Jochen HundtChairman, Hundt Legal Consultancy

Legal Consultant, Alattas & Hundt

DEVELOPMENT OF THE SAUDI BUSINESS

LAW SITUATION

WIRTSCHAFTFORUM

SAUDI ARABIA

Saudi licensed law firm in cooperation with a UAE based consultancy

Offices in Saudi Arabia: Riyadh, Jeddah

Team: four lawyers/legal consultants, one tax advisor

Jochen Hundt: since 1998 legal consultant licensed to practice in KSA

Vertrauensanwalt (“lawyer of trust”) of the Austrian Embassy since 2001

Advisor to many other embassies and trade missions: B, CH, D, DK, F, NL, PL

The Law Office of Khalid O. Alattas in association

with Hundt Legal Consultancy –

Saudi Arabian legal system (1)

• Islamic law – directly applicable

• Not codified

• No civil code

Based on Sharia

law

• Quran – Sunna – Consensus –Analogy

• Hanbali school of jurisprudence

• Prescribed commentaries

Religious sources

• Adopted by Cabinet, after consultation of the Shura Council

• Constitution requires Sharia compliance

‘Regulations’

• Modernization of numerous regulations

• Some new protectionism since 2012

• Latest improvements: amendment of Labor Law, Companies’ Law 2015

WTO accession

2005

Saudi Arabian legal system (2)

• Prohibition of interest

• No claim for loss of profits

• Unlimited liability of shareholders

• No statute of limitations

• Dividends strictly according to distribution of shares

Particularities of Sharia law

Saudi Arabian legal system (3)

Developments

Establishment of a Capital Market Authority – licenses for 90 banks and brokerages

Cooperative Insurance Law – over 30 licenses for insurers

New Mining Law – 100% foreign ownership possible

Accession to the World Trade Organization (WTO)

Privatization of state-owned businesses

Public private partnerships – water and power sector, public transport

FDI inflow increased to 36 billion USD in 2009, but weaker since 2011

Improved competition law, GCC customs union with standard tariff at 5%

Foreign investors can trade in Saudi share swaps

Judicial reform close to completion; new Arbitration Law (UNCITRAL model law)

Opening of the “trading/distribution” sector to 100% foreign ownership

How to export

Manufacturer

National territories

A

SA

Customer

(direct)

Contract drafting

Customer

(direct)

Securing payments

Commercial agency law

Customer

Commercial agent

Distributor

Franchisee

Customer

A

SA

How to appoint a distributor

National territories

Manufacturer

Customer

Establishing a presence

• Only possible as ‘Scientific and Technical Office’ (STO).

• Consent of registered commercial agent is required.

• No minimum capital.Rep office

• Temporary: no minimum capital, project related (public).

• Permanent: SAR 500.000 minimum capitalization.

• Same tax treatment as LLC.Branch

• LLC or joint stock company; liability screen improved.

• Companies’ Law 2015: singe-partner LLC.

• 100% foreign ownership is possible (except ‘consulting’).Subsidiary

Contact:

The Law Office of Khalid O. Alattas

in cooperation with Hundt Legal Consultancy

RIYADH : 2nd Floor – Bahrain Tower – King Fahd Road

JEDDAH : 9th Floor – Future Business Center – Al-Amanah Road

T: +966 (11) 279 5132 +966 (12) 650 4703

F: +966 (11) 279 5101 +966 (12) 650 4704

Jochen Hundt

M: +966 504 233 752

E: jh@alattashundt.com

www.alattashundt.com