Summary
An updated guide to Saudi Arabia's new Investment Law in force since February 2025: registration instead of licensing, equal treatment, investor guarantees, and compliance obligations.
A Fundamental Shift: From Licensing to Registration
Saudi Arabia's investment environment has undergone its most significant legislative transformation in a quarter century. After the Foreign Investment Law issued under Royal Decree M/5 of 1421H governed the landscape for more than two decades, the new Investment Law was issued under Royal Decree M/19 in August 2024 and entered into force in February 2025, fully repealing its predecessor and rebuilding the state-investor relationship on different foundations.
The essence of the shift is that foreign investors no longer need a prior foreign investment licence from the Ministry of Investment as a condition of market entry. Registration with the Ministry now suffices — a streamlined notification-style procedure governed by published, objective criteria rather than administrative discretion. The Kingdom has moved from a philosophy of prior permission to one of open doors with subsequent supervision, consistent with best practice in advanced economies.
Practically, this means market entry timelines measured in days rather than weeks for many activities, and the elimination of periodic licence renewals that were a persistent operational concern for foreign companies operating in the Kingdom.
The Equal Treatment Principle
The new law establishes a principle never before articulated with such clarity: full equality of treatment between domestic and foreign investors in rights and obligations, subject only to limited, published exceptions. There is no longer a 'regime for foreigners' and a 'regime for Saudis' — one investment law applies to all.
This principle carries important practical consequences: the foreign investor's right to own their project outright in open activities without a mandatory local partner, the right to litigate before Saudi courts with the same standing as a national investor, and subjection to the same sectoral requirements as local competitors rather than additional nationality-based conditions.
The sole carve-out is the 'excluded activities' list issued by Council of Ministers resolution — a narrow list covering specific sovereign and security-related activities. Before any investment decision we always recommend a careful legal review of the target activity, because some nominally open activities carry sectoral requirements from other regulators such as the Central Bank, the Capital Market Authority, or the Ministry of Health depending on the nature of the business.
Investor Guarantees Under the New Law
The new law dedicates an entire chapter to investment protection — precisely what international investors examine when pricing country risk. The headline guarantees: investments may not be confiscated or expropriated except for the public interest, pursuant to a judicial ruling, and against fair compensation; funds, profits, and liquidation proceeds may be transferred into and out of the Kingdom without delay and in any currency; the investor's intellectual property and trade secrets are protected; and acquired legal positions are shielded from retroactive application of regulatory amendments.
The law also introduces a clearer grievance mechanism: any decision affecting an investor must be reasoned and appealable, with defined periods for deciding objections and recourse to the administrative judiciary at the Board of Grievances. These procedural details are what make the real difference when a dispute arises, and we advise building them into the structure of any investment from day one.
Practical Steps to Begin Investing Today
The practical path for a foreign investor today runs through four stations. First, verify that the target activity falls outside the excluded list and identify any sectoral requirements. Second, complete investment registration with the Ministry of Investment through its electronic platform — we detail the procedure and documents in our guide to investment registration steps. Third, incorporate the appropriate legal entity — most often a limited liability company or a simplified joint-stock company under the new Companies Law. Fourth, complete the operational registrations: commercial registration, tax and zakat registration, social insurance, and bank account opening.
If your investment includes a real-estate component, the new law on real estate ownership by non-Saudis, in force since January 2026, opens new possibilities worth building into the transaction structure.
The foreign investment team at Faisal Siddiqui Law Firm accompanies investors through all four stations — from activity analysis to operations — with direct experience before the Ministry of Investment and sectoral regulators.