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Family-owned companies remain a cornerstone of economic development in Saudi Arabia and across the broader Middle East. Rooted in deep personal ties and shared long-term goals, these enterprises often evolve from informal arrangements into sophisticated multi-generational structures. As businesses mature and family dynamics shift, some members may inevitably wish to reduce or end their involvement. In such cases, a legally sound and well-governed exit strategy is essential. It not only safeguards business continuity but also helps preserve family harmony.

 

Understanding Exit Scenarios in Family Businesses

An exit in a family-owned business involves the departure of a family member from ownership, management, or both. These exits can be planned, such as through retirement or generational transition, or they may arise from disputes, divergent business priorities, or personal financial goals. Unlike exits in public or widely held companies, family business separations carry emotional, cultural, and reputational dimensions that must be addressed delicately and strategically.

Legal Foundations for Exit Planning

1. Shareholder Agreements

A detailed shareholder agreement is the legal backbone of a sustainable exit plan. It sets out the rights and obligations of each shareholder and provides mechanisms for resolving disputes and managing exits. In family-owned structures, these agreements should also address unique concerns such as:

• Exit scenarios and triggering events
• Valuation methods and appointment of independent experts
• Transfer restrictions and approval protocols for non-family buyers
• Protections to keep ownership within the family circle
• Roles of non-operational family shareholders

By documenting these matters clearly, the agreement reduces ambiguity and the potential for intra-family disputes.

2. Memorandum and Articles of Association (MOA and AOA)

The constitutional documents of the company must align with the shareholder agreement. They serve as the legally binding reference for governance, share transfers, voting rights, and dispute resolution. In Saudi Arabia, any amendments to these documents must comply with the 2022 Companies Law and be registered with the Ministry of Commerce via the Qiwa or Meras platforms, as applicable.

3. Valuation Mechanisms

Disagreements over valuation are a common source of tension during exits. To avoid this, family businesses should pre-define valuation methodologies in their legal documents. Options include:

• Net asset or book value
• Earnings-based or EBITDA multiples
• Discounted cash flow (DCF)
• Independent third-party valuation

Consistency, transparency, and fairness are key to maintaining trust and enabling smooth transactions.

Legal Pathways for Exiting a Family-Owned Business

1. Buy-Sell Agreements

These agreements create binding arrangements that dictate how shares are to be handled under specific circumstances, such as death, disability, retirement, or voluntary exit. They provide financial predictability and help keep ownership within the designated circle of shareholders.

2. Family Settlement Agreements

When disputes emerge or when there is a mutual decision to separate, family settlement agreements can be used to redistribute shares or reassign responsibilities. These agreements are enforceable under Saudi law and typically include:

• Confidentiality clauses
• Non-compete obligations
• Waivers of future claims
• Clear transfer terms

They offer a private, practical resolution while preserving family relationships.

3. Company Share Buybacks

Under the Companies Law, a limited liability company (LLC) or a joint stock company (JSC) may repurchase its shares, subject to regulatory compliance and capital requirements. This may be preferable when other shareholders are not in a position to acquire the exiting member’s interest. The company must ensure adequate liquidity and must follow the Ministry of Commerce notification procedures.

4. Corporate Restructuring and Spin-Offs

For family groups operating across multiple sectors, corporate restructuring offers an alternative to direct exits. A spin-off or demerger can allocate separate business units to different branches of the family. This allows for operational independence while preserving shared legacy and group identity. Such strategies require careful tax and regulatory planning and may involve approvals from the Zakat, Tax and Customs Authority (ZATCA) and the Ministry of Commerce.

5. Third-Party Sale

Though typically a last resort in family businesses, external sales may become necessary when internal options are exhausted. Protective mechanisms in the shareholder agreement, such as:

• Rights of first refusal
• Tag-along rights
• Drag-along rights

Regulatory disclosures and anti-competition laws must also be considered when selling to third parties.

Aligning Exit with Succession Planning

Exit planning and succession planning should be viewed as two sides of the same coin. The exit of a senior family member often coincides with the need to elevate the next generation. Establishing a formal family council or advisory board helps manage expectations and provide a structured forum for communication and dispute resolution. Legal alignment between succession and exit frameworks ensures continuity and prepares the business for long-term sustainability.

Legal Due Diligence and Risk Management

Before any exit is finalised, thorough legal due diligence is critical. This process should include:

• Verification of share ownership and compliance history
• Review of all corporate documents, shareholder agreements, and minutes
• Tax liabilities and potential exposure
• Intellectual property and asset entitlements tied to the exiting member
• Review of any personal guarantees or outstanding obligations

In recent years, the Saudi legal landscape has evolved significantly, particularly with the new Companies Law and increasing regulatory scrutiny. Legal due diligence ensures that all exits are legally valid, commercially reasonable, and compliant with current regulations.

Looking Ahead

In Saudi Arabia, family businesses continue to grow in sophistication, size, and complexity. As such, the need for structured and legally robust exit pathways has become more important than ever. A proactive approach to planning including clear documentation, legal enforceability, and alignment with business strategy helps avoid costly disputes and protects both commercial and personal interests.

Legal advisors play a key role in guiding families through this process, offering solutions that reflect not just legal compliance, but also cultural understanding and emotional sensitivity. With the right frameworks in place, family businesses can navigate separations gracefully and remain resilient across generations.

As Saudi Arabia accelerates its Vision 2030 agenda, digital transformation continues to reshape both public services and private sector operations. A critical pillar of this shift is the growing reliance on digital contracts and electronic signatures. These tools offer speed, convenience, and traceability, but many organisations remain uncertain about their legal enforceability.

 

This article provides an up-to-date overview of the legal framework, compliance requirements, and practical use cases for digital contracts and e-signatures in Saudi Arabia as of August 2025.

Legal Status of Electronic Signatures in Saudi Arabia

Electronic signatures are legally recognised in the Kingdom under the Electronic Transactions Law. The law treats electronic signatures and digital records as equivalent to their paper-based counterparts, provided they meet specific legal conditions.

To be valid, an electronic signature must:

• Be linked to the identity of the signer
• Demonstrate the intent to approve the content
• Be securely protected from tampering after signing

The law was further reinforced by executive regulations and updates issued by the Digital Government Authority (DGA), which oversees the National Root Certification Authority. This authority licenses and regulates certified digital signature providers, ensuring that digital certificates meet stringent security and authenticity standards.

Are Digital Contracts Enforceable?

Yes. Digital contracts are enforceable under Saudi law so long as they meet the general conditions for contract formation:

• Mutual consent between the parties
• A lawful subject matter
• Legal capacity of the signatories
• A valid offer and acceptance

The format of the contract, verbal, paper, or electronic, does not affect its validity unless specific legislation or regulations require a particular form (e.g. notarisation for certain real estate transactions or formal registration for franchise or agency agreements).

A digital contract that includes a legally valid electronic signature is fully binding and carries the same legal force as a traditional contract.

Oversight and Infrastructure

Saudi Arabia’s robust digital ecosystem is built on cooperation between key regulatory bodies:

• Digital Government Authority (DGA) – sets digital governance policies and standards
• National Cybersecurity Authority (NCA) – ensures the security of digital infrastructure
• Communications, Space and Technology Commission (CST) – oversees telecom and IT regulations
• Root Certification Authority – issues and manages digital certificates and ensures Public Key Infrastructure (PKI) compliance

Together, these bodies provide a secure environment for electronic transactions and promote trust in digital services.

Government-accredited providers offer qualified electronic signature solutions, which use encryption and digital certificates to verify the identity of signatories and protect the integrity of signed documents.

Common Use Cases

Electronic signatures are already being widely used across Saudi Arabia’s economy:

• Commercial Contracts: Agreements for supply, services, partnerships, and joint ventures
• Employment Agreements: Facilitating hiring, onboarding, and remote work arrangements
• Banking and Finance: Account openings, loan documentation, and internal approvals
• Government Platforms: Services such as GOV.SA, Qiwa, Muqeem, and Tawtheeq rely on digital signatures for submissions, verifications, and compliance tasks.

However, some documents, such as real estate title transfers, court submissions, and inheritance proceedings, may still require traditional notarisation or judicial approval in accordance with Sharia and administrative procedures.

Compliance and Risk Management

While the law supports digital signatures, businesses must proactively ensure compliance to reduce legal and operational risks. Best practices include:

• Using only certified providers authorised by the Root Certification Authority
• Establishing internal policies on when and how electronic signatures should be used
• Providing staff training on legal requirements, risks, and proper procedures
• Storing signed contracts in tamper-proof, auditable formats
• Conducting regular audits to ensure compliance with applicable laws and standards

Failure to implement these safeguards could expose businesses to disputes around authenticity, consent, or enforceability, especially in high-value or sensitive transactions.

Final Thoughts

Saudi Arabia has firmly established the legal validity and enforceability of digital contracts and electronic signatures. Supported by a comprehensive regulatory ecosystem and a rapidly maturing digital infrastructure, electronic transactions are not only recognised, but they are also increasingly encouraged.

For businesses, embracing these tools represents more than just a compliance exercise. It is a strategic advantage that enables faster decision-making, reduced costs, and seamless collaboration across borders.

To fully realise these benefits, organisations must align their internal processes with national standards, invest in secure technologies, and stay informed of legal developments. In doing so, they can participate confidently in the Kingdom’s digital future, without compromising on legal certainty or contractual integrity.

In a widely discussed podcast episode between comedian Theo Von and OpenAI CEO Sam Altman, Altman raised a striking point that people are increasingly confiding in ChatGPT, sharing personal stories, emotional struggles, and even seeking legal or psychiatric guidance. Altman warned that these conversations are not covered by any form of legal privilege, unlike speaking to a lawyer or doctor, and could potentially be used in legal proceedings if requested by authorities.

 

We have recently heard from our surroundings that people are increasingly using ChatGPT as a companion, seeking psychiatric comfort, informal legal counsel, or daily advice. This blurring of lines between “tool” and “trusted confidant” makes Altman’s warning highly relevant for Saudi Arabia: What legal status does these AI conversations hold here, and could they be used as evidence in court?

I. Current Saudi Data Protection & AI Governance Framework

Saudi Arabia has made sweeping moves to regulate data and AI through the Personal Data Protection Law (PDPL) (Royal Decree No. M/19 of 2021) and the Saudi Data & Artificial Intelligence Authority (SDAIA). The PDPL governs how personal data is collected, processed, and shared, imposing obligations on data controllers and giving individuals rights to consent, access, and erasure.

Complementing the PDPL, the National Strategy for Data & AI and SDAIA’s ethical AI principles promote transparency, accountability, and responsible use. But none of these framework’s address “legal privilege” in the evidentiary sense, they regulate data privacy, not whether an AI conversation is shielded from use in litigation or prosecution.

II. The Privilege Gap

Traditional legal privilege in Saudi Arabia is narrow and profession specific. Lawyer–client communications are treated confidentially under the Law of Advocacy; doctor–patient communications are similarly protected under health regulations. AI chats don’t fit this category. A conversation with ChatGPT is not the same as seeking advice from a licensed lawyer or physician. There is no statutory or doctrinal privilege that would prevent disclosure of AI chat content if requested by a court or regulator. The “trust” users feel toward AI is, legally, misplaced.

III. Can ChatGPT Conversations Be Used as Evidence in Saudi Courts?

The short answer is potentially, but it would depend on the circumstances.

Under the Saudi Law of Evidence (Royal Decree No. M/43 of 2021), which came into force in July 2022, “electronic data, digital records, and communications” are broadly recognized as admissible if certain conditions are met. This category covers emails, text messages, and app chats and, by extension, could encompass AI generated chat logs. However, admissibility is not automatic.

Key considerations:

• Authenticity & Integrity: Any party wishing to submit a ChatGPT transcript would need to demonstrate that the record is genuine, complete, and untampered, something that may require technical evidence, provider authentication, or forensic support.
• Context of Use: Courts would weigh the relevance and probative value of such conversations. For instance, chats could be examined for intent, admissions, or patterns of behaviour, but their weight as evidence might be debated.
• Judicial Discretion: Saudi judges have wide latitude under the Law of Evidence to accept or reject materials depending on credibility and the surrounding facts.

Crucially, there is still no recognized “AI privilege” in Saudi law. If regulators such as the Public Prosecution, ZATCA or CMA formally request AI chat records, providers could be compelled to disclose them. The PDPL ensures that personal data is processed lawfully and securely, but it does not shield those records from lawful court or investigative demands.

Both the U.S. and EU are grappling with the same issue Saudi Arabia faces. AI chats are protected as “data” but not privileged as “confidential communications.” There is no jurisdiction yet that grants AI conversations the same legal shield as a doctor or lawyer discussion.

IV. Policy and Legal Reform Considerations

Sam Altman’s comments spotlight a legal vacuum that users often treat AI like a “trusted advisor,” yet the law sees it as an unprotected channel. Saudi policymakers may consider:

• Clarifying rules for “AI privilege” particularly where AI is used in legal, medical, or religious professional contexts.
• Enhancing PDPL guidance to require explicit user warnings about non privileged AI chats.
• Establishing procedural protections for certain categories of AI stored data (e.g., enterprise licensed legal tools) to avoid indiscriminate disclosure.

V. Conclusion

Sam Altman’s warning may have been global, but it resonates sharply in Saudi Arabia. The Kingdom has cutting edge data laws and an ambitious AI strategy, but no legal privilege yet attaches to AI conversations. Under Saudi law, a ChatGPT chat is an electronic record, and if its authenticity is proven, it can be admitted as evidence in court.

In the meantime, the safest stance is simple: treat every AI conversation as if it might one day be read aloud in court.

Over the past decade, Saudi Arabia’s sports sector has experienced a profound transformation, emerging as a central pillar of the Kingdom’s Vision 2030 goals. Driven by ambitious government strategies to diversify the economy, promote social well-being, and elevate Saudi Arabia’s international stature, sport has become a dynamic industry attracting massive investments and wide public engagement. This article reviews the sector’s evolution, highlights recent key developments, and examines the critical legal considerations shaping its future trajectory.

 

Transformational Growth Under Vision 2030

Vision 2030 explicitly positions sports as a catalyst for national development, emphasizing its role in enhancing quality of life, stimulating private sector investment, and improving Saudi Arabia’s global image. The Ministry of Sport, established in 2016, has spearheaded efforts to create an inclusive, competitive, and commercially sustainable sports ecosystem.

Saudi Arabia has invested heavily in state-of-the-art infrastructure and sport-specific facilities, supporting national federations and enabling the hosting of numerous world-class international events. Notable recent highlights include the Dakar Rally, Formula E and Formula One Grand Prix, WWE shows, high-profile boxing matches, and the Saudi Cup, the world’s richest horse race. Looking ahead, the Kingdom is preparing to host the 2027 AFC Asian Cup and remains a strong contender to co-host the 2034 FIFA World Cup.

At the grassroots level, initiatives like the Quality-of-Life Programme and Saudi Sports for All Federation have dramatically increased public sports participation, especially among women and youth. Enhanced support for community clubs, school sports programs, and talent development academies underscores a commitment to sustainable growth and social inclusion.

Private Sector and Investment Dynamics

The growing role of the private sector is a key driver of the sports industry’s rapid development. Saudi Arabia’s Privatisation Programme aims to transfer ownership and management of various sports clubs and facilities to private entities, boosting efficiency, innovation, and profitability.

The Public Investment Fund (PIF) remains a central player on the global stage, with high-profile acquisitions such as the 2021 takeover of Newcastle United Football Club highlighting Saudi Arabia’s expanding sports footprint. PIF’s investments have also extended to LIV Golf, motorsports, esports, and combat sports, reflecting a diversified portfolio designed to build influence and expertise.

These global ventures attract world-class talent, sponsorships, and know-how, while fostering domestic capabilities and generating economic returns. However, the increasing international presence demands enhanced governance and transparency.

Legal and Regulatory Framework

To support this growth, Saudi Arabia has strengthened its legal and regulatory infrastructure, aligning domestic sports law with global best practices. The establishment of the Saudi Sports Arbitration Centre has introduced independent, specialised dispute resolution for sports-related conflicts, enhancing confidence among stakeholders.

Recent regulatory reforms have addressed club ownership structures, player contracts, anti-doping enforcement, broadcasting rights, sponsorship agreements, and intellectual property protection. This comprehensive framework aims to safeguard integrity, encourage commercial investment, and foster cross-border collaborations.

Sports law is now recognised as a specialised discipline within Saudi legal education, with universities and institutions offering dedicated programs to prepare practitioners for the complexities of modern sports governance.

As Saudi Arabia deepens its involvement with international bodies such as FIFA, the International Olympic Committee (IOC), and the World Anti-Doping Agency (WADA), compliance with global standards concerning human rights, transparency, and ethical conduct becomes paramount.

Socio-Cultural Impact and Inclusion

Sport’s societal impact in Saudi Arabia has been transformative, particularly regarding gender inclusion. Women’s participation in sports has expanded rapidly, with the formation of female leagues, national teams, and leadership roles in sports organisations reflecting broader social reforms.

Sports serve as a platform for community building, youth engagement, and national pride. Government-backed programs promoting sports tourism, mass participation, and inclusive events contribute to public health, social cohesion, and cultural exchange.

Challenges and Future Outlook

Despite remarkable progress, challenges remain. Sustaining grassroots development, building professional leagues, and maintaining Saudi Arabia’s international credibility require ongoing efforts. The legal and governance frameworks must adapt swiftly to emerging issues such as digital sports, esports regulation, intellectual property enforcement, and anti-corruption measures.

Heightened global scrutiny of Saudi sports ventures necessitates balancing domestic priorities with international expectations, particularly on human rights and ethical governance.

Looking forward, priorities will include nurturing talent pipelines, enhancing fan engagement, and integrating cutting-edge technologies like AI, data analytics, and immersive digital platforms. Continued strategic investments combined with responsive policy and legal reforms position Saudi Arabia to become a global sports powerhouse.

The sports sector in Saudi Arabia is undergoing a historic and multifaceted transformation that aligns ambition with opportunity. Supported by visionary government policies, substantial investment, and a rapidly evolving legal landscape, the Kingdom is charting a dynamic course toward regional and global sports leadership. Success will depend on maintaining a delicate balance between growth, integrity, inclusivity, and global standards—ensuring a sustainable and credible future for Saudi sports.