Saudi Investment Law 2025: Foreign Investor Rights and Duties

An Egyptian businessman wants to set up a company in Riyadh to supply medical equipment. He has heard that the old “investment licence” was abolished and that the new law treats Saudi and foreign investors equally. What has really changed for him, and what must he do before he starts?

The direct answer: the Investment Law issued by Royal Decree M/19 dated 16/1/1446H, in force since early 2025, replaced the Foreign Investment Law. It guarantees you treatment equal to a local investor in similar circumstances, no confiscation of your investment except by a final court judgment, and freedom to transfer your funds (Article 4). In return, as a foreign investor you must register with the Ministry of Investment (MISA) before any investment (Article 7), and ask for approval before entering excluded activities (Article 8).

What changed with the new Saudi Investment Law?

The Investment Law issued by Royal Decree M/19 dated 16/1/1446H replaced the old Foreign Investment Law. Note the change of name: the new law addresses investors in general, local or foreign, and then gives the foreign investor some specific rules, such as registration and excluded activities.

Article 2 states that the aim of the law is to develop the investment environment in the Kingdom and increase its competitiveness, and to contribute to economic development and job creation. This includes making it easier to set up and exit investments, guaranteeing investors' rights, equal treatment between local and foreign investors, and transparent and fair procedures. These aims help you understand the spirit of the law when reading its other provisions.

Investment is a broad concept in the law. Article 1 defines it as using capital to set up, expand, develop, finance, own in part or in whole, or manage an investment project in the Kingdom, to achieve an economic benefit. Article 2 of the Implementing Regulations explains that capital is not limited to cash: it includes shares and stakes, contractual rights such as construction contracts and concessions, fixed and movable assets, and intellectual property rights such as patents and trademarks. So if your contribution is a trademark or equipment, it is also a protected investment.

Article 3 sets the general rule: you may invest in any open sector or activity, subject to the list of excluded activities, the power to suspend foreign investment, and the requirements of other laws.

What are the rights of a foreign investor under the new law?

Article 4 brings together the investor's rights, and the first articles of the Implementing Regulations explain them in detail. The most important are:

• Equality and fair treatment: you are treated as other investors are treated, with no difference between local and foreign investors in similar circumstances, and you have the right to fair and equitable treatment. Article 4 of the Regulations describes forms of breach of this right, such as denial of justice, manifest arbitrariness and unjustified discrimination.
• Protection from confiscation and expropriation: your investment, in whole or in part, is not confiscated except by a final court judgment, and it is not expropriated directly or indirectly except in the public interest, under legal procedures and against fair compensation. Article 5 of the Regulations deals with indirect expropriation, that is, a measure that has the effect of expropriation without being called that.
• Transfer of funds: you may transfer your investment-related funds into and out of the Kingdom freely and without delay (Article 6 of the Regulations).
• Managing the investment: you are free to manage your investment in accordance with the laws.
• Intellectual property: your intellectual property rights and confidential business information are protected.
• Information and services: the Ministry provides you with the available information and statistics and the services needed to make your procedures easier, and seeks to deal with your complaints (Article 4(3), and Article 7 of the Regulations). Your rights also include easier administrative procedures for your investment.

Article 4(2) requires the competent authorities to respect these rights when they take measures in the public interest, including measures needed to meet the Kingdom's international obligations, to maintain public order, or for national security reasons. In other words, the public interest does not cancel these rights, but it may limit them within what the laws allow.

Investment incentives are not given by the law itself; they are given by the competent authorities according to objective, specific and fair eligibility criteria, as Article 6 says. So do not treat any incentive as an automatic right.

What are the obligations of a foreign investor?

Through the One-Stop Service Center, the Ministry receives the investor's requests for the approvals needed to carry on the activity, including licences and permits, and coordinates with the competent authorities on them (Article 7(4)).

Can foreign investment be suspended to protect national security?

Article 9 gives the Ministry the power to suspend any foreign investment to protect national security. But it limits this: the decision must be objective, consistent with the Kingdom's obligations under international agreements, and follow procedures set by the Regulations. Articles 22 and 23 of the Regulations set the suspension procedures and how the investor is notified.

What is the fine for violating the Investment Law, and how do you challenge it?

The penalties in Article 11 apply to violations of the registration rules (Article 7) and the excluded-activities rules (Article 8), and they distinguish between two types of violation. For a non-serious violation, the Ministry first notifies you and gives you time to remove it; Article 28 of the Regulations says this period is no less than thirty working days from notification, and you may ask for an extension with reasons. If the violation is not removed, or if it is serious from the start, one or more of the following penalties may be imposed:

• A warning.
• A fine of up to SAR 300,000, which may be doubled for repetition.
• Cancellation of the registration.

The penalty is decided by a committee formed by decision of the Minister, with at least three members, at least one of whom is a legal specialist. If a penalty decision is issued against you, Article 12 allows you to challenge it before the competent court within thirty days of being notified of the decision. This period is short, so do not wait until it is nearly over.

How are investor disputes and complaints resolved?

If a dispute arises and you are a party to it, Article 10 allows you to go to the competent court, or to agree with the other party on arbitration, mediation or settlement. If your complaint is about a decision or measure that affects your investment and you believe it breaches your rights, Articles 24 to 26 of the Regulations set up a mechanism at the Ministry for receiving and studying investor complaints: the Ministry replies accepting or rejecting the complaint within ten working days, and gives its recommendations within thirty working days of accepting it. A complaint is not a lawsuit, and it does not stop you from going to court.

Do not forget two articles at the end of the law: Article 13, which provides that its rules do not affect the Kingdom's obligations under international agreements, and Article 14, which preserves the laws on special economic zones and similar areas. If you invest in a special zone or are protected by a bilateral investment treaty, read its provisions together with this law.

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

Practical solutions for the investor and the Saudi partner

If you are a foreign investor:

• Register with the Ministry before any investment, and update your details every year in the National Investors Register.
• Check the list of excluded activities before choosing your activity, and ask for approval if your activity is on it.
• Keep records of your dealings with government authorities.
• If a penalty decision is issued against you, challenge it before the competent court within thirty days of notification.

If you are a Saudi partner or deal with a foreign investor:

• Make sure the investor is properly registered before signing a contract.
• Write the dispute resolution mechanism into the contract.
• Beware of arrangements in which the foreigner carries on the activity in your name without a licence; this is commercial concealment (tasattur).

Understanding the new law protects your investment from the first step. Send us on WhatsApp the activity you plan to carry on and the proposed ownership structure, and we will explain the registration and approvals you need.