Saudi Arabia
JordanUnified License: How to Turn the Investment Dream into Reality in Saudi Arabia?
In a strategic step to support economic development and enhance the Kingdom’s competitiveness regionally and globally, the Executive Regulations of the Investment System were issued by Cabinet Decision No. (388) dated 14 Ramadan 1445H (24 March 2024), complementing the provisions of the newly approved Investment System. These regulations aim to organize the relationship between the state and investors, define their rights and obligations, and align with the goals of Saudi Vision 2030, which seeks to create an attractive and sustainable investment environment.
One of the prominent features of this system is the adoption of the “Unified License,” representing a significant shift from the previous system, which required precise identification of investment activities in each license. This change reflects the Kingdom’s direction toward updating legislation and achieving greater flexibility in economic activities.
What is the Unified License?
According to Article (4) of the Executive Regulations, an investor—whether a natural or legal person—is granted a unified investment license that covers the general investment activity without the need to specify each subsidiary activity unless the activity falls under restricted or prohibited activities. The unified license serves as the primary legal document granting the investor the right to immediately engage in business activities upon meeting the regulatory requirements.
Article (6) of the regulations emphasizes the necessity of registering the investor in the “National Investor Registry,” which is managed by the Ministry of Investment. This registry serves as the official reference for documenting and periodically updating investor data, facilitating government entities in monitoring activities and ensuring compliance.
II. Regulation of Personal and Family Names as Trade Names
Article 3 of the Executive Regulations regulates the registration of personal and family names as trade names, subject to the following conditions:
- A trader’s personal name may be reserved or registered using the full triple or quadruple name as stated in the national ID.
- A family name may be used if it is composed of more than one name, provided the beneficiary bears the same family name in their ID.
- The ownership of a family name may only be transferred to individuals who bear the same name in their national ID.
Key Changes Compared to the Previous System
Under the previous system, investors were required to submit detailed applications for each investment activity they wished to undertake, along with obtaining multiple approvals from various regulatory bodies (such as environmental, municipal, or health authorities). This process often complicated procedures and delayed the commencement of business operations.
The new system embraces a philosophy of facilitation and flexibility, where it suffices to specify the general investment activity, with detailed specifications required only if the activity is among restricted activities, as outlined in Appendix No. (1) attached to the Executive Regulations, which specifies activities requiring special approvals.
Positive Impacts on Investors
1. Accelerated Procedures and Reduced Bureaucracy
The regulations state that the license will be issued within no more than five business days from the completion of the requirements, significantly reducing the time spent compared to the previous system, which could take weeks or months.
2. Greater Flexibility in Activity Modification
Investors can now easily expand or modify their activities within the same license, as long as the activities remain within the same investment framework, without the need for new licenses or continuous updates unless the nature of the activity changes.
3. Support for Expansion Strategies
The regulations grant investors greater flexibility to open branches or subsidiaries of their licensed activities within the Kingdom without requiring separate licenses for each branch, thereby enhancing rapid expansion opportunities.
4. Reduced Administrative and Legal Costs
Article (10) specifies that the National Center for Investor Services is responsible for minimizing overlap between regulatory bodies and reducing administrative burdens, which directly impacts the reduction of costs related to establishment and follow-up.
5. Clear Legal Obligations
The system aims to enhance transparency by imposing specific obligations on investors, such as the requirement to prepare periodic reports under Article (15), contributing to improved governance and ensuring full compliance.
What Are the Excluded Activities?
According to Appendix No. (1) and Article (5) of the regulations, there remains a list of specific activities that require special approvals due to their sensitivity or national importance. These include:
- Military and defense activities
- Media and broadcasting activities
- Activities related to natural resources (such as oil and minerals)
- Environmental activities with significant impact
An investor wishing to engage in any of these activities must submit a detailed application including required studies and documents and undergo a thorough review by the relevant authorities before receiving final approval.
Comprehensive Service Center: Enhancing the Investment Experience
According to Article (12) of the Executive Regulations, a “Comprehensive Service Center” has been established as the primary link between investors and relevant government bodies. The center provides services through a unified electronic platform that allows investors to submit and track applications online, eliminating the need for personal attendance in most cases and speeding up the work process.
The regulations also require government entities to integrate with this platform to ensure the smooth transfer of information and reduce regulatory overlap.
Legal Recommendations for Investors
In light of these developments, our legal team advises investors to:
- Carefully review the system and its executive regulations to understand the legal requirements
- Consult with a specialized legal advisor to determine if their activities fall under restricted activities
- Regularly update their data in the National Investor Registry to ensure compliance
- Ensure they meet periodic obligations such as reports and environmental or regulatory requirements
Conclusion
The Unified Licensing System represents a qualitative shift in the investment environment in the Kingdom, reflecting Saudi Arabia’s ongoing commitment to improving the business environment and attracting quality investments. These changes are expected to significantly accelerate investment projects, stimulate innovation, and maintain a delicate balance between government facilitation and regulatory compliance.
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