SAGIA and the Saudi Ministry of Commerce and Investment have recently implemented new regulations that will affect the processing of many government services offered to companies. This article outlines the newly adopted regulations requiring compliance with ISIC and looks at how they will impact business operations of companies operating in Saudi Arabia going forward.
The grace period granted by the Saudi Arabian General Investment Authority (SAGIA) and the Ministry of Commerce and Investment (MoCI) to update business activities of all companies established in Saudi Arabia has elapsed and such companies must now, as a matter of priority, amend their business activities to comply with the International Standard Industrial Classification of All Economic Activities (ISIC). The following considerations should also be noted:
In addition, one of the major recent developments under the ISIC is the licensing of the management consulting activities (the Management Consulting Activities). Based on our recent dealings and communications with SAGIA and MoCI, we understand that all of the Management Consulting Activities have been shifted to MoCI under the professional sector and directly licensed by MoCI.
At this stage, SAGIA will only be licensing "high management consulting services" which shall fall under SAGIA's Services sector (the High Management Consulting Activities). The High Management Consulting Activities should mostly allow the performance of general consultancy services that are not classified under MoCI's professional sector and without specializing in specific services, which include the accounting, taxation, management, economical, educational, translation and/or security sectors.
These recent requirements by SAGIA and MoCI will apply to all companies registered in Saudi and significant implications include the following:
The Constitutional Documents of companies must be reviewed and amended to reflect the ISIC requirements applied by SAGIA and MoCI. The Clyde & Co team is on-hand to provide legal and professional advisory services to ensure Saudi companies are compliant from a regulatory perspective. For further details, please do not hesitate to contact Alain Sfeir.