Category Archives: Corporate and Commercial Services

The Ministry of Investment of Saudi Arabia (“MISA”) and The Ministry of Commerce (“MOC”) recently rolled out key legislation shaping how businesses in the Kingdom of Saudi Arabia (“KSA”) undertake their legal forms and their commercial activities aimed at streamlining incorporation and administrative costs on investors. With that said, certain procedures and requirements introduced by both MISA and MOC increased their regulatory oversight by promoting further disclosures or streamlining licensing parameters. This article aims to identify the major introductions investors and commercial entities should take mind of, while also acknowledging the complementary interplay between both MISA and MOC’s legislative actions.

Following the promulgation of the new Investment Law, issued by Royal Decree No. (M/19) dated 16/01/1446 H (corresponding to 22/07/2024 G) (“Investment Law”), MISA released the updated twelfth edition of the Investor Guide in 2025 (“Investor Guide”). This edition effectively replaces previous versions regarding the classification of licenses, although the requirements associated with such licenses remain unchanged. Subsequently, the new Implementing Regulations of the Investment Law was issued pursuant to Minister of Investor Ministerial Resolution No. (1086) dated 08/08/1446 H (corresponding to 07/02/2025 G) (“Investment Regulations”).

Additionally, the MOC introduced new requirements for commercial entities under the Commercial Register Law, issued by Royal Decree No. (M/83) dated 19/03/1446 H (corresponding to 22/09/2024 G) (“CR Law”), which took effect on 3 April 2025.

Part I: MISA – Out With the Old and in With the New?

Under the previous editions of the investor guides, MISA had several classifications for the types of licenses foreign investors could procure, which fell under the following: (1) Service License, (2) Industrial License, (3) Commercial License (a) with a Saudi partner or (b) wholly foreign-owned, (4) Scientific and Technical Office, (5) Real Estate License (6) Temporary License for Undertaking Governmental Projects, (7) Professional License, (8) Consulting License for Engineering Offices, (9) Entrepreneur License, (10) Technical and Economic Office License (11) Regional Headquarters License, (12) Agricultural License, (13) Mining License, and (14) Regional Headquarters License.

Each route of investment identified above had its unique set of requirements and conditions (such as minimum Saudi shareholder (if any) and minimum capital requirements) under the Commercial License route with a Saudi partner or a Professional License, placed challenges on foreign investors who undertake multi-sector based activities under different MISA license classifications restricting them from adding such different activities under the same license, mandating them to obtain an additional MISA license resulting in foreign investors having to maintain two licenses, which usually ran up administrative costs for upkeeping the MISA license.

Now, with the roll out of the Investor Guide, the MISA licenses have now been reclassified to the following: (1) Investment Registration License, (2) Entrepreneur License, (3) Temporary Registration For the Execution of Government Contracts, (4) Registration of Technical and Scientific Offices, (5) Registration for Economic and Technical Contact Offices, and (6) Regional Headquarters License. This welcomed changes under the reclassification of the licenses now allows foreign investors to combine activities from different licenses under the previous investor guides into one. For example, under the prior editions of the investor guides, a foreign investor interested in taking service-based activities and trading-based activities had to obtain a Service License and a Trading License, respectively, requiring them to maintain two separate licenses and subscription fees, resulting in requiring setting up two different commercial entities. This structure was oftentimes costly on foreign investors, pressuring them to consider the commercial setbacks from this administrative upkeep. Now with the new Investor Guide classifications, a foreign investor can combine service-based activities and industrial-based activities all under the same license and thereby allowing their commercial vehicle to undertake all the same activities, rather than establishing subsidiaries, save for the above-mentioned licenses which must be procured separately.

At first glance, it would appear the unique requirements for the previous sub-categories of licenses have been abolished, promoting easier requirements and routes for doing business in KSA. However, in practice, the unique conditions and requirements under the previous categories are still applicable for foreign investors to adhere to. For example, should a foreign investor wish to undertake service-related and commercial related activities, it may apply for one license (i.e. Investment Registration License) but would need to comply with the more arduous requirements under trading i.e. minimum capital requirement – depending on whether the activity will be undertaking with or without a Saudi partner, demonstrating presence in different jurisdictions, and commitment to invest a certain amount within the first 5 years of its incorporation in KSA.

Further, certain restrictions under previous versions of the investor guides have carried over to the Investor Guide, such as the inability to combine any other activity with professional-based activities. As such, should a foreign investor wish to under professional activity, such as financial consultation and a service-related activity, it would require obtaining and maintaining two separate Investment Registration License.

Lastly, MISA has tightened is regulatory oversight by requiring foreign investors to disclose on a quarterly basis their financial strength and standing, mandating such disclosures to be completed within 14 days, as per paragraph (18) of Article (16) of the Terms and Conditions (General Restrictions and Conditions) of MISA. Additionally, foreign investors must commit to annually updating their information within 60 days from the date of the proposed annual update deadline, as per article 13(1) of the Investment Regulations. This oversight allows offers transparency over the financial standing of the commercial entities in the KSA markets.

Part II: MOC

(a) Key Updates

Businesses currently holding sub-registers (branches) must convert these into separate legal entities, such as Limited Liability Companies (LLCs), Joint Stock Companies (JSCs), or Simplified Joint Stock Companies (SJSCs), or cancel them. Notably, this requirement does not apply to foreign companies entering the KSA market through a branch, as this would be their sole commercial registration. The CR Law introduces a unified national platform requiring a single commercial registration certificate to cover all activities, including those of branches. This replaces the need for separate registrations for each entity and location. The expiration date for CRs has been eliminated. Instead, businesses must confirm their CR details electronically on an annual basis, ensuring that information remains current in the Ministry of Commerce’s records. Lastly, the CR Law introduces alternative penalties to financial fines, including warnings that require companies to rectify violations. This flexibility allows businesses to resolve issues without facing significant financial penalties for less severe violations.

(b) Key Timelines

Companies must adhere to specific timelines under the new CR Law:

• Annual Updates: Companies are required to submit an annual update to confirm their information rather than renewing the CR. Updates can be initiated up to thirty (30) days before the anniversary of the CR’s original issuance date.
• Consequences of Non-Compliance: Failure to update the CR within 90 days of the due date will result in a one-year suspension of the CR. If the CR remains suspended for over a year without correction, it may be canceled.
• Five-Year Transition Period: Existing companies must align their operations with the new registration system within five (5) years. They must either transfer branch registrations to a Single National Commercial Registration or cancel their branch registrations and consolidate operations under the main company’s registration.

(c) Implications of Saudization

The recent elimination of branch CRs will have significant implications for Saudization compliance (Nitaqat) in Saudi Arabia. Businesses that decide to convert their branches into separate entities under a single CR must ensure that each newly registered company meets its own Saudization ratios.

Under the Nitaqat program, the Ministry of Human Resources and Social Development (MHRSD) allows certain entities with branches to adopt a combined approach for calculating Saudization percentages. This method enables businesses to consider all employees within the parent company and its branches when determining compliance, rather than assessing each entity separately.

However, it is important to note that this combined approach is exclusively applicable to parent companies with branches and does not extend to affiliates, partnerships, or joint ventures. Additionally, for this combined calculation to be valid, the activities of the branches must align with those of the parent company. In such cases, MHRSD will apply the Saudization requirements of the activity that has the highest compliance thresholds. However, this is subject to practical and procedural clarification following the issuance of the new CR law.

For businesses opting to close a branch, it is essential to manage the transition in accordance with Saudi Labor Law. This includes properly terminating employment contracts, providing severance payments, and offering reassignment opportunities to affected employees where feasible.

Part III: Conclusion

In light of the significant changes introduced by MISA and MOC, it is advisable for investors and commercial entities to:

1. Undertake to reclassify their MISA licenses (upon renewal) and revoke/convert CRs by the necessary timeframes.
2. Identify corporate restructuring solutions allowing clients to reduce their corporate footprint (liquidation, mergers, acquisitions, creating a holding structure)
3. Introducing key commercial agreements to effectuate any corporate restructuring plan (such as novation agreements, assignments).
4. Reassess their corporate structures in light of the new requirements under the CR Law and determine the best approach for branch conversions or closures.
5. Review contracts, licenses, and operational agreements to ensure they align with the new legal structure chosen.
6. Engage with regulators to ensure all necessary filings and approvals are completed promptly.

Luxury goods such as high-value watches, designer apparel, jewellery, and collectable art are increasingly recognised as tools for concealing illicit funds. In Saudi Arabia, the regulatory focus on this sector has grown in parallel with the Kingdom’s broader financial crime enforcement agenda.

A Sector at Risk

The appeal of luxury goods in laundering schemes lies in their portability, high value-to-volume ratio, and ease of resale, often across borders and outside formal financial channels. Transactions involving these items can be difficult to trace, particularly where intermediaries, informal dealers, or cash payments are used.

Legal Framework

The Anti-Money Laundering Law (Royal Decree No. M/M/20, 1439H) captures any act intended to disguise the origin of criminal proceeds. Transactions involving luxury assets fall within the scope when used to convert, transfer, or conceal illicit funds. Penalties under the Law include imprisonment of up to ten years, fines of up to SAR 5 million, and confiscation of related assets.

Who Is Affected

Under Saudi regulation, dealers in high-value goods are classified as Designated Non-Financial Businesses and Professions (DNFBPs). This includes art galleries, jewellery businesses, watch dealers, auction houses, and luxury vehicle resellers. These entities are required to comply with AML obligations, including:

• Conducting full customer due diligence
• Verifying the source of funds
• Reporting suspicious transactions to the Saudi Financial Investigation Unit (SAFIU)
• Maintaining appropriate records

Common Red Flags

SAFIU guidance identifies several indicators that may signal laundering risks, such as:

• Cash purchases exceeding SAR 60,000
• Reluctance to provide personal identification
• Unusual resale patterns involving luxury items
• Transactions structured to avoid reporting thresholds

Enforcement Outlook

While published court decisions remain limited, enforcement activity has increased. In one example, authorities prosecuted a laundering network using shell companies and luxury goods to channel over SAR 500 million in criminal proceeds. The case resulted in custodial sentences and the permanent confiscation of assets.

Compliance Challenges

Unlike financial institutions, many DNFBPs have historically operated without formal compliance functions. Where internal controls and training are weak, identifying and responding to money laundering risks becomes more difficult. Dealers are advised to implement tailored AML programmes supported by legal and compliance expertise.

As Saudi Arabia continues to align its regulatory approach with FATF standards, DNFBPs—particularly those in the luxury sector—will face growing expectations around transparency, reporting, and proactive risk management. Failure to comply not only carries legal consequences but may also damage business credibility in an increasingly regulated market.

In an increasingly competitive employment landscape, Saudi companies are turning to equity-based compensation mechanisms as a strategic tool to attract, incentivise, and retain high-calibre talent. While traditional salary structures remain foundational, the introduction of innovative reward mechanisms such as Employee Stock Ownership Plans (ESOPs), sweat equity, and phantom share arrangements has emerged as a compelling differentiator—particularly in the startup and growth-stage ecosystem.

At Hammad & Al-Mehdar Law Firm, we frequently advise clients on how to implement equity-based incentives in line with local legal frameworks and corporate governance requirements. Below, we explore the legal underpinnings, structuring considerations, and common challenges for each mechanism within the Saudi Arabian context.

Navigating the Available Options:

Saudi companies evaluating equity-based compensation generally consider one of three mechanisms:

• ESOPs,
• Sweat Equity, and
• Phantom Shares.

Each provides distinct benefits, legal obligations, and implications for ownership structure, requiring careful evaluation aligned with company type, commercial goals, and regulatory obligations.

Employee Stock Ownership Plans (ESOPs)

ESOPs are perhaps the most recognisable form of equity compensation. Under these plans, employees are offered company shares—either at a preferential rate or as part of their total compensation package. ESOPs aim to align employee and shareholder interests, fostering a culture of long-term ownership and performance.

Legal Considerations:

• For publicly listed companies, ESOP implementation is governed by the Capital Market Authority (CMA) and subject to approval under specific regulations concerning share allocation and disclosure.
• Private companies may face challenges around share valuation and structuring, and must ensure compliance with corporate governance frameworks under the Saudi Companies Law.
• Vesting schedules are a key feature. These are often structured over four years, with a one-year cliff, ensuring sustained employee commitment.

Sweat Equity

Sweat equity allows companies—particularly startups and early-stage firms—to compensate employees or co-founders for non-financial contributions such as strategic expertise, innovation, or market development.

Legal Considerations:

• Saudi Companies Law permits sweat equity under certain conditions, subject to shareholder approvals and disclosure requirements.
• Valuation of such contributions remains a complex area, particularly in the absence of formal cash investment.
• Structuring must reflect fair market value and be supported by robust documentation to pass legal scrutiny.

Phantom Shares

Phantom share schemes offer a contractual right to receive cash payouts equivalent to the value of real equity—without conferring actual ownership. These are particularly attractive for companies seeking to avoid equity dilution while still rewarding performance.

Legal and Structural Considerations:

• Phantom shares are not regulated by specific provisions under Saudi law, granting significant flexibility in how companies draft and implement such plans.
• They are commonly used by Limited Liability Companies (LLCs) and provide no shareholder rights or voting entitlements.
• Key structuring elements include clear valuation mechanisms, performance conditions, and payout timelines.

Phantom share plans typically fall under two categories:

1. Full Value Plans – the employee receives a payout equal to the full share value at a future date or upon meeting a target.
   Appreciation-Only Plans – employees benefit only from the increase in share value from a set base price, thus limiting the company’s financial exposure.
2. Corporate Structures and Regulatory Implications:
   The choice of equity incentive must be aligned with a company’s legal structure:

Simplified Joint Stock Companies (SJSCs): May issue shares to employees or grant options to acquire shares, provided the Articles of Association authorise it and buy-back provisions are in place.

Limited Liability Companies (LLCs): Cannot issue shares in the traditional sense but often implement phantom share or profit-sharing schemes structured through private contracts.

These arrangements must be carefully drafted to ensure enforceability and alignment with Saudi corporate and tax laws.

Shareholder Protections and Exit Mechanics

While equity compensation encourages ownership behaviour, it also introduces complexities in managing shareholder rights and transfers. Two key legal mechanisms often embedded into share agreements include:

• Pre-emptive Rights: Allow existing shareholders to purchase additional shares before they are offered externally.
• Right of First Refusal (ROFR): Ensures the company or existing shareholders have the first opportunity to buy shares offered for sale by an employee.

These provisions help preserve the integrity of the shareholder base while maintaining a robust incentive structure.

Equity-based compensation schemes are a powerful tool for fostering loyalty, performance, and long-term value creation—but they must be structured thoughtfully and in strict compliance with Saudi law. Each mechanism—ESOPs, sweat equity, and phantom shares—requires bespoke legal planning, especially regarding governance, valuation, taxation, and contractual enforceability.

At Hammad & Al-Mehdar, we support clients in structuring equity compensation strategies tailored to their operational models, growth stage, and governance requirements. Our experience spans startups, family businesses, and publicly listed firms, ensuring regulatory clarity and strategic alignment across all engagement stages.

For legal advice on equity incentive structuring or to explore tailored solutions for your organisation, contact our team.

Public-private partnerships (PPPs) remain a cornerstone of Saudi Arabia’s infrastructure strategy, offering a powerful mechanism for achieving the goals of Vision 2030. The Kingdom’s push for economic diversification and a more dynamic private sector has accelerated PPP adoption across key sectors, from transport and energy to healthcare, education, and digital infrastructure.

Since enacting the PPP Law in 2019, Saudi Arabia has significantly reinforced its legal framework to support private sector engagement. In 2023 and 2024, the National Centre for Privatisation & PPP (NCP) released updated guidelines, standardised templates, and risk-allocation frameworks to streamline project procurement and implementation. The 2024 amendments to the Implementing Regulations of the Privatisation Law provided additional clarity on:

• Government guarantees and contingent liabilities
• Sector-specific eligibility criteria
• Dispute escalation protocols
• Foreign ownership and repatriation rights

The NCP also launched a new PPP Platform Portal in 2024 to enable faster bidder registration, project tracking, and real-time feedback loops during procurement, boosting transparency and investor confidence.

Strategic Role in Vision 2030 Execution

Infrastructure under Vision 2030 is more than concrete and cables—it’s about national transformation. PPPS are now directly embedded in megaprojects such as NEOM, The Line, Red Sea Global, and the Riyadh Metro expansion. These ventures combine long-term contracts with innovative financing structures, allowing Saudi Arabia to tap into global capital while retaining sovereignty and public accountability.

Key sectors currently leveraging PPP models:

• Healthcare: Hospitals, primary care centres, and diagnostics hubs
• Education: Schools, training centres, and digital learning platforms
• Utilities: Water desalination, power generation, and waste-to-energy plants
• Transport: Airports, ports, roads, and urban transit networks
• Digital infrastructure: Data centres and 5G backbone services

Risk Allocation and Legal Safeguards

Risk-sharing remains a critical element of PPP contract structuring. The updated 2024 NCP risk matrix provides more precise delineation:

Type of Risk: Typical Party Responsible
Construction Delays: in the Private Sector
Operational Failures: in the Private Sector
Demand or Usage Shared: depending on the project
Regulatory Changes: Government
Macroeconomic Shocks: Negotiated (e.g., inflation-indexed payments)

The government has also introduced force majeure relief mechanisms for pandemic-like events and geopolitical disruptions, a direct lesson from COVID-19 and recent Red Sea shipping tensions.

Legal Due Diligence and Investor Rights

Before reaching financial close, rigorous due diligence—legal, regulatory, environmental, and Shariah—compliant—is standardised. Notably, a 2023 SAMA Circular strengthened the legal treatment of sukuk and Islamic financing in PPP projects, aligning with Saudi Arabia’s growing Islamic finance ambitions.

Furthermore, the Saudi Government Tenders and Procurement Law (updated in 2024) now mandates pre-bid consultations for PPPS above SAR 500 million, improving alignment between ministries and bidders from the outset.

Dispute Resolution: Growing Trust in Local Forums

International arbitration remains common, but 2023-2025 saw a growing shift toward domestic resolution mechanisms. The Saudi Centre for Commercial Arbitration (SCCA), with its 2023 rulebook aligned with UNCITRAL and ICC standards, has positioned itself as a trusted forum for PPP-related disputes.

Recent reforms include:

• Bilingual (Arabic-English) arbitration proceedings
• Faster interim relief procedures
• Recognition of foreign arbitral awards under the New York Convention

Challenges and Areas for Reform

Despite progress, several challenges remain:

• Regulatory bottlenecks: Project approvals still face inter-ministerial delays in specific sectors.
• Bankability: Lenders often request stronger step-in rights and revenue guarantees, especially in greenfield projects.
• Capacity gaps: Smaller municipalities and regional authorities often lack the expertise to structure and manage PPPS effectively.
• Long-term predictability: Private investors seek greater clarity on how evolving ESG expectations, data regulations, and labour Saudization quotas will impact long-term operational costs.

The Road Ahead

In 2025, the Kingdom is actively working on a new PPP Law Amendment Bill (under consultation as of March 2025) to address gaps in secondary legislation, streamline project lifecycle management, and better align with international best practices. Moreover, regional cooperation through the GCC is being enhanced to allow cross-border project financing and shared infrastructure PPPS, especially in energy interconnectivity and logistics corridors.

Saudi Arabia’s tourism and hospitality sectors continue to undergo transformative change, underpinned by the ambitious goals of Vision 2030. With the Kingdom targeting 150 million annual visitors by 2030—recently revised upwards from the earlier 100 million goal—tourism has emerged not just as a strategic sector, but as a national priority for economic diversification and global positioning. Legal and regulatory reform is central to enabling this ambition, and 2024–2025 has seen a wave of new policies and institutional enhancements aimed at making Saudi Arabia a competitive, world-class destination.

Modernising the Legal Framework

The evolution of the legal environment has been marked by the continued refinement of the Tourism Law and supporting regulations. Following the significant updates in 2022 and 2023, the Ministry of Tourism introduced new executive bylaws in late 2024 aimed at further streamlining licensing, improving classification systems, and ensuring international service benchmarks are met.

Most notably, the launch of the Integrated Licensing Platform (ILP) in 2025 enables end-to-end application and renewal processes for all tourism-related services, including accommodation, entertainment venues, transportation, and tour operations, under a single digital umbrella.

Foreign Investment and Private Sector Momentum

As of Q1 2025, Saudi Arabia has attracted over SAR 220 billion in cumulative tourism-related investments, including major joint ventures between global hotel chains and local developers. The legal framework now permits 100% foreign ownership in virtually all hospitality subsectors, including short-term rentals, eco-resorts, and heritage site management.

In parallel, the Tourism Investment Enabler Programme, launched in 2024, provides a bundled legal and financial facilitation service for new entrants, jointly operated by the Ministry of Investment and the Tourism Development Fund (TDF). This initiative offers preferential zoning, PPP advisory services, tax incentives, and fast-track licensing for projects aligned with national tourism zones, such as the Red Sea Project, Diriyah Gate, and NEOM.

Sustainability, Culture, and Responsible Development

Sustainability remains a legal imperative, not just a policy aspiration. Developers of large-scale tourism projects must now secure the mandatory Green Construction Compliance Certification—an environmental framework introduced in early 2025 that requires alignment with carbon neutrality targets and local biodiversity standards.

Additionally, a new Cultural Heritage Protection Law, enacted in 2024, gives enhanced enforcement powers to the Royal Commission for AlUla and the Heritage Commission, ensuring that both tangible and intangible heritage are preserved amid rapid development. The law mandates cultural impact assessments for projects near heritage sites and requires developers to work with licensed cultural consultants.

Navigating Regulation: New Challenges in a Maturing Market

While legal reforms have brought transparency and accessibility, the regulatory environment remains complex, particularly due to overlapping mandates from regional municipalities, GACA (for aviation-related services), and sector-specific authorities. Businesses must now adhere to updated compliance regimes covering:

• Data privacy (aligned with the new Saudi Personal Data Protection Law, effective March 2025)
• Tourism-specific labour laws and Saudisation ratios
• Safety protocols linked to AI-driven surveillance in public entertainment venues
• Gender integration policies for resorts, spas, and F&B outlets

A key change in 2025 is the expanded use of Compliance Dashboards, which all licensed operators are required to maintain and submit quarterly to the Ministry of Tourism, covering metrics on service quality, environmental impact, and national employment.

Talent Development and Saudisation 2.0

In response to the growing demand for skilled human capital, 2025 has seen the rollout of Tourism Academy KSA, a national public-private initiative launched in partnership with global hospitality schools and powered by the Human Capability Development Program.

Meanwhile, Saudisation mandates have been recalibrated under Saudisation 2.0, focusing not just on headcount quotas but on career progression, retention, and skill development. New compliance rules require hospitality operators to demonstrate that at least 50% of front-facing managerial roles are held by Saudi nationals by 2026, with fines for non-compliance now tied to profitability rather than flat rates.

Outlook: Navigating 2025 and Beyond

Saudi Arabia’s legal and regulatory ecosystem for tourism is becoming more sophisticated, structured, and investor-friendly. With the Kingdom now positioning itself as a leader in sustainable, culturally rich, and tech-enabled tourism, the role of law has shifted from a gatekeeping function to an enabling force.

Operators, developers, and investors must remain agile, aligning not only with current requirements but also anticipating the direction of legal and policy evolution. Regulatory foresight, strategic localisation, and digital compliance integration will be essential in navigating this high-growth, high-reward environment.

As Vision 2030 enters its most critical phase of execution, the tourism sector stands as a global case study of how law, policy, and ambition can converge to reshape a nation’s identity on the world stage.

In today’s rapidly transforming Saudi economy, competitive fairness is not just a regulatory ideal it is a legal imperative. As the Kingdom accelerates toward its Vision 2030 goals, the role of competition law has emerged as a cornerstone of the national legal and economic agenda. The Competition Law, administered by the General Authority for Competition (GAC), serves as a powerful instrument to protect market integrity, promote innovation, and ensure consumer welfare across all sectors of the economy.

The Legal Pillar Behind a Diversified Economy

Saudi Arabia’s Competition Law was first enacted in 2004 and subsequently amended significantly in 2019 to reflect international best practices. These reforms weren’t merely technical—they were strategic. They signalled a departure from informal market controls and a move toward structured oversight, particularly in sectors newly opened to privatisation and foreign investment.

The law’s provisions go beyond penalising monopolistic behaviour. They aim to create a level playing field in which entrepreneurship can flourish and SMES can scale without artificial barriers. By prohibiting practices such as price fixing, collusion, and abuse of dominance, the law safeguards not only current competition but also the market’s future dynamism.

Market Power and the Risk of Overreach

Holding market power in Saudi Arabia is not unlawful. But misusing it is. This distinction is central to how the law operates. Firms with significant market share—typically 40% or more—must exercise heightened caution. Predatory pricing, exclusive supply arrangements, or unjustified refusals to deal can trigger scrutiny, particularly where such conduct suppresses innovation or deters entry by smaller players.

Merger control, another key pillar of the law, has been reshaped to ensure that consolidation does not come at the cost of market diversity. High-value mergers and acquisitions must be pre-notified to the GAC, which retains the authority to approve, condition, or prohibit deals that may distort market structure.

The Cost of Non-Compliance

Enforcement in Saudi Arabia is no longer theoretical. The GAC has rapidly scaled its investigative and sanctioning powers, issuing significant penalties in recent years. These include fines of up to 10% of a company’s annual revenue, or SAR 10 million where revenue is unquantifiable, as well as structural remedies such as the unwinding of anti-competitive agreements or forced divestitures.

But compliance is not just about avoiding fines. It is about fostering a culture of lawful competition. The GAC actively engages with the business community through guidelines, public consultations, and awareness campaigns, particularly targeting SMES and new entrants who may lack in-house legal infrastructure.

International Context and Cross-Border Relevance

As Saudi Arabia emerges as a regional investment hub, the implications of its competition law extend far beyond its national borders. The GAC’s collaboration with international authorities and participation in multilateral fora underscore the Kingdom’s commitment to global norms, particularly in sectors such as e-commerce, fintech, and digital infrastructure.

For multinational corporations, this means increased scrutiny of both local and global practices. Joint ventures, pricing strategies, and supply agreements must be reviewed not only for commercial soundness but also for compliance with Saudi competition principles, which are increasingly harmonised with EU and OECD frameworks.

Why Legal Insight Matters

The complexity of competition law in Saudi Arabia lies not only in its rules but in its application. Many businesses fail to recognise that informal understandings, overly aggressive pricing, or exclusivity clauses can raise red flags. As enforcement sharpens and legal thresholds become more defined, proactive legal review and risk assessment are essential.

Boards and executives must view competition law not as a constraint, but as a strategic framework that rewards ethical growth, fosters investor confidence, and supports the Kingdom’s broader economic goals.

Saudi Arabia’s Competition Law is more than a regulatory tool—it is a signal of the Kingdom’s maturity as a rules-based economy. As new sectors open and digital markets expand, the law will continue to evolve. But the message remains clear: market success must be earned through innovation, not protected through dominance.

The Commercial Courts Law was issued on 15/08/1441 AH, corresponding to 08/04/2020 AD, by Cabinet Decision No. 511 dated 14/08/1441 AH. This law outlines the organizational structure of the commercial courts, the types of cases under their jurisdiction, and the procedural requirements to be followed by parties in commercial lawsuits, such as legal notifications, evidence procedures, and limitation periods.

Article 96 of the law states: “This law shall come into effect sixty (60) days from the date of its publication in the official gazette, and it shall repeal any provisions in conflict with it.” Since the law was published in the official gazette (Umm al-Qura) in issue No. 4827 on 24/08/1441 AH, corresponding to 17/04/2020 AD, it came into effect exactly sixty (60) days later, i.e., on 25/10/1441 AH, corresponding to 17/06/2020 AD.

The legislator has provided a fundamental rule for determining the validity of a commercial claim based on the expiration of the statute of limitation for pursuing such claims. This is set out in Article 24 of the law, which reads: ” Absent a specific provision, the statute of limitations for claims falling under the jurisdiction of the commercial court shall be (five) years from the date of the cause of action, unless the defendant confirms the claim, or the Claimant presents an acceptable justification to the court.”

Thus, if a right (or debt) arose on a certain date, the Claimant must present their claim before the commercial court within five (5) years from the date the right arose; otherwise, the court will dismiss the claim due to the expiration of the statute of limitation. Exceptions to this rule include cases where the Defendant confirms the claim or where the Claimant provides an acceptable justification as deemed by the court.

Recognizing that applying this rule generally could unfairly disadvantage those with rights that arose and have already passed the prescribed limitation period (five years) before the issuance of the law, the legislator issued a clarifying rule in the Implementing Regulations of the Commercial Courts Law. This rule explains how the limitation period should be calculated in exceptional cases. Article 36 of the executive regulations stipulates: “If the right being claimed arose before the effective date of this law, the period specified in Article 24 of the law shall be calculated starting from the effective date of the law.”

This means that any commercial right that arose before the issuance of the Commercial Courts Law will have its limitation period for being heard and adjudicated within five (5) years, starting from the law’s effective date of 25/10/1441 AH, corresponding to 17/06/2020 AD. Therefore, it is crucial to note that the exception to the statute of limitation period for rights arising before the law’s issuance will expire this year, specifically on 24/10/1446 AH, corresponding to 22/04/2025 AD.

For more information, please contact Ibrahim Alabdali, Managing Associate at ibrahim.alabdali@hmco.com.sa or Raghad Moharraq, Associate at raghad.moharraq@hmco.com.sa