Saudi Arabia’s Investment Minister has announced Saudisation will not be forced on companies who relocate their headquarters to the Kingdom. They added Saudisation will also not apply to companies who choose to set up in the Kingdom. Their announcement follows last week’s news that certain rules for companies seeking to take advantage of the $3 trillion investment opportunities identified for international investors under the Vision 2030 strategy will be set.
KSA: International companies that wish to participate in the Saudi government’s investment opportunities will have to establish regional headquarters in the kingdom from January 2024
International companies that wish to participate in the Saudi government’s investment opportunities will have to establish regional headquarters in the kingdom from January 2024 or they will not win government contracts, the Saudi finance minister has told Reuters. International companies which refuse to move their regional headquarters to Saudi Arabia after this time would continue to have the freedom to work with the private sector in the country. However, some sectors will be exempt and detailed regulations on this area will be issued before the end of 2021. This will affect all the authorities, organisations, and funds of the government from any of its organisations. The aim is also to ensure that the products and services purchased by the government are implemented in the kingdom and with suitable local content.
Saudi Arabia’s Crown Prince has announced a raft of judicial reforms including a new Civil Transactions Law are on the way. A new Personal Status Law, Penal Code for Discretionary Sanctions and Law of Evidence will also be introduced.
Once the draft laws are finalised, they will be referred to the Cabinet and other relevant bodies to consider. Once the Cabinet and other relevant bodies have reviewed them, they will be submitted to the Shoura Council to consider. They will be drafted in line with Sharia Law and the Kingdom’s international and regional treaty obligations.
They will help clarify the lines of accountability and ensure the consistency of legal references to limit discrepancies in court rulings. Discrepancies in court rulings have led to a lack of clarity in the rules governing incidents and practices as well as prolonging cases which are not based on established legal provisions and creating a lack of a clear legal framework for individuals and businesses.
Saudi Arabia’s Public Investment Fund has announced its intention to plans to establish a major airline company in the Kingdom. It will compete with State-owned Saudi Arabian Airlines and other major aviation companies in the region. The Fund has made significant progress in establishing an aviation company which will operate both international and domestic flights. The aim is offer consumers more choice and increase the contribution of the aviation sector to the country’s GDP.
Following a public consultation on proposed amendments, Saudi Arabia’s Capital Market Authority have approved amendments to the Market Conduct Regulations. They will come into force on their published date. They are aimed at boosting protections for securities investors against unfair or unsound practices which involve fraud, deceit, or manipulation. They are also aimed at developing the capital market’s legal and regulatory framework and promote its stability, develop procedures to minimise risks associated with securities transactions and boost confidence in the capital market. Among other amendments, the provisions regulating the prohibition of acts or practices involving manipulation or deceit will be developed. This will be done by clarifying that the scope of these acts or practices will include promoting the purchase of a security for the purpose of selling or promoting the sale of a security for the purpose of purchasing it. The amendments will also develop the provisions regulating the prohibition of insider trading and disclosure of inside information for the purpose of including front running trades.
Saudi Arabia: The General Assembly of the Saudi Supreme Court has ordered rents owed by businesses affected by COVID-19 be waived
The General Assembly of the Saudi Supreme Court has ordered rents owed by businesses affected by COVID-19 be waived. A review of such contracts between tenants and landlords has also been ordered. However, the authorities have also set conditions which must apply before a case can be eligible for review under the new regulations. If a contract was concluded before the anti-COVID-19 measures started, the impact on the affected party will have need to have been direct and unavoidable. In addition, in these cases, an affected party must not have been compensated or reached a deal to mitigate the effects of the crisis. In such cases a review will be possible and the new regulations will come into effect. A competent court will then issue their verdict based on the facts and circumstantial evidence. They may order the contract be amended. These new provisions will apply to tenancy contracts and movable properties affected by COVID 19. The regulations also cover other types of contract such as construction and supply contracts, which have been affected by the crisis. If a contract obliges one of the parties to carry out something, which cannot be completed on time because of COVID 19, the court can temporarily suspend implementation of the obligation. If the other party fears unusual damage because of the suspension, they may request termination of the contract. The court has stressed the need for damages to be carefully assessed on a case-by case basis. This should be done by one or more experts and when assessing damages, it should be clear which losses were incurred directly because of COVID 19 and had nothing do to with seasonal changes in activities. The Supreme Court has explained that courts are bound, when considering cases arising from contracts and obligations impacted by COVID 19, not to apply penalty clauses or fines totally or partially, depending on the case. Where a contract includes an exemption of liability clause for one of the contracting parties when an emergency or force majeure event occurs, the condition has no effect and the party which breached the obligations must provide evidence COVID 19 caused the breach. Affected contracts which are not covered by this principle will be subject to standard legal and statutory litigation principles.
Saudi Arabia’s Industry and Mineral Resources Minister has agreed to restructure the mining sector by creating three new agencies. They will be led by the Deputy Minister for Mining Affairs. They are the Ministry’s Agency for Mineral Resources, the Ministry’s Agency for Mining Control and Compliance and the Ministry’s Agency for Mining Development. The aim is to provide faster and better services to investors in the mining sector.
Saudi Arabia’s Human Resources and Social Development Minister has announced the Kingdom has ratified the International Labour Organisation agreement No. 90 on the protection of salaries and agreement No. 120 on health rules in the work environment. The Ministry launched a wages protection programme in 2013 which has been improved since then to reflect the 2030 Vision.
Saudi Arabia’s Central Bank will be able to buy or rent property under the new Central Bank Law. They will be able to do so providing the purpose is to diversify its foreign investments. The Law also bans the Bank from engaging in trade or participating in commercial activities or taking an interest in any commercial, industrial or agricultural projects. However, there will be exceptions to this, where the Bank does any of these activities to fulfil any of its objectives.
In addition, the Central Bank will be banned from financing or lending to the Government or to any individuals. However, there will be exception to this where the Bank carries out these activities to help manage the liquidity of financial institutions or are responding to crises.
The Central Bank’s assets, revenues, and properties will have immunity and should not be raided, seized, confiscated, possessed, or expropriated and they are not subject to any bankruptcy procedures.
They will also not be subject to the Competition and Government Procurement Law. However, they will be subject to the regulations and policies issued by the Board, provided the regulations and policies are consistent with the objectives and basic principles of the Competition Law.
The Bank’s contracts and agreements will be subject to the policies approved by the Board. There will be some exceptions, including where contracts and agreements are related to foreign laws if the rulings establish, they are subject to the jurisdiction of foreign courts.
Saudi Arabia’s Cabinet has approved the Saudi Central Bank Law. It means the Saudi Arabian Monetary Authority will be renamed the Central Bank of Saudi Arabia. They will report to the King but will still have financial and administrative independence, in line with the international practices of central banks. All of the obligations and rights of the Saudi Arabian Monetary Authority will be transferred to the Central Bank.