing Rules of the SFIA. In  the event that specified period  elapsed without the authority rendering a decision about the application  it  shall be obliged to issue the required license for the investor.

Confiscation: Investments related to the foreign investor shall not be confiscated wholly or partially without a court order, moreover, it may not be subject to expropriation wholly or partially except for public interest against an equitable compensation  according to Regulations and Directives.  

CONDITIONS AND CRITERIA FOR LICENSING

The conditions for granting a foreign license by the Authority shall indicate the following:

• The investment activity requested for licensing should not fall under the list of activities excluded from foreign investment and it should be among those within Authority power to license.
• Product standards and production process should be approved by the Kingdom Laws, or in case such laws don’t exist, the laws of the European Union or the laws the United State of America.
• The amount of the capital invested should not be less than twenty five Million Saudi Riyals with respect to agricultural projects, and five Million Saudi Riyals for industrial projects and two Million Saudi Riyals for other projects.
• The foreign investor must have not found guilty of violating this Act, the previous Acts or any such Acts relating to investment.
• The investor must not have been previously convicted for financial or commercial Violations whether in the Kingdom or in other countries as he/it must an affidavit in this respect together with his/its investment application.

CONTENTS OF THE APPLICATION FORM

The application form should at least contain the following particulars:

• The information about the applicant, his/its title, the shareholders of the project and their
  references.
• The information about the project intended to be established.
• A detailed statement of the capital intended to be invested in the project.
• The permanent addresses of the Saudi and foreign partners; State, City, P.O. Box, Phone and Fax numbers, E-mail address, if any.
• Contact person, when need to contact arises, during the review process of information and documents.
• The said form shall also contain an acknowledgement by the investor stating that he/it had
  reviewed the Investment
• Act and its Implementing Rules and that he/it shall abide by the rules stated therein.
• Documents Required for Submission with Investment License Application Classified as per activity)

Documents required for all license types (General Documents)

• Filling up the license application form as per type of activity.
• Signing the declaration form (by the investor) showing that he has already perused the Investment
  Law and its Implementing Rules, and he will abide by their provisions.
• Time schedule comprising the executive steps to be taken by the investor after getting the license.
• List of projects the investor owns in the Kingdom (if any).
• Special documents are as follows:
  • For Companies:
    • The investment decision taken by the proprietary, the company board or the executive
      manager identifying.
    • The names of partners if any. Authenticated copy of the professional license.
    • The Commercial registration of the Saudi Companies or those acting on their behalf regarding
      the foreign companies.
    • Power of attorney showing the name and identity card of the person authorized to finalize the
      license procedures.
    • Copy of the foundation contract of the project (or company) in the event of partnership.
  • For Individuals:
    • Copies of the Passports of foreign investors or Civil Registration for Saudi nationals. In case of
      power of attorney, the authorization shall include the name and identity card number of the
      authorized person.
    • In case of modification: copy of the license resolution and the relevant modification resolutions.
    • Additional documents required based on type of activity are as follows:
      1. Industrial activity
         • (In case of application for modification) :
           - The partners resolution for the requested modification.
           - Valid acquaintances certificate from Zakat and Income Authority.
      2. Agricultural Activity
         • Technical & Economic feasibility study for the project, indicating the name and address of the office which had prepared the study.
         • Letter from Ministry of Municipal and Rural Affairs certifying that the project has not any environment destructive impact. (In case of animal projects)
      3. Service Activity
         • Approval of the Government agency concerned with the required activity license.
  • Mineral Activity:
    • Approval of the Ministry of Petroleum and Mineral Resources (Ministry Deputy for Mineral
      Resources).
    • We hope having threw enough light on the new Saudi Foreign Investment Act, but should you have any inquires or need further information, please don’t hesitate to contact us.

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E-mails: attorney@aloufilawfirm.com

     

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