Question

talk about Legal framework of business in Saudi Arabia

(1000 word)

Answer 1

WORD COUNT - 1058 WORDS

PLEASE LIKE THIS ANSWER, IT HELPS ME A LOT. THANK YOU!!!

The Saudi economy's development over the last few decades was nothing short of incredible, and today the nation is one of the world's top 20 economies. Traditionally, the hydrocarbons market has dominated the economy, though development has generated considerable opportunities in the private market in other sectors including agriculture, engineering, banking, commerce, and building. The legal and legislative system has changed as part of the rising economy to meet modern needs. In this segment, we highlight a range of core regulations that every investor should be aware of in Saudi Arabia.

Types of Law & Regulations — Islamic sharia is Saudi Arabia's main basis of legislation. Sharia consists of a set of universal concepts drawn from a variety of various sources, including the Holy Qur'an, the Sunna, or Prophet Muhammad's sayings, and the Sharia scholars' views and interpretations. Legislation passed is a second source of legislation throughout the world which may be approved by royal instructions, royal decrees, Council of Ministers decisions, which ministerial decisions and circulars, among other ways. In the end all these rules are related to sharia, and can not interfere with it. Foreign Investment Regulation — There are a range of laws regulating foreign investment: Foreign investment: the Foreign Investment Act (Royal Decree No. M/1 of 5/1/1421H, equivalent to 10/4/2000) mandates that any business in Saudi Arabia that has international shareholders receive a foreign investment authorization. The Saudi Arabian General Investment Authority (SAGIA) grants all international capital investment licences. Additionally, notice that foreign companies operating in GCC member states are classified as Saudi firms for the purposes of the Foreign Investment Law and are thus not subject to the Foreign Investment Act. However, the Foreign Investment Legislation will extend to these investments in the event that a corporate company founded in another GCC state has any owners who are not GCC citizens. As a general rule, there is no cap on the amount of foreign investment that may be made in a business established in Saudi Arabia, although in certain situations it is allowed to create 100 percent foreign-owned firms. The Economic and Development Affairs Council is responsible for releasing and frequently reviewing a collection of practices (generally recognized as the Negative Collection) that international companies are forbidden to perform in Saudi Arabia.

Many prominent types of legal structures include single and general corporation membership. This should be remembered that a revised edition of the Companies Regulations is under progress. I Limited liability companies: Saudi Arabia's most common mode of business is the LLC. It should be remembered that an LLC is the most traditional business platform for international investor equity involvement. An LLC will have at least two shareholders, and should not have over 50 shareholders. The owners can be human individuals and private bodies. Throughout addition, lenders only assume responsibility for the company 's obligations to the degree of their individual rights in the securities of the business bodies. To the degree that a shareholder sells its stock, the responsibility of the selling shareholder as to himself and other shareholders disappears from the date defined as the effective date of the sale and purchasing agreement; nevertheless, in the case of any substantive responsibility under the Companies Legislation, the leaving shareholder remains legally responsible until the modified Articles have been modified (ii) Joint stock corporations: A joint stock company would have at least five members. There is simply no limit. The owners will be human persons and corporate bodies. While dematerialized securities are becoming increasingly prevalent, assets in a joint stock corporation are traditionally represented by share certificates. Shareholders are therefore responsible to the amount of which their securities are valued. The total equity capital (not selling public option shares) for a private joint-stock business is SR2 m ($533,200). The equity capital subscribed for in cash can be paid in installments, subject to the approval of the MCI, so that the sum payable per cash equity after subscription is not less than a quarter of its par value. (iii) Regional branches of foreign firms: Local branches of foreign corporations in Saudi Arabia are subject to the requirements of the Firms Regulations and to the laws and legislation specific to their individual operations. A foreign business that opens a branch in Saudi Arabia will deposit an sum equal to the capital needed by SAGIA with a local bank, as is the case for LLC and joint-stock firms. The deposit is then suspended by the bank until MCI provides a clearance certificate for the branch. Exit from investment: Due to any constitutional (e.g. the ability of current owners to buy shares) or contractual pre-emption privilege, the departure of a foreign owner is accomplished through canceling or removal, as the case may be, from the SAGIA investment certificate. Such administrative limitation is intended to insure that Saudi businesses will not arbitrarily exclude international shareholders. In general, canceling a SAGIA investment license is more simple than allowing international capital expenditure, unless new foreign owners step along, in which case the process will be similar to applying for a new authorization.

Capital Markets Law — The Capital Markets Law created Saudi Arabia's Capital Markets Authority (CMA), the sole regulator and overseer of capital markets. The CMA is a state-owned agency with political , legal, or operational independence that reports directly to the Council of Ministers Chairman. According to the Capital Markets Act, the Saudi Arabian Stock Exchange (Tadawul) has now been reinstated. The platform was founded as a joint stock firm whose assets are solely owned by the Saudi government through its investment arm, the Public equity fund.

Employment Law — Job problems are regulated by Labour Law in Saudi Arabia. The Labor Ministry oversees all labor-related concerns in Saudi Arabia by Labor Offices based in the country's different regions. The Labor Act sets such basic requirements on issues related to labor, such as operating hours, vacations, health conditions and loss of jobs.

Land Property — The land possession in Saudi Arabia is proven by title deeds. While a central register is created by law under the joint auspices of the Ministry of Justice and the Ministry of Municipal and Rural Affairs where all real estate rights, including mortgages, are registered, it is yet to be developed. Land estate documents are usually held manually and maintained by appointed municipal notaries, which also document land possession and real estate transactions.