A monthly insight into Saudi Arabia's regulatory landscape

Issued regulations and amendments

Below is a concise list of the latest and most influential legal updates in Saudi Arabia, straight from the Official Gazette (Um Al-qura), providing a straightforward overview of the recent changes in the Kingdom's legal scene.

• Amendment of the Premium Residency Law, issued by the Council of Ministers Resolution No. (437) dated 06/06/1445H (corresponding to 19/12/2023G).
• Instructions on the Translation of Laws, Regulations, and Statutory Documents of Government Entities, issued by the Council of Ministers Resolution No. (483) dated 20/06/1445H (corresponding to 02/01/2024G).
• Regulatory Framework for the Passporting of Financial Products between the Regulators of the Financial Markets in the GCC Countries, issued by Royal Decree No. (M/125) dated 09/07/1445H (corresponding to 21/01/2024G).
• Instructions and Directives on Handling the Situation of Factories Located Outside the Sites of Lands Allocated for Industrial Activities in the Regions of the Kingdom, issued by the Council of Ministers Resolution No. (533) dated 04/07/1445H (corresponding to 16/01/2024G).
• Regulatory Provisions Regarding Holiday Vacations for Labour Law Employees in Government Entities, issued by the Council of Ministers Resolution No. (532) dated 04/07/1445H (corresponding to 16/01/2024G)
• Selling and Renting Real Estate Projects off-plan Regulation, issued by Royal Decree No. (M/44) dated 10/03/1445H (corresponding to 25/09/2023G) and published on 23/06/1445H (corresponding to 05/01/2024G).
• Rules of Government Entities Contracting with Companies that do not have a Regional Headquarters in the Kingdom and Related Parties, issued by the Council of Ministers Resolution No. (461) dated 13/06/1445H (corresponding to 26/12/2023G).

In this segment, we will spotlight regulations that influence diverse sectors, aiming to provide a concise yet comprehensive glimpse into the transformative forces at play in Saudi's legal evolution.

Brief definitions of used terms in this Article:

Royal Order: The most potent and highest organizational decision in the Kingdom, an official written document disclosing the King’s direct and unilateral will, issued in a specific format and bearing the King's signature, without the subject being presented to the Council of Ministers and the Shura Council.

Royal Decree: An official written document explicitly voicing the endorsement of the King on a subject submitted to the Council of Ministers and the Shura Council after each of the councils presents their findings and decisions to the King.

Council of Ministers’ Resolution: Written decisions that express the will of the Council of Ministers, bearing the signature of the Prime Minister or his deputy in their capacity as deputy Prime Minister, and are considered one of the most critical legislative tools as Resolutions are issued continuously and affect daily life, and these Resolutions are usually issued after the weekly meeting of the Council. 

Ministerial Decisions: Decisions issued by a Minister or a government official with the authority of a Minister, and often, the authorization to issue legislative decisions by an official as head of the governmental office they hold, is given by a Resolution of the Council of Ministers.

Financial Product: Securities or derivatives approved for registration and promotion in the jurisdiction of one or more regulatory bodies in GCC countries per the provisions of the regulatory framework and the regulations of Passporting.

Promotion: The marketing of passported Financial Products across one or more countries of the GCC under the conditions specified in this regulatory framework and Passporting regulations.

Amendment of the Premium Residency Law

Royal Decree No. (M/84) was issued containing several amendments to the Premium Residency Law issued in 1440H, including amending the definition of “family” in the law to include “parents”, as the law previously limited the scope of the family to “spouses and children”, as well as amending the types of Premium Residency mentioned in Article (Three) of the law to be:

“permanent, and fixed term” instead of being “indefinite term, and for one year renewable,” and accordingly, new products of Premium Residency were amended to be up to five years renewable instead of one year.

Furthermore, there are some articles and paragraphs that have been abolished by the aforementioned decree, including the abolishing of Article (Eight), which states that the holder of Premium Residency is considered a resident (Iqama holder) to adhere to other statutory provisions, the abolishing of paragraph (2) of Article (Eleven), which states that the holder of Premium Residency is not entitled to the right to obtain citizenship, as well as the abolishing of subparagraph (B) of paragraph (1) of Article (Four), that limits the age of applicants for Premium Residency to be not less than twenty-one years old, contributing to the expansion of the range of applicants to include those under that age, taking into account the nature of the new Premium Residency products.

Rules of Government Entities Contracting with Companies that do not have a Regional Headquarters in the Kingdom and Related Parties

The new Rules replaced the previous Rules under the same name issued by the Council of Ministers Resolution No. (377) dated 03/06/1444H,  updating some provisions, while the main stipulation remained the same, which is the prohibition of government entities from contracting with companies that do not have a regional headquarters in the Kingdom (“Non-regional Companies”).

There were no significant amendments between the new and abolished Rules. For example, in regards to the exceptions that allow government entities to contract with Non-regional Companies, the order and format of the exceptions were modified, without any modifications to the directives themselves, which were and still are as follows:

1. Works and purchases with an estimated cost of one million Saudi Riyals or less
2. Works and purchases carried out outside the Kingdom
3. Public tenders if there is no more than one technically accepted offer or if the Non-regional Company's offer is the best compared to other offers and is valued less by (25%) or more than the value of the second best offer
4. Limited tenders in the event of an emergency that requires the invitation of a Non-regional Company or the absence of more than one qualified tenderer from companies other than Non-regional Companies
5. Direct purchase in an emergency that necessitates contracting directly with the Non-regional Company or if the services or products are available exclusively from a Non-regional Company

Government entities may apply to a committee formed by the Rules to assess exceptions to exclude a Non-regional Company, provided that the application is submitted before the tender or the start of direct purchase procedures and includes the required information by the Rules.

In the previous Rules, government entities were required to prepare a report on contracting with a Non-regional Company. This report had to be submitted to the General Court of Audit and the Government Expenditure & Projects Efficiency Authority. This requirement still exists in the new Rules. However, the entities that must receive a copy of the report have changed. The new recipients are now the Supreme Committee of the Saudi Program to attract regional headquarters of international companies and the General Secretariat of the same committee.

Regulatory Framework for the Passporting of Financial Products between the Regulators of the Financial Markets in the GCC Countries

The GCC efforts began to issue a regulation for the Passporting of Financial Products a long time ago, and the fruits of these joint efforts are the preparation of this regulatory framework and the issuance of Royal Decree No. (M/125) referred to above, which made the regulatory framework enter into force for the Kingdom.

Passporting refers to the process of registering a Financial Product with both the registering regulator and the host regulator. This allows interregistered companies to promote their financial product within the regulatory framework of Passporting. Thus, a company registered in one of the GCC countries can promote its Financial Product in another GCC country; for example, a company registered in Kuwait can promote its financial product in the Saudi market.