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    Hazim Al-Madani Law Firm is located in Riyadh, Saudi Arabia. Our office provides professional legal services by a highly qualified and skilled team of consultants and advocates.We help Organizations and Entrepreneurs to work smarter and grow faster. We consult with our clients to build effective organizations, innovate & grow, reduce costs, manage risk & regulation and leverage talent. Our aim is to support you in designing, managing and executing lasting beneficial change. Our clients include notable companies, corporations and individuals. If you need legal help with civil or commercial issues please call us today.

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    • "You truly make a difference in people's lives because you do not just win cases, you do not just get judgments collected, you actually put business back together and help heal wounds."

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      FAQ's

    Franchising FAQ

     

    Q1. What is the definition of a franchise?

    1. Anyone who contracts with the producer or his representative in his country for expanding the business of principal and distribution of products and services whether as an agent or a dealer by way of a proxy, in exchange for a profit or commission or facilities.

    Q2. Which law and government agencies regulate the Agency system?

    • the commercial agency law and it’s implementing the regulation.
    • the ministry of commerce.

    Q3. What are a requirement for registering a Franchising Contract:

    • Translation of contract and documents written in a foreign language into Arabic by a certified translator which should be notarized and attest up to the level of Saudi Consulate.
    • A copy of main or branch commercial registration certificate of the Saudi Agency or Distributor.
    • A written acknowledgment from the Saudi part stating that the capital is Saudi and the person in charge of management and signature is Saudi.
    • A valid certificate of membership in Riyadh Chamber of Commerce and Industry, indicating payment of subscription fees.
    • Providing data of the Saudi agent or dealer and data about the foreign agent, contract, and declaration.

    Note: that the commercial agency contract shall be written and signed by the entrusted authority in its original country or its representative in that country.

    Q4. What is a major restriction in the Commercial Agency Law?

    As stated in article 1 of the Commercial Agency Law:

    “Non-Saudi nationals, whether natural or legal persons, may not be commercial agents in the Kingdom of Saudi Arabia. However, the Saudi companies that carry out the activities of the commercial agencies must have their capital owned by Saudi nationals only. The members of their boards and those who have the right to sign shall be Saudi nationals.”

    Q5. Can a main distributor or dealer appoint sub-dealer or agent?

    Yes, if it is agreed between the principal and the main the distributor or dealer in writing.

    Q6.  What are precautions a franchisee must be aware of?

    There are no such precautionary rules mentioned in the Commercial Agencies Law, however, we believe that the following precautions shall be taken into consideration:

    • The background of the Franchisor.
    • Are there any current or previous litigation related to the franchisor?
    • Are they into Bankruptcy
    • Are there restrictions in sourcing the Product/Service in KSA?
    • Whether the Franchisor can provide assistance in advertising and training on the products or services.
    • Are the Trademarks, Patents, and Copyrights registered in Saudi Arabia or there any infringements?

    Q6.  Do other laws affect the franchise relationship?

    Yes, laws do affect the franchise relationship, if we took a look in the Saudi commercial agency law we would find some articles that prohibit franchising in some type of business, and some articles that state that the franchisee must be Saudi, and many other articles which govern the matter.
    Q7.  In what circumstances may a franchisor terminate a franchise relationship? What is the specific legal restriction on a franchisor’s ability to terminate a franchise relationship?

     Franchise relationship can be terminated by the franchisor for several reasons such as:

    • When a material breach was made by the franchise in his contractual duties.
    • When there is a material breach and it's not cured within a reasonable time after a demand for a cure has been made.
    • Bankruptcy or insolvency to the franchise.
    • Failure to follow the franchisor's requirements regarding where the franchise store is located, the appearance of the franchise's building, signs, employee uniforms, or any one of dozens of other business operations.

    Q8. In what circumstances may a franchise terminate a franchise relationship?

    • Bankruptcy or insolvency to the franchisor.
    • Failure to provide training and support as agreed.
    • Failure to protect the franchisee's business opportunity or territory by, for example, allowing another franchise to open in the franchisee's territory.
    • Fraud or misrepresentation with respect to potential profits.

    Foreign Labor FAQ

     

    complete my contract?

    If after much thought you feel that you do not want to stay, you are free to return home. But if at a later date you decide to re-apply, it will be very difficult to get another position in Saudi Arabia.

    What is the pay like?

    Generally, the compensation for expatriates is based on the compensation of the country in which you are currently working. Canadians and Americans are paid the highest, but generally, it is less than the compensation being earned in North America. However, because the income is tax-free and healthcare is provided, individual's take home their entire paycheck. This allows them to save many times what they do back home.

    Can I bring my family?

    Only senior administrative (e.g., Director/Head of a Clinical or Non-Clinical Department) and physician contracts provide married-status contracts, which offer family members accommodations, travel, and health benefits.

    On a single-status contract, accommodations, air tickets, and medical coverage are provided for the employee only.

    Can I bring a pet?

    People on single-status contracts who are in shared accommodations cannot bring any pets. People on married-status contracts who are not in shared housing may be able to bring a pet, depending on the rules of the housing complexand depending on the type of animal, but the couple would be responsible for all expenses and arrangements for its transportation to Saudi Arabia and any damages the pet may cause.

    Where will I live?

    Most expatriate staff live in housing on the hospital grounds, or in a private housing complex (commonly called a "compound"). A compound is an area of private property that is similar to a gated community. The sizes of compounds vary. Some will have only the residential facilities, while others will have pools, fitness facilities, tennis courts, salons, and grocery stores. Like a gated community, you're free to come and go as you please (bear in mind, however, that some compounds have late-night curfews). People leave the compound to work, shop, visit friends who live on other compounds, attend cultural events (e.g., concerts at embassies), dine out, go sightseeing, etc.

    What is provided in my apartment/house?

    Cutlery, dishes, pots, pans, a kettle, and toaster come with the apartment, as do basic appliances such as a fridge and stove. Depending on your accommodations, washers, and dryers are either in the individual apartment unit or in a communal laundry room (there is no charge). Utilities are included, and basic TV channels are included. If you want more channels you can purchase satellite packages that include stations such as ESPN, CNN, BBC, the Movie Channel, etc. Long distance phone calls are not included. Many people view online or download their favorite shows via networks or other services.

    Do I have to share my apartment/house?

    Physicians and most senior administrative positions are entitled to non-shared housing. All other contracts usually receive shared accommodations, with one — two other housemates.

    How much vacation am I entitled to?

    Vacations are calculated as "calendar days." Depending on the employer, you will usually have between 40 and 54 calendar days of vacation per year (e.g., April 1st to 14th is considered to be 14 calendar days of vacation).

    When will I be able to take a vacation, and for how long can I go away?

    You will not be able to take the vacation for the first three months of your contract, as this is your probationary period. After this time, you will be able to make vacation arrangements with your supervisors at the hospital, as you would in any workplace. Helen Ziegler and Associates, Inc. cannot guarantee your vacation time for any particular dates, or for any length of time.

    Can I leave the Kingdom on vacation whenever I want?

    While you are waiting to receive your residency permit (iqama), which usually takes between 2 and 4 weeks (but can sometimes take months), you may not leave the country. Also, the first three months of employment is a probationary period, during which you will not be able to take any accrued leave/vacation days. After you obtain your residency permit (iqama), you will be able to leave and re-enter the country for a short trip that doesn't use leave days, e.g., for a weekend trip the UAE. You will need an exit/re-entry visa to come and go; these can be purchased individually or as a multiple.

    What kind of healthcare coverage am I entitled to?

    The hospital will provide any medical treatment and emergency dental procedures you require. In most cases, you will not be covered for basic dental care. Also, if you leave the city to go on vacation or for a day trip, you will not be covered for any medical treatment. Thus, it is a good idea to purchase travel health insurance, when you leave the city in which you are employed, even if it is to travel within Saudi Arabia.

    I take prescription medication. Can I get it there, or should I bring it with me?

    You can get prescription medication in Saudi Arabia (which is covered by your health coverage), but you may not be able to get a specific brand name. You can ask in advance if the brand is available. Or, if you prefer a specific brand, you may bring a supply that will last you several months. Please bring prescriptions in the original container. The label must clearly state your name and the name of the medication (this is especially important when you are carrying medication on the airplane).

    Who pays for my flight?

    Relocation and repatriation airfare are typically provided by the employer. Helen Ziegler and Associates, Inc. works with the hospital to arrange your flight from your point-of-hire to the city where you will be working.

    If I book my own flight, will the hospital pay me back for it?

    No. Nor, for logistical reasons, can the hospital honor requests to fly specific airlines or accommodate requests for additional or extended stops on your way to Saudi Arabia.

    What does "tax-free income" mean?

    There is no income tax deducted in Saudi Arabia, and there is no sales tax. However, your foreign income may be taxed in your home country:

    • Americans are excluded from paying taxes on any amount up to US$108,800 (the tax year 2016) if the person was out of the country for at least 330 full days out of 365 days of a consecutive 12-month period. Exclusion amounts are subject to change, so please refer to Internal Revenue Service; especially see "Publication 54."
    • Canadians have a more complicated situation which involves severing residential ties to Canada (e.g., spouse, dependent children, non-investment property, etc.). For information, please refer to Canada Revenue Agency

    What is the currency in Saudi Arabia?

    The currency in Saudi Arabia is the Saudi Riyal (also spelled Rial), commonly referred to as the "SR." The SR has been fixed at a stable rate to the US dollar since the early 1980s, with the rate being: US$1 = SR3.75.

    How am I paid?

    You are paid monthly, in Saudi Riyals, by direct deposit into a local bank, located either on the hospital site or within easy walking distance.

    How easy is it to open a bank account?

    The hospital will help you open a bank account soon after you arrive and after your Iqama (permanent residency visa) has been issued. While safe, money in this account, will not earn interest, so you should transfer your money to an account outside Saudi Arabia to earn interest. (Islamic law prohibits earning interest on money; Islamic banking, however, provides another method for making your money work for you without violating Islamic law.)

    What should I do with my money then?

    Since no interest is paid on accounts in Saudi Arabia, most people keep only basic spending money in their Saudi bank account. Instead, people transfer most of their savings to offshore accounts through e-transfers, wire transfers, bank drafts, or whatever is possible through one's home bank. Internet banking is common.

    Can I use credit cards in Saudi Arabia?

    Saudi Arabia is generally a cash society, but credit cards are accepted in major department stores, chain hotels, and major hotel restaurants. Generally, other outdoor souks do not accept credit cards. Occasionally machines have trouble with "chip cards."

    Licensing and Visa

    What is HZA's recruitment process?

    To apply for a position you can call us, sign-up on our website, or email us a copy your resume and one of our recruiters will be in touch to discuss the details of our positions.

    The recruitment process varies depending on the hospital to which you apply, your profession, and the visa/licensing rules of the country.

    Are interviews required?

    Yes! We will interview you via Skype, or possibly in person. Additionally, an interview with the hospital in the Saudi Arabia is required.

    Why do you ask so many personal questions?

    During our introductory call, you will discover that we ask some extremely personal questions. The reason is: we don't want to put you through the lengthy application process if some personal factors may later exclude you from an employment visa in the Middle East.

    Do I have to have a Saudi license to work?

    You must keep your American or Canadian (or other) license active and current while you are working in Saudi Arabia, and have it with you. Nurses, doctors, and allied health professionals also must obtain a Saudi Commission for Health Specialties license. An exam is not necessary for Western-trained staff, but you will have to provide certain documents.

    Do I need to have a visa to go to Saudi Arabia?

    Yes. As your recruiting company, Helen Ziegler and Associates, Inc. will request your visa (as well as those for eligible family members*) from the hospital and the Ministry of Foreign Affairs. Obtaining a Saudi work visa is a lengthy and complex process which requires verification of educational and experience credentials, an extensive medical examination, and a police clearance. The process is different for Americans and Canadians. HZA has obtained Saudi work visas for approximately 4,000 candidates

    What is a residency visa and why is it so important?

    In order to stay in Saudi Arabia long-term, you must obtain a residency visa. Residency visas are arranged by the hospital, and once you receive your residency visa, you will receive an "Iqama" which is a residency permit. The Iqama is similar in appearance to a driver's license — it has an identifying digital photo of you and carries your personal identifying information. You should carry it at all times.

    How long will it take to obtain my residency visa?

    Initially, you will enter Saudi Arabia on a temporary work visa that is valid for three months, and which is sponsored by the hospital. Once you arrive, the hospital will ask for your passport to process your Iqama. The Iqama usually takes between 2-4 weeks to obtain but can take months.

    Do I get to keep my passport or will it be handed over to the hospital upon my arrival?

    Upon entry into Saudi Arabia, your passport will be obtained and held by your employer. Following the three-month probation period, employees may apply for an exit/re-entry visa which enables them to travel outside of the KSA. A single exit/re-entry visa costs approximately SR200 (US$53) and is valid for a single trip out of the country. A multiple exit/re-entry costs approximately SR500 ($133) and is good for unlimited trips for six months. *NOTE: rates subject to change
    Each time the employee re-enters the country, their passport will be obtained by their employer.

    Why do I have to relinquish my passport to the hospital when I arrive?

    You must give the hospital your passport so that they can obtain your Iqama.

    I have friends and family who would like to visit me. How can I obtain visas for them?

    You will be allowed to sponsor only close family members (e.g., spouse, children, parents, and siblings). You are responsible for all costs associated with their visit (e.g., visa, flight, accommodations). You are not able to sponsor friends and extended family members.

    Lifestyle and Day-to-Day Living

    What religions are practiced in Saudi Arabia?

    Islam is the official religion of Saudi Arabia. Prayer call occurs five times per day and during this period, shops and restaurants close for about 20 minutes to allow workers to pray. Many expatriates living in Riyadh are from Muslim countries. Although there are also many non-Muslim expatriates (e.g., Christians, Hindus), there are no churches or houses of worship of other faiths in the Kingdom.

    How should I dress when I am in Saudi Arabia?

    For men, all clothing is worn in public areas (e.g., outside the hospital grounds and housing complexes) should be conservative. This means no sleeveless shirts, no shorts, etc. in public (sportswear can be worn at men-only fitness facilities) and in private areas. In public areas, jewelry should be limited to a wedding ring and a watch.

    Women are required to wear an abaya (a black, lightweight cloak that drapes over your clothing) and to carry a scarf that can be used to cover the hair (if required) when in public areas (e.g., malls, souqs). The scarf and abaya are usually sold as a set; they must be black but can have colored embroidery, applique, etc. on them. Women are not required to veil. Abayas (and scarves) can be purchased online and can be bought throughout Saudi Arabia. This doesn't mean that you can't work out or go to the beach. Western-only private beaches and pools are available, where, of course, bathing suits can be worn. Sportswear can be worn at women-only fitness facilities. Women can wear abundant jewelry. Any type of shoe (e.g., sandals, flip-flops) can be worn publicly. And at home, you can wear whatever you wish. And under your abaya, you can wear whatever you wish.

    I have tattoos/facial piercings/body piercings. Is this a problem?

    No. However, it's best to keep tattoos covered, and piercings in non-traditional locations (e.g., the eyebrow, lips) may be frowned upon.

    I do not want to appear culturally insensitive. Other than the dress, is there anything else I should be aware of?

    Definitely, do not take pictures of any government buildings or palaces. Do not photograph Saudi adults or children without permission. During Ramadan Ramadan (the annual month of fasting), don't eat, drink, smoke, or chew gum in public places during daylight hours. Women should not offer to shake hands unless, of course, the hand of the other person is offered first.

    Will I be safe in Saudi Arabia?

    There is a relatively little crime in Saudi Arabia. Yes, there has been an occasional terrorist attack over the years,
    however, the level of violence is far less than one would find in a city of comparable size in the United States or Canada, and the security level is high. We are in regular contact with Westerners, and generally, Western people say they feel safe.

    Should I register with my country's embassy or consulate in Saudi Arabia?

    When traveling abroad one should always register with one's embassy or consulate. Riyadh is home to all of the government ministries and foreign embassies, including those of the United States and Canada. Jeddah is the site of many consulates, including those of the United States and Canada. You can also register in advance of going overseas:

    Americans: See the State Department's STEP (Smart Traveler Enrollment Program) Program page

    Canadians: See Foreign Affairs and International Trade Canada's Registration of Canadians Abroad page

    What if I feel that I need to leave due to the international situation?

    Following 9/11, the vast majority of employees decided to stay and "wait it out." Those who decided to leave had their airfare paid and they were offered the opportunity to return in the future. Also, each staff member has access to a volunteer embassy "warden" who is in direct contact with their embassy and provides regular updates on the international situation and their government's recommended response.

    Where can I get additional information about traveling abroad?

    Canadians can review The Department of Foreign Affairs and International Trade website. This is a useful site, providing a variety of information (in English and French) for Canadians planning to go abroad. Some information includes passports; travel reports; consular services; regional characteristics.

    Americans can review The Department of State website. This site provides information for Americans planning to go abroad, such as passports; travel and health reports; consular services; regional characteristics; currency exchange.

    Does Saudi Arabia allow tourists to enter the country?

    Recently Saudi Arabia instituted some limited opportunities for tourists via organized tours offered by a limited number of travel agents. For information about who is eligible to participate in these tours, contact the Saudi Arabian embassy or consulate nearest you:

    Is Saudi Arabia expensive to live in?

    Brand names and imports can be expensive, compared to the prices at home (where they may not be imports!).

    Women's Main FAQ

    Do I have to wear a burqa?

    Women in Saudi Arabia do not wear burqas, but whenever out in public, they are required to wear an abaya. An abaya is a black, lightweight cloak that drapes over one's clothing (from the shoulders down). Western women must also carry a scarf that can be used to cover the hair (if required) when in busy public areas (e.g., malls, souqs).

    Must the abaya be a certain color or length?

    Yes, abayas must be black, but they can have embroidery, sequins, applique, etc. The abaya should hang to the ankles. We advise that you purchase an abaya prior to relocating.

    As a woman, can I leave the housing complex by myself?

    Of course! There is no requirement for women to travel in groups.

    Can I wear sandals in Saudi Arabia?

    Yes: In fact, you will see sandals (mostly high-heeled) and flip-flops that are every bit as simple or elaborate as any you will see at home or in fashion magazines. (However, because the asphalt can become so hot in the summer, you may want to keep the cheap flip-flops for wear in cooler months or for around the house, lest they begin to melt ... or at least deteriorate quickly!)

    Do hair stylists know how to style the hair of African Americans?

    Not all of them can, but your African American and African colleagues can point you towards those who can!

    What is the shopping like?

    The shopping malls house all the international boutiques (with their Prada, Gucci, Yves St. Laurent, Boss, etc., designs), as well as larger stores which sell less costly clothes (e.g., GAP, H&M, American Eagle, Zara), and US and European chain department stores (e.g., Saks Fifth Avenue, Debenhams, Harvey Nichols, Marks & Spencer). But if you like to shop, in my view, the most interesting purchases are in the souqs, with their traditional hats, scarves, camel blankets, rugs, brass works, etc.

    Can I try on clothes in shops?

    This is a surprisingly tricky question. In the women's only malls, such as the "Ladies' Kingdom" at the Kingdom Centre Mallin Riyadh, women can try on clothes. In other malls, since most sales clerks are males, if one wants to try on a garment, one must first purchase the garment, then take it to the restrooms, which have toilet sections and change room sections, and try on the garment. If it doesn't fit, return it — if it does, you're lucky!

    Can I buy underwear?

    Although you can buy all styles of women's underwear, if you have a favorite brand/style, I would stock up before relocating. Most people feel that cotton is the most comfortable fabric for the hot climate.

    Only recently has Saudi Arabia been allowing female sales clerks in lingerie shops (women had, of course, been the clerks in women's only malls). The lingerie shops are now designated "families only" or "women only" — no unaccompanied men allowed. Before the advent of female sales clerks, lingerie shopping could be a challenge, because few women were comfortable discussing things such as their cup size with men ...

    Can I wear a two-piece bathing suit?

    Yes, if you are swimming in the women's only pool of your compound. But if you are swimming in one of the coastal waters in which men and women of all nationalities swim, a conservative one-piece is best.

    Can I wear makeup?

    Yes. The Arab women (Saudi women included) are very skilled in the art of applying makeup. Even if you see only the eyes, they are dramatically shadowed and otherwise elaborately enhanced, and their eyebrows waxed into precise shapes.

    Can I buy tampons?

    Yes, they can be found in most pharmacies or grocery store personal care product aisles. But the selection is not as good as at home.

    Can I wear jewelry?

    Very definitely. In fact, one of your main recreational pursuits may be shopping for gold in the souqs.

    Can I bring workout DVDs?

    Yes, but be careful of the covers. If the cover images are of scantily-clad (from a conservative society's perspective) women/men working out, take the discs out of the cases, and put them in a plain sleeve, accordion-style case, etc.

    Can I get spa treatments?

    Absolutely! You can get the enormously varied range of treatments, including massages, facials, manicures, and pedicures. (And it's typically cheaper than back home.)

    What kinds of clothes should I pack?

    The two things to keep in mind are 1) Saudi Arabia is a more conservative society, and 2) for most of the year it's very, very hot.

    So besides buying an abaya and scarf (as noted above), you really don't need to change your wardrobe much (unless it happens to be stocked with flannels and fleece).

    Surprised? Don't be. You will attend parties and embassy concerts and events, which require the same sort of clothing you'd wear to such events back home, e.g., a cocktail dress. You will hang around by your pool and you will work out, so you will need a bathing suit and gym gear. And because in public (e.g., malls, souqs, restaurants) you will be wearing your abaya, you can wear whatever you want underneath it.

    But to deal with the heat (and in Jeddah, the humidity), you may want to add a few lighter garments to your regular clothing collection — perhaps some "wicking" or fast-drying tops or pants, or perhaps a long skirt to let the air circulate around your legs. And you may want to throw in a few longer sweaters or jackets both to help you deal with the omnipresent air conditioning and for the conservative cover-up of your hip region. But you don't need to buy a new wardrobe ... unless, of course, you want to.

    Can I drive a car in Saudi Arabia?

    Women are not permitted to drive in Saudi Arabia, but there are free shuttle buses to and from your residence to common shopping destinations throughout the city, and taxis are available.

    As of summer 2015, Uber and similar taxi apps (i.e., Kareem) are now popular in Saudi and have the reputation as being safe.

    Professional Life and Work Matters

    How is the healthcare system in KSA organized?

    The health care system in Saudi Arabia is roughly similar to the American system. Military hospitals treat members of the armed forces and their families. University teaching hospitals treat the general public. Ministry of Health hospital and tertiary-care referral hospitals treat the general public. Private hospitals treat either specific populations or are strictly for-profit. Saudi Arabia is also actively involved in medical research.

    What is the official business week in Saudi Arabia?

    Until late June 2013, the weekend was Thursday and Friday. However, a royal decree from June 2013 announced the weekend would be changed to Friday and Saturday, to bring it in line with the other Gulf countries.

    Who are the patients at my hospital?

    The patients are Saudi nationals, expatriates, and Saudi hospital staff and their dependents. You will see all types of patients including heart disease, common cancers, and interesting genetic diseases.

    Who are my coworkers?

    Your coworkers will be healthcare professionals and support staff from Saudi Arabia and countries around the world: Canada, the United States, the United Kingdom, Europe, Australia, New Zealand, Egypt, Jordan, the Philippines, Sudan, Somalia, South Africa, etc.

    What language is spoken at the hospital?

    Although English is the working language at the hospital, your colleagues come from all over the world, so English may be a second language to many of them. Some patients may speak English, but many speak only Arabic; translators will be available. Hospitals also offer free courses in basic Arabic.

    Will my uniform be provided for me?

    Yes. At the King Faisal Specialist Hospital & Research Centre in Riyadh, for example, nurses get four sets of white scrubs and two jackets; respiratory therapists are issued green scrubs.

    If I do not wear a uniform, how should I dress at work?

    If you do not wear a uniform the dress is professional clothing (sometimes covered by a lab coat).

    Can I wear open-toed shoes at work?

    No, closed-toe shoes are required. Most people wear running shoes. Crocs are currently acceptable.

    Am I entitled to overtime pay?

    Although your contract will state that overtime is paid at 1.5, Saudi Labour Law counts your days off as paid days. Therefore, for practical purposes, the overtime rate is approximately 1.2.

    Will I get an orientation?

    All new employees typically attend a hospital and department-specific orientation for 1-2 weeks upon arrival. Staff nurses will typically be assigned a preceptor on the unit.

    Social Life

    What is the social life like?

    Like anywhere else, the social life in Saudi Arabia is what you make of it. There are organized trips to historical sites, sports competitions, and other recreational activities. Dinner parties, desert trips, and beach parties are common. There are concerts at embassies and expatriate-operated amateur theater and musical ensembles. It must be noted, however, that unmarried couples may not travel or dine together off-compound without being in the company of a married couple (there are many married couples in Saudi Arabia).

    Where will my new friends and colleagues be from?

    The expatriate community in Saudi Arabia is made up of citizens from around the world: Americans, Canadians, Australians, British, German, Irish, Egyptians, Indians, Pakistanis, Sri Lankans, Bangladeshis, Filipinos, Malaysians, South Africans, etc.

    In 2015, the CIA World Factbook estimated Saudi Arabia's population to be 27.8 million, of which around 30% are expatriates.

    What types of sports are available?

    There are endless opportunities to get and stay fit. There are organized athletic events, such as tennis, ball hockey, running, rugby, and soccer. There are also marathons and desert camping. Fitness clubs are available but can be costly, so most people stick with the pool facilities, gyms, and tennis courts commonly available on the hospital grounds or in housing complexes. There is grass and sand golf courses, such as at the Intercontinental Hotel (where both men and women play).

    Is drinking alcohol legal in Saudi Arabia?

    Alcohol and products containing alcohol are strictly prohibited by law. (This includes liqueur chocolates!) Bringing them into the country, and/or purchasing or drinking alcohol is prohibited in Saudi Arabia.

    Is smoking cigarettes legal in Saudi Arabia?

    Smoking is legal in Saudi Arabia, but women cannot smoke in public.

    Are there any types of books, CDs, or DVDs that are illegal in Saudi Arabia?

    Do not bring books which are critical of Saudi Arabia or which are politically controversial into the country. Pornography is strictly prohibited. Travel guides about Saudi Arabia are completely acceptable. If your books have covers or pictures that may be offensive, remove them. DVDs may be checked at customs.

    Is English-language reading material available?

    There are three daily English papers: Arab NewsSaudi Gazette, and Riyadh Daily. There are several English-language bookstores, but the stock can vary. There are book-sharing clubs among expats and small libraries at the hospital. Books can also be ordered online from websites such as Amazon.com. An eReader, such as Kindle, is also an option.

    What is the food like?

    Saudi Arabia allows expatriates to go on a culinary world tour. In addition to sampling authentic Middle Eastern cuisine(such as tabouleh, hummus, pita, baba ghanoush, etc.), there is Italian, French, Chinese,  Japanese, Thai, Filipino, Mexican, Turkish, and Indian. For a taste of "home," the standard American chains such as McDonald's, Pizza Hut, Dunkin' Donuts, and Dairy Queen are available. Many of the foods in the supermarket will be familiar to you, from ketchup to Twinkies to skim milk. Although produce is readily available at supermarkets, fruit and vegetable souqs (markets) also provide excellent fresh produce. Alcohol and pork products are not permitted.

    What is available in the stores?

    Most things that are available in North America are available in Saudi Arabia, with the exception of items that are prohibited, such as alcohol, pornography, and pork products.

    • Pharmacies are open at convenient times, and many pharmaceuticals can be obtained over the counter.
    • High-end designer clothing and sportswear items are easy to find, but you can't always try them on! The country also has many good tailors who can make items for you.
    • It can be difficult to find bathing suits — even more so when there is a chance you might not be able to try it on — so bring a couple from home.
    • Electronics stores abound, selling the latest in the computer, audio, and video equipment. Videos and DVDs are also available, but many of these will have been censored.
    • Jewelry shopping in the gold souqs is so popular with expatriates that most leave Saudi Arabia with a sizeable gold collection.

    What languages are spoken in Riyadh, Jeddah, Dhahran, etc.?

    The official language is Arabic. English is commonly spoken, and Hindi, Urdu, and Tagalog are also spoken by many of the expatriates who live there. English is the language of operation of all hospitals and translators are available for communicating with patients who do not speak English.

    What is the weather like in Saudi Arabia?

    Saudi Arabia is a desert country with, believe it or not, a wide range of temperatures.

    Riyadh, which is in the center of the Kingdom and set in the middle of the desert sees the greatest temperature differences with an average low of 8C-21C (46F-70F) in the winter and an average high of 42C (108F) in the summer.

    Jeddah is slightly cooler than Riyadh but also more humid thanks to its location along the Red Sea. Jeddah sees an average low of 18C-29C (64F-84F) in the winter and an average high of 37C (99F) in the summer.

    When you leave the city on your camping/hiking/touring adventures, be sure to bring a heavy sweater. The desert can actually get quite chilly at night.

     

    Forgien Investments FAQ

          1- What are the forms of investment in Saudi Arabia?

    • Individual Establishment
    • Branch of a Foreign Company
    • Limited Liability Company
    • Closed Joint-Stock Company
    • Representative Office (Technical Support Office)
    • Temporary Company

     

    2- What are the major aspects of both Limited Liability Company and Branch of Foreign Company and how do they differ in terms of ownership structure, capital, and liability?

    • One of the major issues that an investor has to take into consideration when establishing a business in Saudi Arabia is the structure of the entity. The entity’s structure must meet investor’s requirements, such as management style preferences, confidentiality of the processes, controlling factors over operations, etc. 

      Moreover, each of the structures entails some advantages and disadvantages, which will also be answered in this section. The investor must understand the key features of each entity’s structure in order to determine which is appropriate for him. 

      Below are the most common structures applicable for setting up a business in Saudi Arabia: 

      Limited Liability Company (LLC)
      An LLC is an independent legal entity that may either be a joint venture (between a foreign company and Saudi natural or legal person/s), or a 100% foreign-owned entity. The owners of the LLC are called partners or shareholders. As per Saudi Laws, the minimum shareholder for LLC is two, and the maximum is 50. In case the number of shareholders falls below two, the LLC shall be automatically dissolved. 

      The most prominent feature of this structure is the limitation of the shareholders to the liabilities, generally, up to the extent of their capital contributions only. However, in case the LLC incurred losses up to 50% of the total registered capital, and if there was no action taken by the shareholders to resolve such losses, nor proceed with the dissolution of the LLC, the shareholders shall then be personally liable. 

      The LLC regulations are specified in its Articles of Association. 

      Whether the LLC will be a Joint Venture or 100% foreign-owned entity, the shareholders may appoint either Saudi or foreign manager, whether or not such manager will come from the shareholders themselves, or any third party. The appointed manager shall represent the LLC in front of government departments, customers, courts, suppliers, etc., and shall have the authority over day-to-day management of the company, as described in the authorization issued to him by the shareholders. 

      Profits of the LLC are distributed in proportion to the shareholders’ capital contribution, taking into consideration of the 10% profit deduction, which will form part of the statutory reserve of the LLC, as provided for in Article (176) of the Companies Regulations. 

      The shareholders are allowed to transfer their shares either to their co-shareholders or third parties, provided that there is written consent from the remaining shareholders, and the pre-emptive rights of the other shareholders shall be taken into consideration. In the case of transfer of shares, the shareholders have the right to recover their capital contribution. The transfer of shares requires the approval of SAGIA in order to amend the investment license, and of Ministry of Commerce for the amendment of the Articles of Association and Commercial Registration of the LLC. 

      A Saudi-registered LLC has the benefits to repatriate profits, sponsor non-Saudi employees, acquire or lease premises for business operation and employees accommodation, and obtain industrial loans from SIDF and other banks. 

      2.Branch of Foreign Company 
      Another option that an investor may consider is by establishing a Branch of a company registered outside Saudi Arabia, which we refer hereto, as Branch of Foreign Company (“Branch”). The Branch is considered as the representative of a foreign company in Saudi Arabia, and it is allowed to perform its activities in the Kingdom, like any registered LLCs, and to engage in business in accordance with the license issued by SAGIA. 

      Obviously, the Branch is 100% owned by a foreign company (Mother Company) and it is not considered as an independent entity. Unlike LLC, the Mother Company shall be responsible for all the liabilities of the Branch in Saudi Arabia. 

      The Mother Company has control over the management and operations of its Branch, although appointing a manager shall be required from Mother Company, to become the representative of the Branch in front of government departments, customers, courts, suppliers, etc., and the appointed manager shall be responsible for day-to-day activities of the Branch, in accordance with the authorization given to him by the Mother Company. 

      The activities of the Branch are limited to the activities of the Mother Company, and since it is not an independent entity, it cannot enter any Joint Venture or partnership, nor establish its own Branch. 

      The Branch operations and internal regulations are guided by those of the Mother Company, as long as they are not in contradiction with the Saudi Laws, and with consideration of the limitations set forth in the investment license of the Branch. 

      The Branch also enjoys the benefits similar to that of LLC, such as repatriation of profits, sponsoring non-Saudi employees, acquiring or leasing premises for business operation and employees’ accommodation, and obtaining industrial loans from SIDF and other banks. 

     

     

    3- What is the minimum capital required for a limited liability company or Branch?

    • For service LLC or Branch, the minimum capital is SR500,000
    • For industrial LLC or Branch, the minimum capital is SR1,000,000

    Recently, SAGIA is giving more attention to mega investments. Based on this fact, we found difficulties in processing applications for investors with minimum capital, therefore we advise foreign companies to increase the investment amount in KSA and not to stick with the minimum taking into consideration that capital invested by foreign companies is not subject to tax in KSA. Foreign companies pay 20% on the achieved net profit only.

    4- How many partners are required for an LLC?

    SAGIA requires at least two partners to establish an LLC. The partners may be individual or company, provided that the minimum share of each partner in the total capital is 5%, or less than 5% if the invested capital exceeds the minimum capital requirement.

     

     

    5- Is it required to have a Saudi partner in the LLC?

    Some activities like EPC, trading and engineering offices are required by law to have a Saudi partner. Other activities are permitted by law, to be registered as 100% foreign-owned investment. On the other hand, it is an added value to have a Saudi partner who can provide the technical, financial and marketing services.

     

     

    6- What is the procedure and uses of Capital fund?

    Regardless of the project is industrial, services or any other type, the required paid-up capital must be deposited in a Saudi Bank to obtain Capital Deposit Certificate before obtaining the Commercial Registration (CR) certificate. Usually, such amount shall be fixed for a couple of days (from deposit stage until obtaining CR). After having the CR, the company is free to use such capital locally or outside Saudi Arabia for the purpose of the company. For example, purchasing equipment’s, purchasing materials, paying expenses, etc.

     

    7- Is it a must to declare any investments in KSA when submitting for a new Commercial Registration?

    Any company willing to invest in Saudi Arabia must declare their participation and such company should have all the required documents valid and must be an active company.

     

    8- How a Holding company can invest in KSA?

    If the Holding company wants to invest in Saudi Arabia in any activity, such activity must be mentioned in the Articles of Association of the Holding company.

     

     

    9- What is the Foreign Corporate Tax in Saudi Arabia?

    Foreign Corporate Tax in Saudi Arabia, for the time being, is 20% from the net profit. This percentage applies regardless of the type of company. If there are losses, it can be carried forward to the next year and can be deducted from future profits. Recently, there is a lot of discussion about tax deductions after Saudi Arabia joined the WTO, but there is no confirmation about it until now. Moreover, an additional 5% tax will be imposed on the distributed profits to the foreign partners. We advise you to contact a CPA Auditor since the tax is not our specialty.

     

     

    10- Is there any incentive for a manufacturing project in Saudi Arabia?

    Yes, and this is regardless of the ownership. Industrial projects are entitled to get some incentives like a special rate for the electricity, land, and water. In addition, Saudi Investment Development Fund (SIDF) gives free of charge loans to some projects which can cover up to 50% of the financial requirements for establishing the industrial projects.

     

     

    11- What are the basic requisites for opening a Representative Office (Technical Support Office) in Saudi Arabia?

    In order to establish a Technical Support Office in Saudi Arabia, the company should be in the field of industry and should have existing distributor or agent in Saudi Arabia. It must also meet all other requirements of SAGIA.

     

     

    12- Can investors obtain residency in Saudi Arabia?

    If the investors decide to obtain residency (iqama) in Saudi Arabia, the percentage of ownership in the investment should be at least 25%, or less that 25% if the invested capital exceeds than the minimum capital requirement.

     

    13- Can a female invest in Saudi Arabia?

    Yes, provided that the female investor can meet all the requirements and qualifications of SAGIA

     

     

    14- What is a temporary investment license?

    A Temporary Investment License is given to companies with the objective of executing a certain project in Saudi Arabia. According to SAGIA regulations, all temporary licenses will be canceled automatically after executing and finalizing the contract awarded to the investor. If the investor is still interested in continuing providing services and contracting with other clients in Saudi Arabia, then, it is recommended that he converts the license into a permanent investment license.

    15- What are the steps for canceling the CR (Liquidation)?

    • Usually, the investing company should issue a resolution that they are no longer interested in working the in Saudi market and that they are decided to close/liquidate their investment in the Kingdom.
    • The investment company shall prepare/issue a Power of Attorney for their representatives in Saudi Arabia delegating to them the task to liquidate the company and to cancel the CR
    • A final audited report closing the balance sheet should be issued from the appointed CPA of the company.
    • An application, together with the required documents (e.i. license, CR, AOA, GOSI certificate, valid tax certificate, closing balance sheet, etc.), shall be submitted to SAGIA to issue a decision for the cancellation of the license of the company.
    • After the issuance of the Cancellation Certificate from SAGIA, the papers shall be forwarded to the Ministry of Commerce (MOC), where they will ask for the publication of official gazette or newspaper regarding the cancellation of the license of the company.
    • MOC will request a certificate from Labor Office and Tax Department that there are no labor/employees under the CR of the company and that the company has no tax liability.
    • After MOC, CR of the company will be canceled.

     

    16- Can foreign investors engage in trading activities in Saudi Arabia?

    • Trading activities in Saudi Arabia are not allowed for foreign investors (except for GCC nationals) unless the capital is at least SR27 million and they should have a Saudi partner who will own at least 25% of the capital of the JV.

     

     

    17- What is the estimated time to complete registration process of the investments in Saudi Arabia?

    In general, the time consumed to finish all the formalities of registering foreign LLC, Branch, Establishment and Representative Office is approximately 2-3 months.

     

    18- What is the most popular legal status of investment in Saudi Arabia?

    The most popular form of foreign investment is the limited liability company (LLC) because of the following reasons?

    • Limited as to liability
    • No need to issue a Commitment Letter from the Mother Company
    • No need to secure approval from the Saudi Arabia Ministry of Commerce
    • Ease of Formation.
    • It may be wholly owned by foreign investors
    • Offers flexibility in management and business scope

     

    19- What are the new requirements for registering a construction company in Saudi Arabia?

    Other than the basic requirements, SAGIA is now requiring all applicants for construction companies to comply with the following requirements:-

    • License applications will be limited to legal persons in the form of LLC or Joint Stock Company.
    • Approval of the fields of classifications issued by the Ministry of Municipal & Rural Affairs as a reference to identify and describe the activities related to the activity of construction, building, management and maintenance, operation and cleaning and it should be consistent with the kingdom international commitments.
    • Provide a detailed action (Business) plan indicates accurately the capability of the project to achieve the objectives of the investment including its contribution to the increase of the Kingdom revenue, and (Saudization Plan) for the jobs that will be provided by the project to the Saudi citizens, how the project contribute to promotion of competition and services and the diversity of option for consumers, the strategic investment dimensions of the project on the investment in the Kingdom, the advantage of the city that to be the center of the project and its region of this project.
    • Proof the financial capacity for investment commensurate with the project capital and share of each partner and commensurate with action plan provided for the project. And that the license applicant company has implemented an earlier project in its country or another country, in a financial value beyond the financial limits of the 3rd class of classification approved by the Ministry of Municipal and Rural Affairs or equivalent
    • Submit a balance sheet of license applicant company outside the kingdom not less than 3 years and not more than 10 years describes the integrity of the financial position provided that to it have profit in all years and to be prepared by a CPA and attested from the concerned authorities in charge of commercial activities and taxes in home country of the company and attested by the embassy of KSA.
    • Not employ than 25% of non-Saudi manpower, if necessary, among this percentage there will be managers, executives, and specialists who have the experience not less than 3 years in the same activity to work with the company after being licensed by SAGIA.
    • No combination is allowed in the license application between construction & building, maintenance & operation in one license, excluding companies with more than 300 employees in their home country.
    • The license applicant company provides an unconditional and irrevocable bank guarantee in the name of SAGIA renewed annually against granting the license at the rate of 2% of the financial limits for 3rd Class of the classifications provided by Ministry of Municipal & Rural Affairs or equivalent for the targeted the activity. Such guarantee remains valid and enforceable until the write-off the commercial registration.
    • Obtaining an insurance against the company errors in the implementation of the project after being granted the license or when renewed.
    • The commitment of the licensed company or renewed license to submit an annual report on all projects that awarded to or executed by the company and the value of each project.
    • The commitment of the licensed company or renewed license to provide all data and information and the financial statements to any auditor determined by SAGIA to audit its financials.

     

     

    20- What are the new requirements for registering a Light Industries Manufacturing Company in Saudi Arabia?

    Other than the basic requirements, SAGIA is now requiring all applicants for construction companies to comply with the following requirements: -

    • License applications will be limited to legal persons in the form of LLC or Joint Stock Company.
    • The technical specifications of or method of the product must comply with Gulf, Saudi or international specifications.
    • The final product must be in conformity with Saudi technical regulations or the related Saudi standard specifications
    • The project premises must within one the industrial or economic cities.
    • The design of the project site should be made by a certified, licensed engineering firm.
    • That the purpose of the production of the final product is to achieve self-sufficiency for the domestic market and export development.
    • Not employ than 25% of non-Saudi manpower, if necessary, among this percentage there will be managers, executives, and specialists who have the experience not less than 3 years in the same activity to work with the company after being licensed by SAGIA.
    • Provide a detailed action plan indicates accurately the capability of the project to achieve the objectives of the investment including its contribution to the increase of the Kingdom revenue, and the jobs that will be provided by the project to the citizens, how the project contribute to promotion of competition and services and the diversity of option for consumers, the strategic investment dimensions of the project on the investment in the Kingdom, the advantage of the city that to be the center of the project and its region of this project.
    • Proof the financial capacity for investment commensurate with the project capital and share of each partner and commensurate with action plan provided for the project
    • Submit a balance sheet of license applicant company outside the kingdom not less than 3 years and not more than 10 years describes the integrity of the financial position provided that have profit in all years and to be prepared by a CPA and attested from the concerned authorities in charge of commercial activities and taxes in home country of the company and attested by the embassy of KSA.
    • The existence of technical system to manage and control production, recycling, waste disposal as well operation according to clear production lines, power consumption, stores, safety a security in the factory.
    • The existence of approved safety plan in the factory.
    • Provide an annual report of factory production, raw materials consumption, import & export and production volume commensurate with factory size and a number of staff.
    • Provide all data and information and the financial statements to any auditor determined by SAGIA to audit its financials.

     

    21- Can a 100% GCC company in Saudi Arabia appoint a manager who is not a GCC national?

    No, a 100% GCC company should only appoint a GCC national as general manager of the company. But this manager may delegate his authorities to other persons whether GCC national or not, provided that such persons are under the same sponsorship.

     

     

    22- What are the required qualifications to become the General Manager of a JV with EPC activities?

    According to the Ministry of Commerce, the Manager should be a member of a professional association in his country. Otherwise, he may use his membership in KSA, if any.

     

     

    23- Who are the approving authorities for LLC engaging in EPC activities?

    To obtain a license for LLC with EPC activities, it needs approval from Saudi Council for Engineers (SCE), Ministry of Commerce and Industry (MOCI) and Saudi Arabian General Investment Authority (SAGIA).

     

     

    24- What are the requirements for Engineering Company?

    For the Saudi partner:

    • he should have a professional license allowing him to practice the profession
    • his share should be not less than 25% of the capital


    For the foreign company partner:

    • a certificate from the competent authorities in the country of origin stating that the company has a good reputation and working in the professional field of activity for not less than 10 years
    • Certificate of Incorporation attested by competent authorities
    • An undertaking that it shall provide expertise, technology and will train Saudi staff
    • Copy of AOA
    • a resolution appointing its representative in Saudi Arabia

     

     

    25- What are the requirements for Engineering Company?


    Required Documents from Foreign Partner

    • A copy of the Articles of Association attested from the Embassy of Saudi Arabia in the country where the company is registered.
    • A copy of the CR (Commercial Registration Certificate), attested from the Saudi Embassy.
    • A copy of the audited balance sheets of the last three years (2008, 2009 & 2010), audited by the legal auditor in that country and attested from the Saudi Embassy.
    • A certificate from the competent authorities in the country of origin stating that the company has a good reputation and working in the professional field of activity for not less than 10 years (attested by Saudi Embassy).
    • An undertaking from the Foreign Partner that it shall provide expertise, technology and will train Saudi Staff.
    • Power(s) of Attorney, Board Resolution(S) and Manager Authorization(s), to be notarized and attested from Saudi Embassy. (We shall provide you with the format upon appointing GCH as your formal representative)
    • Company profile.
    • Contacting details; phone, fax, e-mail, P.O. Box …. etc.
    • Accomplishment letters from companies or clients outside Saudi Arabia in the field of Engineering, attested by Saudi Embassy.
    • A copy of the Passport of the Director-Representative of the Company.
    • 8 personal photos, size: 3x4, white background for the Director-Representative of the Company.
    • A letter or certificate stating that the person whose signature appearing in the authorization and resolution is the authorized representative and signatory of the company, to be stamped from Saudi Embassy.

    Required Documents from Saudi Partner

    • A copy of the Professional License.
    • POA to be done in front of the Saudi Notary Public (We will provide the format upon appointing GCH as your representative)
    • Profile of the Engineering Firm
    • Copy of ID Card
    • (8) pieces photos, size 3x4, white background 

    Required Documents from the appointed Manager of the JV

    • A copy of the Passport of the JV manager in KSA.
    • 8 personal photos, size: 3x4, white background for the manager of the new JV in KSA.
    • A copy of the university degree in the field of the company’s business (attested by Saudi Embassy).
    • A copy of the membership professional association of the manager in the same field of the License. (Attested by Saudi Embassy).
    • 10 years Experience in the same field (attested letter).
    • An undertaking to stay in Saudi Arabia for not less than 9 months (attested by Saudi Embassy).

     

     

    26- What are the types of entry visas in the Kingdom?

     

    There are four types of entry visas to the Kingdom:

    • Investor visas
    • Business visit visas
    • Employment visas
    • Family visit visas.

     

     

    27- How many work visas can a company obtain in Saudi Arabia?

    Initially, the number of visas issued to a company is 1+2, meaning, 1 visa is issued for the appointed manager during the registration process and additional 2 visas shall be given to other employees after obtaining the Commercial Registration. Thereafter, the company may request for additional visas and the approval of such request will be based on the necessity for manpower to carry out its activities or execute its contracts.

     

     

    28- Does SAGIA require the investor to open a bank account to transfer the minimum capital requirement into Saudi Arabia? If yes, can the investor withdraw the deposited capital?

    Yes, the investor is required to open a bank account in any Saudi bank in order to deposit the required capital. After obtaining the Commercial Registration, he has the freedom to withdraw the capital and use it in the company operations.

     

    29- Is it required to translate all documents into Arabic before sending them to Saudi Embassy for attestation?

    All documents should be attested by Saudi Embassy in the investor's country of residence. In Saudi Arabia, the documents can be translated into Arabic. Unless the Saudi Embassy has its own condition of translating the documents, English language is acceptable for SAGIA.

     

     

    30- Can an Individual Establishment be a partner in the LLC?

    Yes, an Individual Establishment can be a partner in LLC taking into consideration that the investment will be in the name of the owner of the Establishment.

     

     

    31- Can a Foreign Individual Establishment (Sole Proprietorship) be a partner in the LLC?

    No. SAGIA recently limited the Investment in Saudi Arabia in major sectors (Manufacturing, contracting, Trading and Restaurants) to Limited Liability Companies and Joint Stock companies only. Only an already registered Individual Establishment in KSA can be a partner in LLC taking into consideration that the investment will be in the name of the owner of the Establishment.

    32- What are the rules for applying trade names of the company?

     

    Following are the rules for reserving the trade name of the company from the Ministry of Commerce:

    • Words which have equivalent meaning in Arabic may be used.
    • Foreign companies are allowed to use their non-Arabic company names
    • Using the non-Arabic name of a person is allowed only if it is the name of the shareholders in the L.L.C.
    • The trade name shall have a distinctive character and shall not be used/reserved before.
    • Use of abbreviations is not allowed for trade names

     

    33- Are there any government guidelines for obtaining information about marketing guide prices, e.g. renting prices of project equipment and prices of project materials, which is issued by Saudi government?

     

    In the Kingdom of Saudi Arabia, there are NO governmental guidelines or instructions regulating the renting sector. Any company interested in renting any equipments or purchasing any material shall contact the various companies in the Kingdom and get quotations for that.

     

     

    34- Can a foreign investor purchase local companies in Saudi Arabia? What are the qualifications and conditions needed?

    Yes, Merger and Acquisition (M&A) is allowed in KSA, and foreign company may acquire shares of a local company based on the followings:-

    • The foreign company shall get approval from SAGIA.
    • The line of services of the purchased company shall be approved within the Saudi Foreign Investment Regulations.

     

    35- Can foreign companies purchase land for accommodation in Saudi Arabia ?

     

    Any foreign company can purchase/rent a land and build a compound or houses for its employees. The foreign company is NOT ALLOWED to buy land and build the accommodation and then rent it to others unless it is licensed for such activity. The company can purchase the land according to the Saudi Government Laws and own it % 100 subjects for approvals from SAGIA and municipality. The price and payment methods vary based on the location and owner of the land.

     

     

    36- How can companies employ or dismiss local labors in Saudi Arabia? Are there any relevant laws or regulations? Are there any risks in employing or dismissing local labors? And how to avoid and solve these risks?

     

    A lot of labor issues were tackled and organized by the Saudi Labor Regulation dated 28/10/2005 (G). Labor regulation defined wage, as (employers'/employees') rights and obligations. Moreover, labor regulation left the door open for other contractual arrangements between parties for them to decide through the Employment Contract on the condition that it shall not contradict the regulation itself.

     

     

    37- Can investors in KSA participate in a JV with another company?

     

    Yes. Usually, up to 3-4 ownership, the investor may participate. A newly registered company may participate in a JV only after the issuance of the first financial statements.

     

     

    38- What is nitaqat?

     

    Nitaqat is a new Saudization program, introduced by the Saudi Ministry of Labor. Under the program, private firms are classified into Premium, Green, Yellow and Red categories based on their percentage of Saudization. The program sets penalties and incentives for companies based on which category they fall under. Companies with high Saudization rates will fall under the Premium or Green categories, while those who fail to achieve the required rates will be included in the Yellow and Red categories. Nitaqat ensures that Saudization rates are based on the actual performance of private businesses, and takes into consideration the sector as well as the size of the work force for each company.

     

     

    39- How many employees does my company have to have to fall under the Nitaqat program?

     

    Companies with less than 10 employees will not fall under the Nitaqat program.

     

    40- Which category does my company fall under?

     

    The criteria used for classification depends on your company's sector and size. In the Nitaqat program, the labor market is segmented into 41 commercial activities, and companies are categorized into five sizes based on the number of people employed. Please visit the website of the 

    Saudi Ministry of Labor to verify your company's category status.

     

     

    41- What happens if my company falls under Red or Yellow categories?

     Companies that fall under the Red category will not be allowed to renew work visas for their foreign employees. They will be barred from opening new branches or facilities. Companies that fall under the Yellow category can renew work visas for each foreign employee on the condition that the employee has not spent more than six years in the kingdom. Yet, they cannot transfer visas of non-Saudi workers to fall under their own sponsorship.

     

     

    42- If your company falls under the Yellow category, you will face the following penalties:

     

    • Will only be allowed to get one visa upon the departure of two foreign employees.
    • Will not be allowed to get new visas.
    • Will not be allowed to transfer visas.
    • Will not have control over employees as the employees would be able to move to companies under Green or Premium categories.

     

     

    43- If your company falls under the Red category, you will face the following penalties:

     

    • Will not be allowed to get new visas.
    • Will not be allowed to transfer visas.
    • Will not have control over employees as the employees would be able to move to companies under Green or Premium categories.
    • Will be deprived of basic ministry services such as renewal of employees' working permits, change of profession, transfer of visas, issuance of new visas and opening files for new business branches.

     

    45- What happens if my company falls under Premium or Green categories?

     

    • Companies that fall under the Premium or Green categories will be able to benefit from an easier visa-approval process for their employees. They will also be able to recruit workers from the other categories without having to obtain consent from the other employer. 

     

    46- What are the activities included in the "negative list" as per SAGIA regulations?

     

    SAGIA's "negative list" sets out the activities which are prohibited to foreign investors. Below herewith are the activities included in the "negative list" as per SAGIA regulations:

    • Industrial Sector
      • Oil exploration, drilling, and production, except for certain services related to the mining sector
      • Manufacturing of military equipment, devices, and uniforms
      • Manufacturing of civilian explosives
    • Service Sector
      • Catering to military personnel
      • Security and detective services
      • Real estate investment in Mecca and Medina
      • Tourist orientation and guidance services related to Hajj and Umrah
      • Recruitment and employment services, including local recruitment offices
      • Real estate brokerage
      • Printing and publishing, other than the following activities:
        • pre-printing services (as specified)
        • printing presses (as specified)
        • drawing and calligraphy (as specified)
        • photography (as specified)
        • radio and television broadcasting studios (as specified)
        • foreign media offices and correspondents (as specified)
        • promotion and advertising (as specified)
        • public relations (as specified)
        • publication (as specified)
        • press services (as specified)
        • production, selling and renting of computer software (as specified)
        • media consultancies and studies (as specified)
        • typing and copying internationally (as specified)
        • motion picture and video tape distribution services (as specified)
      • commission agents
      • audiovisual and media services
      • land transportation services, excluding inter-city passenger transport by trains
      • services provided by midwives, nurses, physical therapy services and quasi-doctoral services
      • fisheries

     

     

    Insurance FAQ

    1-      What is the role of the Insurance Supervision Department of SAMA?

    The Law On Supervision of Cooperative Insurance Companies, promulgated by Royal Decree (M/32) dated 02/06/1424H, has entrusted SAMA with the regulation and supervision of the insurance market in Saudi Arabia. To achieve this task, SAMA has setup a dedicated department, the Insurance Supervision Department.

     

    2-      Where can information about the insurance sector be found?

    The main source of information about the insurance market in Saudi Arabia is SAMA. As such, all information available about insurance in the Kingdom can be found on  SAMA’s website, specifically, under the “Publications” section.

     

    3-      What is the purpose of cooperative insurance?

    The purpose of cooperative insurance is securing protection for subscribers against future and unexpected losses, and restoring the financial status of the insured to the state he/she had been in before the occurrence of the loss. This is accomplished through mutual cooperation among insured persons.

     

    4-      What is meant by “insurable interest”?

    “Insurable Interest” is the legal right of a natural or juristic person to insure an object (e.g., a car). In  order to insure an object there should be a verifiable legal relationship between the person and the subject of insurance. An example of legal relationship is “ownership”, e.g., if you own a house or a car, you have the right to insure it, whereas a person may not insure his neighbor’s house, due to the absence of an insurance interest.

     

    5-      What is meant by deductible?

    “Deductible” refers to the portion to be paid (specified in the insurance contract) by the beneficiary (the insured) in case a policy-covered risk took place. For example, a car accident costing SR 5,000 for repairs, and the deductible as per the policy is SR 1,000, the company shall pay SR 4,000 and the insured shall bear SR 1,000.

     

    6-      What is meant by the “insurance coverage limits”?

    “Insurance coverage limits” is the maximum limit of the insurance company’s liability as specified in the insurance contract before applying any deductions/charges. For instance, the maximum limit of the insurance company’s liability as specified in the motor insurance policy is five million Saudi riyals for material damages and five million Saudi riyals for physical losses, and any amounts beyond that shall be borne by the insured, not the company.

    Motor Insurance

     

    7-      What is the compulsory motor insurance policy?

    The compulsory insurance policy covers the damages caused to individuals and property by your vehicle. This policy does not cover the damages afflicting you or your vehicle when driving. For example, when an accident takes place and you are 100% the cause, the insurance company will pay for all the damages made by you, but will not pay you any compensation for damages afflicting you or your vehicle.

     

    8-      What is the comprehensive motor insurance policy?

    Comprehensive insurance policies covers both the insurance company’s liability for the insured’s car (covers the vehicle against fire, theft, and incidental accidents) and the insured’s liability towards a third party (property and individuals). For example, when two vehicles have an accident, the comprehensive insurance policy covers all damages caused by or afflicted on you. The company shall pay all the costs for repairing your car, repairing and compensating all the damages of the third party that you caused and are responsible for.


    The comprehensive motor insurance program can be expanded for an additional premium where it covers the following:

    • Renting an alternative vehicle for the insured while the damaged one is being repaired
    • Roadside assistance service
    • Repairing broken-down vehicle at the dealer or a local garage

     

    9-      What are the things that you should pay attention to when purchasing a comprehensive motor insurance policy?

     

    • Limits of Coverage:

    The amount of coverage stated in the policy or the vehicle’s market value at the time of the accident, whichever is lower, represents the insurance company’s maximum liability for compensation. Make sure that you report the actual value of your vehicle to the company when insuring it, and at each renewal of insurance policy without addition or diminution because the insurance policy is a compensation policy not an enrichment one. 

    • Percentage of Depreciation:

    The idea of depreciation applied to the object subject of insurance refers basically to the principle of compensation which aims at restoring the insured to his same financial position prior to the loss occurrence. This method is used widely by insurance companies as a means to compensate for the actual value of the damage resulting from the covered loss, taking into consideration the presumed lifecycle of depreciated spare parts. Example: if a car had an accident causing it to be totally wrecked after six months of insurance, and it was worth SR 100,000 upon the purchase of the insurance policy, the insurance company will not indemnify the insured for the whole amount, but it shall deduct the amount of depreciation of the car for six months.

     

    • No Claims Discount (NCD):

    Some insurance companies offer the insured (vehicle owner) what is called “no claim discount” by which they reduce the insurance premium for next year due to having a claim-free and accident-free record over the previous insurance year. This is to encourage drivers to avoid traffic accidents. On the other hand, some companies raise the insurance premium for the new insurance year if the insured submitted a claim during the previous year.

     

    10-  What are the documents supporting the claim in motor insurance?

    All documents proving and supporting the fact that the person insured was driving the vehicle driver when the accident occurred, the insurance coverage validity and the circumstances of the incidence of which the claim resulted. Supporting documents also include the accident report from the traffic police department and any other original documents the company might require, such as:

     

    • Driving license
    • Vehicle registration card
    • Insurance policy

     

    11-  What are the exceptions to an insurance policy?

    It is necessary to be aware of the cases where the insurance company is not responsible for indemnifying you for the damage that might be incurred by your car due to an accident. They are included in the policy under “Exceptions” or “Exceptions from the coverage limits” or “General exceptions”. Example:

     

    • Catastrophe risks
    • Risks resulting from driving a car by a person under the age of 21

    Property Insurance

     

    12-  What are the types of property that can be insured?

    Insurable property can be divided into three categories:

    • Buildings: Refers to the structure of the building and its attachments
    • Machinery and other content: Refers to all content that might be inside the buildings or storehouses except for stock
    • Stock: Refers to all items in the custody of the insured whether he owns them or not and the items and goods kept by an organization whether it owns them or not

     

    13-  What are the insurance coverage limits of property insurance?

    Property insurance coverage includes:

    • The subject of insurance itself whether it is real estate or a movable asset against risks (e.g., fire, theft, pipe crack, natural hazards)
    • Contents of the subject insured
    • Personal liability
    • Legal liability against death cases caused by incidental accidents to property and casualties
    • Rent loss for the landlord due to the real estate’s unsuitability for rent because of a defect or risk covered by insurance according to the insurance policy
    • The cost of an alternative accommodation while the damaged real estate is being fixed

     

    14-  What risks are excluded from property insurance?

    Property insurance exclusions are:

    • Damages resulting from riots and domestic strikes and disturbance provided that it was not agreed on adding them in the insurance policy
    • Damages ensuing from wars whether declared or undeclared
    • Damages of radioactive contamination whether it is the direct cause or not.
    • Injuries or destruction because of pollution
    • All types of consequential losses
    • Terrorism risks
    • Damages ensuing from maritime risks if their exclusion was clearly stated in the insurance policy

    Medical (Health) Insurance

     

    15-  What is meant by medical (health) insurance?

    Medical (health) insurance refers to insurance policies which cover medical treatment costs, medications, medical and therapeutic services and supplies and management of medical programs.

     

    16-  What is meant by the “benefit brought to the insured” in medical insurance?

    “Benefit brought to the insured” refers to the costs of providing health services included by the insurance coverage within the limits specified in the insurance contract.

     

    17-  What is meant by “base of direct entry” or “in the company's account” in medical insurance?

    “Base of direct entry” or “in the company’s account” refers to the facilities of no-payment appointed by the company and available for the insured. All expenses incurred at these facilities are directly debited from the company’s account.

     

    18-  What is meant by a “service provider” in medical insurance?

    “Service provider” is the person or health facility which is accredited and licensed according to applied regulations to provide medical services in the Kingdom, e.g., hospitals, diagnosis centers, clinics, pharmacies, laboratories, and physiotherapy or radiotherapy centers.

     

    19-  What is meant by the “service providers' network” in medical insurance?

    “Service providers’ network” is a group of health service providers accredited by the Council of Cooperative Health Insurance (CCHI) and specified by the insurance company to provide the service for its policyholders. These service providers will directly debit expenses from the insurance company’s account upon the policyholder presenting a valid insurance card.

     

    20-  What are the supporting documents when making a claim in medical insurance?

    All documents proving and confirming the age, nationality, identity of the insured as well as the validity of the insurance coverage, the circumstances of the incidence of which the claim resulted and repayment of costs. Supporting documents also include other documents such as: bills, receipts, prescriptions, doctor report, referral and recommendations and any other original documents that might be requested by the company.

     

    21-  What diseases and cases that are usually excluded by insurance companies from the medical insurance?

    • Plastic surgery unless the surgery is necessary, e.g., as a result of a defacement ensuing from an accident
    • Chronic diseases suffered prior to entering the current insurance contract such as diabetes
    • Routine medical check-ups such as employment or travel checkup.
    • Steroids and vitamins

     

    22-  Does the insured bear part of the medication cost or does the insurance company bear the whole cost?

    It depends on the type of policy; some policies do not require the insured to bear any part of the cost while others stipulate paying a specific portion of the costs based on the company’s agreement with the insured. In general, the value of the insurance policy providing full coverage for medical costs is higher than the one that provides partial coverage for medical costs.

     

    Protection and Savings Insurance

     

    23-  What is meant by protection and savings insurance?

    Protection and savings insurance is a contract by which the insurance company assumes to pay to the insurance beneficiary an amount or amounts including the savings proceeds on a future date in exchange for the insurance premiums paid by the beneficiary.

     

    24-  What are the types of protection and savings insurance?

    There are several types of protection and savings insurance, such as:

    • Protection insurance: Refers to insurance policies which cover risks related to death, permanent/ temporary and full/ partial disability of individuals or groups
    • Protection and savings insurance: Refers to insurance policies under which the insurance company pays an amount or amounts including the savings proceeds, on a future date, against the premiums paid by the insured

    Regulatory

     

    25-  What are the prevailing insurance laws and regulations in Saudi Arabia?

    In Saudi Arabia, the insurance legal framework is composed of:

    • The Law On Supervision of Cooperative Insurance Companies
    • The Implementing Regulation
    • The topic-specific regulations, e.g.: Market Code of Conduct Regulation, the Risk Management Regulation, the Anti-Fraud Regulation, the Anti-Money Laundering and Combating Terrorism Financing Regulation, etc., and all other circulars and guidance notes issued by SAMA

     

    26-  Who defines the regulations about insurance and how?

    SAMA defines all topic-specific regulations, circulars and guidance notes about insurance. The definition process contains 3 steps:

    • SAMA identifies the need to define a new regulation
    • SAMA drafts the law and posts it for public consultation on its website (for 20 to 60 days). During that time, professionals and the public are invited to comment on the new regulation
    • SAMA reviews the comments received, updates the regulation and publishes it on its website

    Licensing

     

    27-  What is the process to obtain an insurance and/or reinsurance license?

    The insurance and/or reinsurance licensing process entails five main steps, namely application submission, file review, Royal decree issuing, IPO and license issuing. The process can take up to 16 months, depending on its content.

    Step 1: Application Submission

    Step 2: File Review

    Step 3: Royal Decree Issuing

    Step 4: Initial Public Offering

    Step 5: License Issuing

     

    28-  What are the required documents to submit when applying for a license?

    There are 8 supporting documents to be submitted along with the application for insurance/reinsurance company license or insurance/reinsurance service provider license:

    1. 1.      Completed license application form
    2. Memorandum of association
    3. Articles of association
    4. Organizational structure/ chart
    5. Feasibility study
    6. 5 year operation plan to include as a minimum the following
    • Insurance types which the Company intends to practice
    • The ability to entrust or accept re-insurance agreements for the types to be re-insured
    • Product marketing plan
    • Expected costs to commence the activity and necessary financing sources
    • Expected activity growth rates taking into consideration the solvency margin requirements
    • Expected number of staff and Saudi appointment / qualifying plan
    • Annual expenses based on the expected activity growth rates
    • Estimated financial statements linked to growth expectation
    • Statement of the technical basis of the insurance operations and a certificate by an actuary confirming that the basis, advantages and restrictions of insurance operations are sound and enforceable
    • Branch allocation and operation plan
    1. Any agreements with other parties
    2. Irrevocable Bank guarantee for an amount equal to the required capital in favor of the Agency issued by a local bank and to be renewable automatically until the capital has been paid up in full 

    29-  Can SAMA revoke the license of an insurance or reinsurance company/ a services provider?

    Yes, if necessary SAMA can revoke any insurance or reinsurance company or services provider license.

     

    30-  What is the process to obtain an insurance services provider’s license?

    The insurance and/or reinsurance licensing process entails 4 main steps, namely application submission, file review, commercial registration issuing, and finally license issuing:

    Step 1: Application Submission

    Step 2: File Review

    Step 3: Commercial Registration Issuing from the Ministry of Commerce

    Step 4: License Issuing

     

    31-  Which companies are licensed to operate in Saudi Arabia?

    To obtain the full list of insurance companies licensed to operate in Saudi Arabia, visit the “Licensed Companies” section

     

    Product Approval

     

    32-  What is the “File and Use” approval?

    There are two types of insurance products approvals namely “File & Use” and permanent approvals:

    • ISD grants the “File & Use”, a form of temporary approval, upon the submission of the complete product approval submission. During the “File and Use” period, ISD reviews the product in order to decide to permanently approve/ decline it. Medical Expenses, Motor, and all Savings and Protection products other than employer-sponsored Group Life are explicitly excluded from the “File & Use” process. 
    • When SAMA grants a permanent product approval, the insurance company can commercialize the product permanently on the Saudi market.

     

    33-  What is the process to get a new insurance product approved by SAMA?

    The product approval process entails 3 steps, namely the product approval application submission, application review and finally the product approval/ decline issuing.

     

    Step 1: Product approval application submission

    The request should be made to ISD in both soft and hard copy versions and in both Arabic and English language and accompanied by the following documents for approval:

     

    • The proposal form.
    • The policy wording and endorsement.
    • The policy schedule.
    • The reinsurance treaties.

     

    Step 2: Application review

    ISD will contact the insurance company to obtain further documentation and information.

     

    Step 3: Approval/ Decline Issuing

    Once the product review is complete, SAMA notifies the company of the product’s permanent approval/ decline.

     

    34-  What is the expected timeline for a product to be approved?

    There is no specific timeline for a product to be approved. The necessary time to approve a product depends on the type and complexity of the product.

     

    35-  What criteria are assessed in order to approve a product?

    ISD supervisors verify the compliance of the products with the requirements of the insurance law, the Implementing Regulation and other SAMA regulations.

     

    36-  Should all products be approved prior to commercialization?

    All insurance products must be approved under either “File & Use” or permanent approval before their commercialization

     

    Supervision

     

    37-  What is the supervision process?

    The supervision process of ISD encompasses four supervision activities namely on-going monitoring, compliance assessment, off-site examination and on-site inspection:

    • The on-going monitoring includes the financial supervision which monitors the health of the Saudi insurance market and complaints analysis which assesses insurance companies conduct towards policyholders
    • The compliance analysis assesses the compliance of companies with the insurance law and SAMA’s regulations
    • The off-site examination remotely draws the risk profile of regulated entities
    • The on-site inspection completes the risk profile of regulated entities by conducting a visit to the premises of the company

     

    38-  Are all the companies reviewed on a regular basis? And how often does an assessment occur?

    All the regulated entities are reviewed on a regular basis by ISD supervisors:

    • The financial strength is monitored throughout the year
    • The off-site examination and compliance analysis are conducted on an annual basis
    • The on-site inspection is performed every one to three years

     

    39-  Who performs the supervision of insurance and reinsurance companies?

    ISD supervisors perform the supervision of regulated entities. Each supervisor is assigned a regulated entity to supervise. During on-site inspections, the regulated entity should expect to receive in its premises a team of three to six supervisors.

    Financial Reporting

     

    40-  What is financial reporting, why is it important?

    Financial reporting is the provision of financial information to ISD for review and analysis. The financial analysis allows ISD to monitor the health of the Saudi insurance market.

     

    41-  Which companies are required to submit their financials to SAMA? And how often?

    Licensed companies are required to submit the following financial returns to SAMA:

    • Quarterly and Annual audited financial statements for SAMA’s approval before publishing
    • Monthly, Quarterly and Annual prudential returns using the financial reporting forms

     

    42-  Where can a company obtain the latest version of the financial reporting forms to be submitted to SAMA?

    To obtain the latest version of the financial reporting forms,  visit the Forms page.

     

    43-  What accounting standards are followed by the financial reporting forms?

    The financial reporting forms were developed in accordance with the International Accounting Standards (IAS) and the Implementing Regulation of The Law On Supervision of Cooperative Insurance Companies.

     

    Complaint Handling

    44-  How fast are insurance/ reinsurance companies and insurance/ reinsurance service providers required to reply to policyholders’ complaints?

    The companies and service providers are required to reply to policyholders’ complaints within 15 calendar days from the date of receiving the complaint as per article 45 of the Implementing Regulation.

     

    45-  What is the process to file a complaint against an insurance company or service provider?

    The plaintiff should contact the general secretariat of the committees for resolution of insurance disputes and violations in order to file a complaint

     

    46-  What information should be provided when filing a complaint against an insurance company or service provider?

    The plaintiff should explain the circumstance that leads to filing the complaint against the company and should provide proof to support his case (if available) along with details on his policy number and contact information.

     

    47-  How can I follow-up on my complaint filed at SAMA?

    The plaintiff can follow up on his complaint by contacting CRIDV.

     


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