Saudi Arabian Law Overview

A services manual on foreign investment is available on the website of the Ministry of Investment (MISA). It details the investment licences that may be applied for, some of which are described below.

Temporary Certificates to Submit Proposals for Government Projects

In accordance with the Council of Ministers Decision No 405 of 22 Shawwal 1435 Hejra (corresponding to 18 August 2014), entities bidding for government projects must submit applications to the Ministry of Commerce for obtaining a temporary certificate. Such certificates are only valid for one year, and do not entitle the entity to a commercial registration certificate. The service documents required for the application are:

1. a copy of the applicant’s commercial register;
   
   
2. financial statements of the past three years that have been authenticated by an internationally acclaimed legal office (the applicant’s total revenue must have exceeded SAR 500 million, and it must have made a profit for the past five years);
   
   
3. copies of the letters of award for three projects finished in the last seven years where the applicant acted as the main contractor; and
   
   
4. a copy of the applicant’s ISO 9001 certificate, ISO 14001 certificate (or an equivalent certificate) and the Occupational Safety Certificate 18001.

All documents submitted with the application must have been authorised by the Saudi Arabian embassy of the applicant’s country of origin. A temporary certificate is not sufficient to permit the execution of an awarded contract; a service licence or temporary licence for the performance of a government contract must be obtained for such purposes.

Temporary Licences for the Performance of Government Contracts

Foreign businesses who have obtained a contract from the Saudi Arabian government or a government agency are entitled to a temporary licence, enabling them to perform the contract in Saudi Arabia. This licence expires at the end of the contract. This service is currently handled by MISA. Under this arrangement, the foreign business entity’s activities in the Kingdom must be limited to the specific project, and it may not solicit other business in the Kingdom. The following documents are additionally required for obtaining such a temporary licence:

1. a copy of the applicant’s commercial register entry from its country of origin, which has been authenticated by a Saudi Arabian consulate; and
   
   
2. a copy of the letter of award for the project, or the project execution contract signed by the competent authority, which must state the contract’s duration.

Licences for Technical and Scientific Services Offices

Resolution No 1532 of 1975 of the Ministry of Commerce made it possible for foreign companies with specific technical and scientific skills to obtain licences to open technical and scientific services offices (TSSOs) in Saudi Arabia. However, such offices may not engage in commercial activities, and are meant to provide technical support to the parent company’s Saudi Arabian agent or distributor, to conduct market surveys, and to undertake product research. The office must also submit an annual summary of its activities to MISA. The service documentations required for such a obtaining such a licence are:

1. a copy of the commercial register of the business authenticated by a Saudi Arabian consulate; and
   
2. a copy authorization of the agent or distributor.

Professional Companies

The Professional Companies Regulation, Royal Decree No M/4 of 18 Safar 1412 Hejra (corresponding to 28 August 1991) enabled non-Saudi entities engaged in the free professions, which included accountants, architects, consulting engineers and lawyers, to establish a presence in the Kingdom in partnership with a Saudi entity engaged in the same profession, under a licence from the Ministry of Commerce and Industry. Initially, such professional companies could not have limited liability, and at least 25% Saudi Arabian participation was required.

The 1991 Professional Companies Regulation has been replaced by the Professional Companies Regulation, Royal Decree No M/17 of 26 Muharram 1441 Hijra (corresponding to 25 September 2019), under which a professional company can be a joint liability company, a JSC, a simple commandite company or a limited liability company. Partners and shareholders of a professional company may convert their company into one of the aforementioned companies. Certain sectors, such as engineering, have also been opened to complete foreign ownership, subject to the fulfilment of specific requirements. A single professional company may also provide a range of services falling under different industry classifications, provided that the specific legal requirements for conducting each type of business activity are fulfilled.

*This Saudi Arabian Law Overview is not intended to be legal advice, and cannot be relied on as a substitute for legal advice. We make no representation that the contents of this Saudi Arabian Law Overview are or will remain accurate or current. 

Copyright © Derayah LLPC