The Ministry of Municipalities and Housing, the Municipal Services, Planning, and Urban Development Sector to provide feedback on the draft «Regulations for Licensing Construction Activities,» which it posted on the «Istithla’al» platform from August 14 to September 23, 2026.
The new regulations governing the licensing of construction 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 or advertising such work without obtaining a prior license.
The provisions of the regulations are set to apply to all contractors who engage in or apply to engage in contracting work in the Kingdom, in both the public and private sectors.
The draft regulations set forth a series 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 providing a technical staff or 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 entities 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 for verifying the contractor’s legal status part of the work award procedures.
These regulations aim to govern the relationship between the 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 associated with conducting the activity are continuously met.
The regulations further require the establishment to have a valid commercial registration, a physical location with a registered national address, and a technical staff member or technical manager accredited by the Saudi Council of Engineers.
Documentation of All Contracting Agreements
The regulations require contractors to document all agreements entered into with project owners or subcontractors, provided that these agreements are registered on the Contractors Authority’s platform.
This requirement 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 the contractor fully responsible for any legal, financial, or contractual consequences that may result from negligence or failure to perform 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 for the entity 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 manager, thereby establishing a specific framework for businesses wishing to operate in this sector.
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, thereby allowing for the imposition of prescribed penalties on violators.
Conversely, the regulations allow for appeals of licensing decisions to be filed with the competent authority within 60 days.
If the appeal is rejected or remains unresolved, 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.
