Saudi Arabian Investment Law -

As part of its Vision 2030 reform agenda, Saudi Arabia has introduced a new Investment Law, aimed at enhancing its attractiveness to international investors. The updated investment law (the New Investment Law) and its implementing regulations, which will come into effect in early 2025, will repeal the current Foreign Investment Law issued by Royal Decree No. (M/1) dated 10 April 2000 (the Current Foreign Investment Law). The implementing regulations to the New Investment Law (the Implementing Regulations) are expected to be issued within one hundred and eighty days from the date of publication of the New Investment Law, i.e., by 7 February 2025. Investor rights

The new legislation aims to integrate existing investor rights and freedoms into a unified framework designed to improve transparency, ease business operations, and enhance the Kingdom’s position as a premier global investment destination. The revised law offers strengthened protections for investors by upholding the rule of law, ensuring equitable treatment between local and foreign investors and securing property rights. It also includes robust measures to safeguard intellectual property and facilitates seamless fund transfers.

Below is a detailed comparison of certain key provisions of the Current Foreign Investment Law and the New Investment Law. The new legislation introduces key amendments aimed at aligning investor rights with international standards, streamlining the registration process and ensuring equal treatment between domestic and foreign investors. These changes are designed to attract greater investment by providing enhanced intellectual property protections, fostering fair competition and establishing clear, effective dispute resolution mechanisms—all of which support the Kingdom’s broader objective of driving sustainable economic growth.

Topic	Current Foreign Investment Law	New Investment Law	Comments
Scope and application	The law applies only to foreign (non-Saudi) investors.	The scope of the law has been expanded to include foreign and local investors, ensuring investors receive equitable treatment regardless of nationality.	–
	Freedom of investment not explicitly enshrined.	Subject to certain excluded categories published by the Ministry, an investor may engage in investment in any sector or activity available for investment.	–
Investor rights	Foreign investors have the right to: • Repatriate profits and dispose of investments lawfully. • Acquire real estate for licensed activities, within non-Saudi ownership restrictions. • Receive facilitation and information from the competent authority. • Not have their investments confiscated except pursuant to a final judicial ruling.	In addition to the rights in the Current Foreign Investment Law, investors (both local and foreign) have the right to: • Be treated equally with other investors under similar circumstances, whether local or foreign. • Be treated fairly and justly. • Transfer their funds within or outside the Kingdom in any recognized currency. • Manage and dispose of their investments in accordance with the law and own any property necessary to conduct their business. • Not have their investments expropriated except pursuant to the public interest, in accordance with legal procedures, and in return for fair compensation. • Have their intellectual property and trade secrets protected. • Have their complaints resolved before the Ministry using clear and transparent procedures.	Equal treatment between local and foreign investors is now enshrined in the law and several additional rights have been recognized. The enumerated rights now explicitly apply to both foreign and local investors.
Investment incentives	Projects licensed under the Current Foreign Investment Law enjoy the rights and incentives as projects by local investors.	Investment incentives are granted in accordance with objective and fair eligibility criteria, to be set out in further detail in the Implementing Regulations.	The Current Foreign Investment Law provides for equal incentives for foreign and local investors but does not set standards for criteria.
Licensing requirements	Activities by foreign investors, whether permanent or temporary, require a foreign investment license from the Ministry.	The Ministry shall establish a national register for investors. Foreign investors must register with the Ministry prior to engaging in any investment (save for investments in securities subject to the Capital Market Law).	The New Investment Law replaces licensing procedures with a simplified registration process. The practical implications of this shift are not yet well understood, and the Implementing Regulations will delineate registration requirements in further detail.
Activities restricted from foreign investment	The Council of Ministers has the power to issue a list of activities excluded from foreign investment.	The list of excluded activities shall be updated and issued by a permanent ministerial committee established for that purpose. A foreign investor must obtain Ministry approval before engaging in any investment activity included in the list of excluded activities or making any change in the ownership of such investment.	The New Investment Law permits foreign investment, with Ministry approval, in certain activities that are otherwise restricted or excluded.
National security measures	The Current Foreign Investment Law is silent with respect to measures to be taken in furtherance of national security.	The Ministry may suspend any foreign investment for the purpose of protecting national security, provided that the decision is: • Based on objective grounds. • Consistent with the Kingdom's obligations under international agreements. • Compliant with procedures to be specified in the Implementing Regulations.	–
Dispute resolution	Disputes arising between a foreign investor on one hand, and its local partners or the government on the other hand, shall be settled amicably where possible. Failing amicable settlement, the dispute shall be settled according to the relevant laws.	An investor who is a party to any dispute, including disputes with the competent authorities, may refer the dispute to the competent court unless the parties to the dispute agree otherwise. Investors may agree to resolve their disputes through alternative dispute resolution methods, including: • Arbitration • Mediation. • Conciliation.	The New Investment Law recognizes alternative dispute resolution mechanisms, promoting a more streamlined and collaborative approach to dispute resolution.
Nature of penalties	The Ministry shall notify the foreign investor in writing of any violation of the law. The foreign investor must rectify the violation within the period specified by the Ministry. One or more of the following penalties may apply if the violation persists: • Withholding all or some of the incentives and privileges granted to the foreign investor. • Fine not exceeding SAR 500,000. • Revocation of the foreign investment license.	The foreign investor must remedy a “non-serious” violation of the law related to registration, approval of investment or participation in excluded activities within a defined period after notification by the Ministry, such period to be specified in the Implementing Regulations. One or more of the following penalties may apply if the investor commits a “serious” violation or fails to rectify a non-serious violation: • Warning. • Fine not exceeding SAR 300,000, which may be doubled in case of a repeat violation. • Cancellation of investor registration. Serious violations will be defined in the Implementing Regulations. One or more of the following penalties may apply if the investor commits a “serious” violation or fails to rectify a non-serious violation: • Warning. • Fine not exceeding SAR 300,000, which may be doubled in case of a repeat violation. • Cancellation of investor registration. Serious violations will be defined in the Implementing Regulations.	Violations are classified into "non-serious" and "serious" categories, with investors given the opportunity to remedy non-serious violations before penalties are imposed. The penalty structure is also redefined.
Process for imposition of penalties	Penalties are imposed by ministerial resolution and may be appealed before the Board of Grievances.	The Minister of Investment shall form a committee to be comprised of at least three members, one of whom at least shall be a legal specialist, to assess violations and impose penalties. The committee shall take into account the gravity and frequency of the violation and the size of the establishment. An investor may appeal the committee’s decision before the competent court within 30 days of being notified of the decision.	Under the New Investment Law, a dedicated committee – rather than the minister – is responsible for assessing violations and imposing penalties. The appeal process has changed accordingly and a 30-day deadline now applies.

In summary, the introduction of the New Investment Law represents another advancement in Saudi Arabia’s Vision 2030 program, reflecting the Kingdom’s commitment to enhancing its investment climate. By replacing the Current Foreign Investment Law, the new legislation aims to modernize the regulatory framework, offering increased transparency, improved investor protections, and streamlined processes. With its focus on aligning with international standards, safeguarding investor rights and ensuring equitable treatment, the New Investment Law is poised to bolster Saudi Arabia’s position as a leading global investment hub. Further clarity is expected upon release of the Implementing Regulations, and prospective investors in the Kingdom are encouraged to monitor developments and consult with their legal counsel in order to understand the practical implications for their business in the Kingdom.

Authored by: Edoardo Betto*, Jennifer Abou Fadel, Nader Girgis* and Ellen Ray

*Member of ZH Partners – Relationship firm in Saudi Arabia

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