The Law Firm of Hazim Al Madani Attorneys and Legal Consultants
Suspension of government contracts with foreign companies with regional headquarters outside Saudi Arabia from 2024
As of early 2024, Saudi Arabia has announced the suspension of government contracts with foreign commercial companies that set up their own regional offices outside the Kingdom.
His Excellency the Minister of Investment Engineer Khaled Al-Falih said that the decision should not surprise anyone, it is a continuation of the kingdom’s strategy, which follows 2030 vision of Saudi Arabia to attract foreign investment. Riyadh’s strategy is a plan launched by Crown Prince Mohammed bin Salman in January last year, which is part of its objectives is to move the regional headquarters of international commercial companies to Riyadh.
In line with this initiative, the Kingdom has decided to terminate the contract with any foreign trading company that does not have a regional headquarters in the country from 2024.
This is targeting the promoting of the foreign investment in the Kingdom while providing jobs for Saudi’s youth and increasing the spending efficiency to make sure that the main products and services purchased by various government agencies are implemented in the Kingdom.
This decision is in line with Saudi Arabia’s announcement that 24 international companies are determined to move their regional headquarters to the Kingdom. Saudi Arabia has already granted licenses to 44 international companies to move its regional headquarters in the capital Riyadh.
The Kingdom has also begun economic, social and legal reforms, the Quality-of-Life Program initiative to modify rules and regulations and develop new regulations that facilitate and enable access to the desired goals, to be an easier and better place to stay, work and reduce the actions that have hindered companies since ancient times.
To better clarify the most common types of licenses granted to foreign companies wishing to work in the Saudi market:
1.Service licensing: This license includes the following activities: (contracting, senior management consultancy, information technology, tourism, training, health, insurance and reinsurance, education, advertising, shipping and air freight services for goods, exhibition organization, catering and nutrition services, financial services, …… Etc.).
2.Industrial licensing: This service is provided to all industrial licenses such as heavy and light manufacturing and process industries.
3- License of a scientific and technical office: This service is provided to foreign companies that have a Saudi agent or authorized distributor in the Kingdom and aim to establish an office that provides scientific and technical services to agents, distributors, and consumers of the company’s products.
4- Real estate license: it’s Activities that include investments in real estate development, but the cost of the project should not be less than (30) 30 million Saudi riyals land and construction outside the cities of Mecca and Medina.
5-A commercial license with a Saudi partner: This service is provided to foreign enterprises aiming to engage in wholesale and retail activity in the Kingdom with the Saudi partner.
6- Foreign trade license100%: Offered to foreign enterprises 100% who aim to engage in wholesale and retail activity in the Kingdom or e-commerce.
Agricultural licensing: This service is provided to enterprises aiming to engage in agricultural activities.
8.Mining licensing: This service is provided to enterprises aiming to engage in mining activities in the Kingdom.
To show the legal forms of companies and the value of capital of these companies based on the Corporate Law and the Investment Law in Saudi Arabia:
Type of license
Acceptable minimum capital
Joint Stock Company
Sole proprietorship joint stock company
Limited liability Company LLC.
No specific capital is required, but capital is required to be sufficient to achieve its business purpose
Real Estate funding
Commercial with a Saudi partner
26,666,667 foreign capital share is not less than SAR 20 million and foreign partnership ratio is not more than 75%
Real Estate Development
The value of one project should not be less than 30,000,000 land and building outside the two holy mosques
Since we have received many inquiries about the procedures required to establish a foreign company (subsidiary-branch and new companies) in Saudi Arabia, we will provide you with the following:
- Register with the Ministry of Investment (MISA)and obtain an investment license.
- Preparation of the establishment, documentation, and publishing contract (for new subsidiaries and companies).
- Apply for the Commercial Register Certificate (CR)at the Ministry of Commerce (MOC).
- Open a bank account.
- Depositing capital and issuing a bank certificate.
- Register in the Chamber of Commerce.
- Renting a headquarters for the company that meets the legal requirements of the civil defense.
- Issuing the civil defense certificate
- Get a municipal license.
- Open a file for the company in the Ministry of Labor.
- Registration at the General Social Insurance Corporation.
- Registration with the General Authority for Zakat and Income.
- Registration in the VAT.
- Register with Saudi Post for the national address.
- Open a file in quua platform for labor office services.
- Register for modad platform to manage and commit to documenting employment contracts.
- Issuing a work visa to the Director General.
- Participation and activation of a resident service for passport services and the Ministry of Interior for foreign residents.