Saudi Arabia
JordanAl Madani & Co. Law Firm & Legal Consultants
Key Legal Developments in the Kingdom of Saudi Arabia in 2024
In 2024, the Kingdom of Saudi Arabia witnessed extensive legislative and regulatory developments across various economic and social sectors, in alignment with the ambitious Vision 2030. These reforms aim to improve the business environment, enhance transparency, and develop the legal frameworks governing commercial, investment, and social transactions. From the personal data protection system to updates in the commercial registry and trade names, and from enhancing product and service quality to improving social insurance systems and government competitions, the Kingdom is steadily progressing towards a comprehensive and sustainable transformation in various fields.
This article highlights the key legal developments of 2024, focusing on their objectives, features, and the extent of their impact on the business environment and comprehensive development in the Kingdom.
1. Personal Data Protection System
In September 2024, the Personal Data Protection System came into force after being issued by Royal Decree No. (M/19) on 9 Safar 1443 H, with amendments made under Royal Decree (M/148) dated 5 Ramadan 1444 H. This system provides a modern legal framework for regulating the collection, processing, and retention of individuals’ personal data in Saudi Arabia.
Key features of the system:
1. Data Collection Controls:
• Collection of personal data is prohibited unless for a specified and legitimate purpose, with prior notification to the individual.
• Data processing contrary to the stated purpose is prohibited.
2. Individuals’ Rights:
• The right to access, correct, or update personal data.
• The right to request the deletion of data once its purpose has been fulfilled.
• The right to object to data processing or withdraw consent.
3. Data Protection and Transfer:
• Necessary security measures must be taken to protect personal data.
• Data transfers outside the Kingdom are restricted, subject to strict conditions to ensure protection.
4. Monitoring and Penalties:
• The Personal Data Protection Authority oversees the enforcement of the system.
• Penalties of up to 5 million Saudi Riyals may be imposed for violations, with the possibility of increased penalties for repeated violations or severe harm to individuals.
5. Compliance for Companies and Institutions:
• Large entities must appoint a Personal Data Protection Officer.
• Clear policies for data processing must be in place, and periodic reports on compliance must be provided.
2. New Commercial Registry System
Key features:
1. Unified Commercial Registry:
• Adoption of a single commercial registry covering all business activities across the Kingdom, eliminating the need for sub-registries.
• This measure reduces administrative complexities and saves time and costs.
2. Elimination of Sub-Registries:
• Sub-registries are no longer required; all activities are now registered under the main registry.
3. Centralization of the Commercial Registry:
• Commercial registries are now centralized in a single electronic platform, simplifying the registration and management of commercial information.
4. Individual Ownership:
• Individuals are limited to owning only one sole proprietorship, enhancing transparency and reducing legal conflicts.
5. Removal of Registry Expiration:
• Commercial registration no longer has an expiration date; it remains valid as long as the business activity continues and data is regularly updated.
6. Bank Account Linkage:
• A commercial bank account must be linked to the commercial registry, enhancing financial transparency and combating commercial concealment.
3. Trade Names System
Key features:
1. Centralized Trade Name Registration:
• Trade names can now be registered at a national level through a unified electronic platform, reducing the complexity of local or regional registrations.
2. Transparency and Protection of Rights:
• Mechanisms for protecting registered trade names and preventing infringement are in place, including ensuring trade names do not cause confusion between different activities.
3. Simplification of Procedures:
• The system allows for streamlined electronic procedures to select, check availability, and register trade names, making it easier for startups and investors.
4. Alignment with Vision 2030:
• The system supports Vision 2030 by enhancing the investment environment and increasing competitiveness among companies both locally and internationally.
5. New Requirements for Trade Names:
• Trade names must accurately reflect the business activity.
• Use of phrases contrary to Sharia or cultural norms is prohibited.
• Common or generic names may not be used unless distinctive elements are added.
6. Penalties:
• Strict penalties are imposed for infringement of registered trade names, including imitation or illegal use, to ensure protection of rights holders.
4. New Investment System
Key features:
1. Streamlined Administrative Procedures:
• The system aims to simplify the procedures related to establishing businesses and registering companies through a unified electronic platform, making transactions faster and easier for investors.
2. Incentives and Facilitations for Investors:
• The system provides incentives such as temporary tax exemptions, simplified customs procedures, and funding for diverse investment activities. It also includes land allocations and low-interest loans for targeted sectors.
3. Unified Licenses:
• The system standardizes the licenses required to establish investment projects, enabling investors to obtain all necessary permits from a single source and more quickly.
4. Investor Rights Protection:
• The new system ensures the protection of both local and foreign investors through laws and regulations that guarantee fairness and non-discrimination, with mechanisms for resolving investment disputes effectively.
5. Investment in Key Sectors:
• The system encourages investment in sectors such as technology, renewable energy, education, healthcare, and manufacturing, in line with the Kingdom’s goal of achieving economic diversification.
6. Public-Private Partnerships:
• The system enhances cooperation between the public and private sectors through strategic partnerships, providing opportunities for investors in large-scale infrastructure and developmental projects.
7. Facilitations for Foreign Investors:
• The system allows foreign investors to fully own projects in certain sectors, promoting the inflow of foreign capital into the Kingdom, with mechanisms to encourage global companies to open branches in Saudi Arabia.
5. Labor System
Key amendments:
1. Expansion of Leave and Contracts:
• New definitions for “resignation” and “delegation” were introduced.
• Resignation procedures and employee grievance procedures were clarified.
2. Enhancement of Training and Qualification:
• Employers are required to establish policies for employee training and qualification to improve skills and enhance performance.
3. Regulation of Maritime Work:
• Amendments were made to the maritime work regulations to align with international standards.
4. Penalties for Illegal Employment Practices:
• Penalties are now imposed for hiring workers without the necessary ministry licenses.
5. Amendment of Employment Contract Terms:
• Article 37 was amended to state: “An employment contract for a non-Saudi employee must be in writing and for a fixed term. If the contract does not specify the duration, the term is considered one year from the date of employment.”