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The foreign entities in Saudi Arabia are allowed to have 100% ownership in retail and wholesale trad

September 2016 - Corporate & Commercial. Legal Developments by Hazim Al Madani Attorneys & Legal Consultants.

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recently, Under the new economic situation nowadays in Saudi Arabia after the announcement of vision 2030 of the Kingdom of Saudi Arabia, the Council of Ministers of Saudi Arabia granted the decision to allowing the foreign companies to invest and own 100% ownership in retail and wholesale trading sector.

the most Highlights conditions and requirements have been disclosed regarding this decision as follows:-

first: the capital share

The capital share should be 30 million Riyals for the companies willing  to start a retail and wholesale trading sector in Saudi Arabia. when comparing with exciting SAGIA investment rules concerning  retail trading with the Saudi partner, in this case the foreign percentage should not be above 75% and minimum share for the Saudi partner is 25%, in addition, the total capital share should be not less 27 million riyals.

 

Second: the amount of Investment over next five years:

According to the announced rules, the foreign company which has the intention to run retail and wholesale trading with 100% ownership should increase the investment amount to 200 million Saudi riyals in first five years from the date of issued SAGIAlicense. This amount will be considered as a liquid capital share in the future.

 

Third: - Hiring & Saudization:

Based on the announced rules, the foreign companies should respect and comply with the rules of the saudization as per the GOSI rules, labor law and Nitaqat and its updates

 

Forth: - training:

The foreign company should comply with the rules that 30% of the Saudi employees should be given training yearly. Comparing  this with exciting SAGIA investment rules with regard retail trading with the Saudi partner, in this case, the training of the Saudi employees yearly is only 15%.

Fifth: - Presence in Global Markets:

According to the announced rules, the foreign company should have Presence in minimum 3 Global Markets. The purpose of this requirement is to ensure the strength of those companies that have a global presence and customer base in the globally.

Moreover, other than  those above, It is  necessary that the foreign company has to achieve at least one or more of the following requirements during the first five years:

It is obligatory that the 30 % of distributed products in the Saudi market should be produced inside Saudi Arabia. This condition for sure will contribute so much in Industrial upgrading and increasing step by step the local production in Saudi Arabia as an aim of Saudi vision of 2030.

Must established programs and centers for research and development By allocating minimum 5% up from the company sales to establish those programs and centers inside the kingdom of Saudi Arabia.

Must establish and provided logistics services distribution centers, as well as after sales service.

Also, it is notable to mention that the famous American company Dow chemical company has already awarded the foreignSAGIA license for trading with 100% ownership from the Ministry of Trade and Investment a few days back.

The short brief of This company, it is Listed in the US Dow Jones INDEX, which was founded about 120 years and it is one of the worlds leading companies in the field of petrochemical industries, manufacturing industries, innovation and research.