1. Legal developments

1.1 New labor courts will start operating in October 2016.

Responsibility over the Labor Courts will soon be transferred from the Ministry of Justice to the Ministry of Labor in Muharram 1438H., corresponding to October 2016G. In preparation for the forthcoming changes, the Ministry of Labor has established plans to increase Labor Court staff, with a goal of decreasing the amount of time litigation takes. The Labor Minister mentioned that additional developmental projects will be implemented soon to improve the capabilities of the Labor Courts.

Arab News – 4 April 2015

1.2 Major overhaul of the Labor Law includes 38 amendments

Under Saudi Arabian law, the employment relationship between employer and employee is governed comprehensively by the Labor and Workmen’s Law (the Labor Law).

The Labor Minister recently announced 38 forthcoming amendments to the Labor Law, which have already been approved by HRH King Salman and will come into effect six months after they are published in the Saudi official gazette.

The Labor Minister explained that the amendments largely purport to boost Saudization and to increase workers’ rights in general. Some of the amendments include a 180-day probation period, additional requirements related to training Saudi Arabian employees, procedures for disciplining employees, and extension of compensation for work-related injuries. Payment methods, work hours, emergency leave, and absence were also mentioned under the new amendments. Failure to comply with specific clauses of the law and repeated violations will mean fines of up to SR 100,000 and closure for 30 days.

Arab News – 7 April 2015

1.3 Higher Saudization levels postponed

Saudization is the colloquial term used to refer to Saudi Arabia’s official government policy of encouraging the employment of Saudi Arabian nationals in the private sector. The policy of Saudization is enforced and implemented through several programs and regulations in Saudi Arabia, including the Nitaqat Program.

In order for private companies to understand the 38 new amendments to the Labor Law, the Minister of Labor has postponed implementation of new legislation that would have forced private companies to raise their Saudization levels under the third phase of the Nitaqat Program. The postponed legislation would have required large firms to increase their Saudization percentages from 25 percent to 41 percent starting 20 April 2015.

Arab News – 9 April 2015

1.4 Attesting documents online

The Ministry of Justice along with the Ministry of Commerce and Industry (the MoCI) have arranged an online service to authenticate legal documents and make document verification easy and simple. After completing the processing of the application online, the MoCI will respond to the applications with the attested documents signed by a notary or an attorney from the Ministry of Justice. The relevant forms for attestation are available on the MoCI’s website.

Arab News – 15 April 2015

2 Finance and Capital Market developments

2.1 Saudi stock exchange to open for foreign investment on June 15

Under current regulations, foreign investors are prohibited from directly trading in the Saudi Arabian stock market, Tadawul.

On 15 June 2015, Tadawul will be open for foreign direct investment, subject to final rules which will be published on 4 May 2015. According to the draft rules that were proposed in August 2014, Qualified Financial Institutions will be permitted to invest through Tadawul as foreign investors. Further, no more than 5 percent of any listed firm can be owned by a single foreign investor and no more than 20 percent of any listed firm can be foreign-owned in aggregate.

Arab News – 17 April 2015

2.2 SACO float to raise SAR 504 million

The Saudi Company for Tools and Hardware (SACO) in Saudi Arabia seeks to raise SAR 504 million from its 30 percent initial share sale, with shares valued at SAR 70 each.

According to HSBC Saudi Arabia, institutional investors have pledged orders to purchase the full amount of shares that SACO is offering.

Arab News – 17 April 2015

2.3 ICD to carry out sukuk mandate for Jordan’s Ministry of Finance

The Islamic Corporation for the Development of the Private Sector signed an advisory agreement with Jordan’s Ministry of Finance to provide transaction technical support with respect to Jordan’s forthcoming sovereign sukuk offering. The sukuk offering will be valued at around JOD 1.4 billion (about SAR 7.4 billion, USD 2 billion).

Arab News – 19 April 2015