Legal Developments

Ministry of Labor Study the Market Needs

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.

The Ministry of Labor (MoL) announced that it is currently studying the market needs as part of its review of the delayed Nitaqat 3 proposals to raise Saudization requirements for companies in Saudi Arabia. The Council of Saudi Chambers (CSC) requested to postpone the third phase for three years in order to avoid labor shortage in several sectors, claiming it will have a negative impact on the job market.

The MoL was aiming to raise Saudization rates from 25 to 41 per cent in downstream industries, from 29 to 44 per cent in large retail and wholesale firms and from 29 to 66 per cent in large commercial establishments.

Arab News, 11 July 2015

Finance and Capital Market Developments

Increased Purchase of Shares by Foreign Investors

As we have reported in previous updates, on 6 May 2015 the Capital Market Authority (CMA) issued the final rules for Qualified Foreign Investors (QFIs) to invest in listed shares on the Tadawul. The final rules came into effect on 15 June 2015.

Tadawul market data showed that foreign investors purchased 2.33 per cent of all shares that were purchased on the Tadawul during the month of June. This number includes both newly licensed QFIs, as well as foreign investors purchasing shares via swap arrangements.

 This is an increase from the amount of shares foreign investors purchased in May, prior to the effectiveness of the final rules for QFIs, when share purchases by foreign investors only accounted for 0.83 per cent of the total shares purchased on the Tadawul.

Arab News, 3 July 2015

USD 3 Billion Sukuk Announced

The Arab Petroleum Investments Corporation (APICORP) announced that it will establish a USD 3 billion sukuk program. The first issuance is expected to occur in late 2015, subject to prevailing market conditions.

Arab News, 7 July 2015

CMA Starts Accepting Licensing Applications to Conduct Credit Rating Activity in Saudi Arabia

The CMA announced in late 2014 the approval of the Credit Rating Agencies Regulations (CRA Regulations) to be effective and in full force as of 1 September 2015. The CMA also announced that it will start accepting licensing applications to conduct credit rating services in the Kingdom as of 8 July 2015 and will allow applicants who applied before 1 September 2015 to conduct rating services until they receive the CMA license.

CMA website, 8 July 2015