Legal Developments

100 per cent foreign ownership in retail entities to be allowed

Prior to Saudi Arabia’s 2005 accession to the World Trade Organization (WTO), non-Gulf Cooperation Council (GCC) investors could hold only up to 51 per cent ownership in wholesale trade and retail entities.

With the 2005 WTO accession, Saudi Arabia liberalized this restriction and allowed non-GCC investors to hold up to 75 per cent ownership in wholesale trade and retail entities.

During King Salman’s visit to the US in September, which included meetings with prolific businesses and their representatives, the Saudi Arabian General Investment Authority (SAGIA) announced that non-GCC investors will be permitted to wholly own wholesale trade and retail entities in Saudi Arabia, subject to certain conditions.

The conditions for full non-GCC ownership of wholesale trade and retail entities in Saudi Arabia have yet to be revealed. Some potential conditions may include higher Saudization percentage requirements, higher paid-up capitalization requirements, stricter training requirements for Saudi Arabian employees and the like. It will be interesting to see what conditions are applied, as well as whether or not such conditions make full ownership in wholesale trade and retail entities in Saudi Arabia an attractive investment to non-GCC investors.

At present, SAGIA has only issued a press release (see https://www.sagia.gov.sa/en/Investor-tools/Press-releases/Announcement/) which invites international companies to submit an application, which will be assessed on a case-by-case basis for now.

Arab News – 7 September 2015

Fast-track visa system for government projects contractors

The Ministry of Labor (MoL) announced this month details on the new fast-track online visa issuance system.

The MoL revealed that companies that have won government projects contracts, and that are within the Platinum to Green zones for Saudization purposes, may take advantage of the fast-track system.

Saudi Gazette – 8 September 2015

Finance and capital market developments

Saudi Aramco seeking USD 5 billion loan

Saudi Aramco is seeking to raise USD 5 billion to extract capital it invested in its 62.5 per cent / 37.5 per cent joint venture with China’s Sinopec for the Yanbu Aramco Sinopec Refining Co. (Yasref) refinery in Yanbu, which produces around 400,000 barrels per day.

Saudi Aramco representatives have stated that Saudi Aramco seeks to borrow the USD 5 billion for 10 years.

Arab News – 8 September 2015

SAR 1 billion sukuk issuance for OREIDCO closes

This month Saudi Fransi Capital announced the closing of the SAR 1 billion sukuk offered on behalf of Abdullah Al-Othaim Real Estate Investment and Development Company (OREIDCO), a prolific Saudi company that invests in the shopping mall, entertainment, and leisure sectors in Saudi Arabia and throughout the Arabian Gulf and wider Middle East.

GIB Capital, NCB Capital, and Saudi Fransi Capital acted as joint lead managers and joint bookrunners on the deal.

Arab News – 9 September 2015