Saudi Arabia’s recently issued Implementing Regulations of the Investment Law

As part of Saudi Arabia’s (KSA) ongoing efforts to modernise and strengthen its investment landscape, KSA has recently announced the anticipated Implementing Regulations of the Investment Law issued pursuant to Ministerial Decision 1086, dated 07 February 2025 (the Regulations). The Investment Law was issued pursuant to Royal Decree No. M/19 on 11 August 2024 and is currently in effect (the Investment Law).

This article will look at the key legislative changes under the Regulations and what these mean for investors. For more information on the Investment Law itself, refer to: Saudi Arabia's updated Investment Law: an overview and comparative analysis : Clyde & Co (clydeco.com).

A primary focus for the Ministry of Investment, Saudi Arabia (MISA) in issuing the Investment Law and the Regulations is to advance KSA’s economic diversification objectives under Vision 2030 by creating a system that aligns with global best practices and positions KSA as a competitive and secure environment for investment. The Investment Law and the Regulations will help to streamline investment procedures, promote fairness, and enhance KSA’s appeal as a leading investment destination. 

The Regulations offer detailed guidance on the practical application and enforcement of the Investment Law and serve to provide a clear, structured, and transparent framework for foreign investors. The Regulations also address specific procedural requirements, compliance measures, and enforcement mechanisms.

Key Legislative changes under the Regulations

1. Publication of an Investor Guide

In accordance with the Regulations, MISA will publish an Investor Guide containing rules and procedures issued by MISA, along with further guidance and details on the Regulations (the Investor Guide). The Investor Guide will be updated periodically and will include a schedule of penalties, statistical data and information on investment in KSA, a list of activities restricted for foreign investment, a list of investor incentives and other relevant information.

2. Introduction of a new investor registration system 

MISA has restructured its foreign investor vetting system and removed the requirement for foreign investors to obtain foreign investment licenses (MISA License). Under the new system, foreign investors are no longer required to obtain a MISA License and pay license fees. Under the previous regime, investors were required to apply for specific MISA Licenses based on the type of activity for example, a Services Investment License was needed to conduct services-related business. Now, this requirement has been removed.

Instead, foreign investors must simply register with MISA before engaging in any investment activities within KSA (the MISA Registration). Unlike the previous regime, the MISA Registration can cover activities across multiple sectors, eliminating the need for separate licenses for each sector-specific activity.
The Regulations establish a National Investor Register to maintain accurate and updated records of all registered investors (the Registry), which is now operational. Local investors may register with the Registry voluntarily. 

To register in the new system, MISA requires specific details and documents based on the type of investor, whether foreign, local, legal entity, or natural person. The Regulations specify mandatory information that investors must provide when registering with the Registry, including business scope, ownership structure, and financial contributions, among others. Additionally, annual updates to registration information are required to ensure ongoing compliance.

3. Annual update requirements

The Regulations set out a new streamlined process for registering investments in the Kingdom. Whether applying as an individual or a legal entity, investors must submit key information and documents as outlined in the Investor’s Guide (yet to be published). Once registered, investors will be required to submit annual updates reflecting any changes to their information or commitments within 60 business days preceding the annual update due date. Failure to do so within the specified timeframe may result in the need to re-register. 

4. Inclusion of natural persons as foreign investors

Under the previous regime, foreign investment was restricted only to legal entities. The new Investment Law and its Regulations broaden the definition of a 'foreign investor' to encompass both legal and natural persons. Specifically, a 'foreign investor' is now defined as any natural or legal person engaged in investment activities who is not classified as a local investor under the provisions of the Investment Law.

5. Capital requirements 

The Investment Law and its Regulations do not explicitly provide for the reduction or elimination of the minimum capital requirements set under the previous regime. These requirements remain in place and will apply to specific types of investment activities. However, the composition of the capital requirements has been updated to include various forms of assets with material value, excluding loans, bonds, financing sukuk, and public and private debt instruments.

6. Excluded activities and special approvals

To protect national interests, the Regulations set out a process for managing activities that are either restricted or prohibited. A Screening Committee is responsible for issuing and updating the official list of these excluded activities, which will be published in the Investor’s Guide. 

If a foreign investor wishes to engage in one of these activities, they must apply for approval through the MISA. The MISA and the Screening Committee will handle the application process and may request additional information if needed.

7. Investor protection and rights 

The rights of investors are a core focus under the new Investment Law and Regulations. Under the Regulations, rights awarded to investors encompass equal treatment, fair and equitable treatment, protection against indirect expropriation, and freedom to transfer funds.

Key investor rights outlined under the Regulations include:  

• Equal treatment of local and foreign investors: foreign investors will receive the same treatment as local investors under comparable circumstances. The Regulations further outline the criteria for assessing whether circumstances are indeed ‘comparable’ based on a totality of circumstances test;
• Fair and equitable treatment: investors are protected from denial of justice, arbitrary treatment, material breach of due process and unjustified discrimination;
• Protection from indirect expropriation: investors are safeguarded against indirect expropriation. The Regulations outline the criteria for identifying instances of indirect expropriation and clarify the exceptions where certain situations do not constitute indirect expropriation; and
• Unrestricted fund transfers: investors can freely transfer funds related to their investments, such as profits and dividends, within and outside the Kingdom, subject to compliance with relevant laws. The Regulations outline the applicable types of fund transfers. 

8. One-stop service centre

The Regulations introduce the concept of a ‘One-Stop Service Centre’ operated by MISA, designed to streamline communication between investors and the various government entities responsible for issuing regulatory approvals. The objective is to ensure that investors can efficiently meet all legal and procedural requirements.

According to the Regulations, the forthcoming Investor’s Guide will specify the scope of services offered by the centre, particularly in relation to obtaining necessary approvals, while respecting the jurisdiction of the relevant authorities. As of now, the updated Investor’s Guide has not yet been published.

9. Investor complaints and dispute resolution

The Regulations establish a formal process for investors to submit complaints related to decisions or procedures that may affect their investment activities. The MISA is tasked with setting up a system to receive and process these complaints in coordination with the competent authorities. 
Investors may raise concerns involving violations of their rights under KSA laws, international treaties, or contractual agreements. Importantly, submitting a complaint does not limit the investor’s right to pursue legal action or alternative dispute resolution methods. 

10. Violations and enforcement 

The MISA may assign officers to identify and document violations by reviewing records, checking contracts, and working with licensing authorities. If a violation is found, it is referred to a committee. For minor issues, investors are given at least thirty business days to fix them, with the option to request more time.

More serious violations such as operating without registration, engaging in restricted activities without approval, giving false information, or blocking enforcement efforts, are subject to stricter penalties. A list of these violations and their respective penalties will be included in the Investor’s Guide. 

Conclusion

The recently issued Regulations of the Investment Law mark a significant step in KSA’s efforts to modernise its investment landscape and align with global best practices. The Regulations aim to create a more transparent and structured environment for investment by introducing a new investor registration system, expanding the definition of foreign investors to include natural persons, and providing detailed guidance on compliance and enforcement. 

The emphasis on investor protection, equal treatment, and the ability to engage in previously excluded activities increases KSA’s appeal as a leading investment destination.

It is crucial for all investors to consider the requirements under the Investment Law and the Regulations. We strongly recommend that investors review these requirements thoroughly. 

For personalised advice and to ensure your investments are fully compliant, please do not hesitate to contact Alain Sfeir, Shahd Makhafah, Summayah Muncey, Sultana Aldeghither or Leenah Abaalkhail.