Minister of Investment Khalid Al-Falih issued a decision approving the new executive regulations for the Investment Law, which aim to translate the provisions of the law into practical measures that support attracting investment and strike a balance between protecting national interests and guaranteeing the rights of both local and foreign investors. The regulations, published in the official gazette “Umm al-Qura” and comprising 37 articles, represent a legislative milestone that underscores Saudi Arabia’s commitment to transparency, equality, and economic openness.
According to the regulations published in the Official Gazette, the Executive Regulations of the Investment Law—which take effect upon the law’s entry into force—include a set of provisions that define a new framework for investors" relationship with the Saudi market.
Equality Among Investors
Article 3 of the regulations emphasizes ensuring equal treatment of domestic and foreign investors under similar circumstances, without prejudice to the international regulations and agreements to which the Kingdom is a signatory.
To determine the extent to which circumstances are comparable, several factors are taken into account, including: public policy objectives, the nature of the goods or services, the relevant economic sector, the size of the investment, and its impact on the local economy or the environment.
The regulations also clarify that this obligation does not conflict with the Ministry’s right to issue new regulations and rules in accordance with the requirements of the public interest, such as the protection of national security and public safety.
Freedom to Transfer Funds
Article 7 of the regulations contains clear provisions regarding investors" freedom to freely transfer their funds to and from the Kingdom, including:
Initial capital and any additional amounts to support or expand the investment.
Profits, capital gains, royalties, fees, and current income.
Loan installments related to investments.
Proceeds from the sale or liquidation of investments.
Earnings and salaries of foreign employees associated with the investment.
However, the regulation permits the deferral or restriction of transfers in certain cases, such as bankruptcy, the protection of creditors" rights, criminal offenses, or the enforcement of court judgments, in accordance with fair and non-discriminatory domestic legislation. It also exempted measures related to financial services to ensure the protection of investors and depositors and the stability of the financial system.
Protection of National Security
To strengthen measures to protect national security from risks posed by foreign investments, the regulation stipulates that the Ministry of Investment must coordinate with the competent authorities, including the Investment Review Committee, before, during, and after taking any measures related to national security.
The government is required to notify the foreign investor in writing of the initiation of such procedures, while giving the investor the opportunity to submit their opinion and attach the necessary documents to assess the impact of their investment.
The regulations also allow the Ministry to hold discussions with the foreign investor to explore alternative solutions that mitigate potential risks. If an agreement is reached that ensures the risks are averted, the Ministry may suspend the proceedings before issuing any final decision.
To view the full text of the new executive regulations for the Investment Law... click here
