In light of Saudi Arabia’s “Vision 2030” strategy, the country has finally opened another door to allow foreign investment in the field of engineering to blossom. After a year of discussion and consultation, the Commerce and Investment Ministry, as well as the Saudi Arabian General Investment Authority (SAGIA) has announced that they will now allow 100% foreign ownership on any engineering firm.
Before this, engineering firms were only allowed 75% ownership of the company, required a Saudi citizen to be a shareholder, and limited liability incorporation. Once this new law will take effect, however, all of these limits will be gone, and a foreign citizen can freely own 100% of their engineering firm, no limits whatsoever.
Source: Arab News
This decision stemmed from the fact that last year, the SAGIA had also given retail and wholesale businesses the same right, and the results were enough to satisfy authorities to expand foreign ownership to even more industries.
Of course, with every law, there’s almost always a catch, and in this case, it’s the requirements to apply for 100% ownership. For one, the foreign entity must have been operating for at least 10 years, and the second is that this entity must already be operating in 4 other countries. This limits those who can apply to only multinational engineering firms, but this is reasonable, as the government wants to ensure the quality of the new entrant. That doesn’t mean all hope is lost for smaller firms, as the SAGIA has the power to waive this restrictions if they consider the entrant’s existence in the country be in the best interests of the Kingdom.
Source: Middle East Construction News
“It is a positive step forward,” says Alain Sfeir, a Riyadh-based corporate partner with law firm Clyde & Co. “Foreign engineers and consultants are looking to get involved in and benefit from the expansion of infrastructure the Kingdom is experiencing, and the new corporate structure will give them more confidence to proceed.”
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