The new regulations governing the licensing of contracting activities, with a focus on raising the level of regulatory compliance and protecting project parties. The Ministry of Municipalities and Housing has prohibited the practice of contracting work or advertising such work without obtaining a prior license.
The regulations impose a set of requirements that must be met to obtain a license, foremost among which is that the entity’s capital must not be less than 100,000 riyals, in addition to having a valid commercial registration and a physical headquarters verified by a registered national address, as well as having a technical staff or a technical manager certified by the Saudi Council of Engineers.

Prohibition on Contracting with Unlicensed Contractors
The regulations are not limited to the contracting firms themselves, as the regulations prohibit government and private entities, as well as individuals, from accepting any work or entering into contracts with firms that are not licensed to engage in contracting activities.
It also requires the project owner and the general contractor to verify that the contractor to whom the work is awarded holds a valid license—including subcontractors—making the responsibility to confirm the contractor’s legal status part of the work award procedures.
These regulations aim to regulate the relationship between parties involved in construction projects and to link the practice of the activity to the possession of a valid license, thereby preventing the awarding of work to entities that do not meet the specified requirements.

Three-Year License
The regulations set the term of the construction activities license at three years, renewable, with entities seeking renewal required to submit their application at least 20 days before the license expires.
It also requires that the contractor’s membership in the Saudi Contractors Authority remain valid to ensure the license remains in effect and that the requirements for conducting the activity are continuously met.
The regulations further require the entity to have a valid commercial registration, a physical headquarters at a registered national address, and a technical staff member or technical manager certified by the Saudi Council of Engineers.

Documentation of All Contracting Agreements
The regulations require contractors to document all agreements they enter into with project owners or subcontractors, and these agreements must be registered on the Contractors Authority’s platform.
This obligation extends to safety procedures, as the regulations emphasize the need to take the necessary measures to ensure the general safety of workers, passersby, and neighboring facilities.
The regulations also hold contractors fully responsible for any legal, financial, or contractual consequences that may result from negligence or failure to perform their duties.

Financial and Technical Requirements for Conducting Business
Capital stands out as one of the basic requirements for obtaining a contracting license, as the regulations set the minimum capital requirement for the company at 100,000 riyals.
This is linked to a set of other requirements, including a valid commercial registration and a physical headquarters, as well as technical staff or a certified technical director, thereby establishing a specific framework for businesses wishing to engage in this activity.
These requirements are in addition to the contractor’s obligation to document contracts, maintain safety, and assume liability for the consequences of negligence or failure to perform duties.

Penalties and Appeals Against Licensing Decisions
The regulations clarify that violations of their provisions are subject to the regulations on penalties for municipal violations, allowing for the imposition of prescribed penalties on violators.
Conversely, the regulations allow for appeals against licensing decisions to be filed with the competent authority within 60 days.
If the appeal is rejected or not decided upon, the person against whom the decision was issued may appeal to the administrative court within 60 days from the date the appeal was filed.

Regulations Take Effect Upon Official Publication
The regulations take effect immediately upon publication in the Official Gazette, while the Ministry of Municipalities and Housing is responsible for issuing the necessary guidelines and forms to implement their provisions.