Saudi Arabian General Investment Authority (SAGIA) has reworked sections of the foreign investment act. The act was passed in April 2000 to create a more liberal environment for foreign investment in the kingdom.
Under the changes, the original 24 articles of the executive rules of the act have been replaced by 26 altered or new ones that focus on the simplification of licensing procedures and the recognition of email and internet applications.
While the alterations do not give SAGIA much new power, they do however increase the pro-investment tone of the law, provide a greater degree of flexibility for investors, strengthen their property rights in the kingdom and prevent double taxation.
Article 1 has been altered to allow foreign companies to invest elsewhere in the kingdom, within the pending legislation liberalising the capital markets regulations. The change will allow companies that have spare capital from setting up their in-kingdom ventures to invest the remainder in the stock market.
The tone of article 3 has become markedly more favourable to investors, saying that the periodic review of the negative list will now be conducted with the express intent of reducing the number of activities barred to foreign investment.
Investors' parity with local entities is clarified through the changes to article 5, which explicitly puts forward the right to hold property and be free from double taxation. It also eases the movement of shares between partners and deals with writing off losses carried forward.
Under other changes to the executive rules, SAGIA will closely monitor small investment projects to prevent the abuse of investors through malpractice, allow investors to obtain more than one licence in the same business, allow SAGIA to issue lists of violations and penalties and allow the foreign investor to appeal decisions direct to the SAGIA board of directors or the board of grievances.