On June 13th 2023, the Saudi Council of Ministers approved the Kingdom’s new Civil Transaction Law, marking a significant shift from Sharia law to a codified legal system.
On June 13th 2023, the Saudi Council of Ministers approved the Kingdom’s new Civil Transaction Law, marking a significant shift from Sharia law to a codified legal system. The law took effect on June 19th 2023, following a grace period of six months.
The key features of the new law include a move towards a more consistent interpretation and application of Saudi law, which could lead to more predictable court decisions and increased appeal to investors. It aims to introduce a contemporary civil code while still preserving Sharia law as the foundation.
The new Civil Transaction Law governs both contractual and non-contractual obligations in civil and commercial matters. It regulates various aspects of contracts, ownership, possession, and other property-related matters, as well as non-contractual obligations like tort and unjust enrichment.
Under the new regime, remedies have been expanded, allowing for claims of indirect damages such as loss of future profits or business reputation. This clarification and broadening of standards may attract investors from western influenced legal systems.
Over, the new Civil Transaction Law is expected to streamline legal processes, enhance transparency, and increase efficiency in civil and commercial transactions, potentially boosting foreign investment in Saudi Arabia, especially from Western jurisdiction.
On June 4th 2023, the Egyptian Prime Minister issued a decree to amend the Executive Regulations of the Egyptian Investment Law, aiming to incentivize investors and attract more foreign direct investment (FDI) to Egypt. The amendments specifically focus on private free zones, easing investment hurdles by removing previous requirements such as minimum share capital and minimum investment amount. Industrial projects no longer need to employ a minimum number of employees or lease a certain amount of land. Investments in private free zones still need to be made through an Egyptian joint stock or limited liability company, export 80% of their production, and source at least 30% of their supplies locally, but these remaining requirements can now be waived on a case-by-case basis with approval from the General Authority for Free Zones and Investment (GAFI).
The amendments also introduced a new type of private free zone called private services free zones, which are sector-specific investment zones for service providers, like tourism, transportation, health, and energy sectors. These new zones are supervised by GAFI and have simplified requirements, as investments only need to be made through an Egyptian joint stock or limited liability company, with no obligations for exporting services or sourcing locally.
While these amendments are seen as a positive step towards attracting more foreign investment, their actual implementation and other investment factors, such as labor quality and infrastructure, will play a crucial role in effectively attracting foreign investors to Egypt.
On June 7th 2023, the Saudi Arabian General Authority for Competition (GAC) granted conditional clearance for the acquisition of a 51% stake in Direct Financial Network Co. (DirectFN) by Saudi Tadawul Group Holding Company through one of its subsidiaries, Tadawul Advanced Solutions Co. (Wamid). The decision followed a market investigation that raised concerns about potential negative implications on the market for financial sector digital solutions. Both the acquirer and the target operate in the digital solutions market for the financial industry in Saudi Arabia.
To secure clearance, the parties proposed remedies to address competition risks. GAC ultimately granted conditional approval with certain requirements, including commitments to maintain competitive prices and service for competitors and to not offer preferential prices to DirectFN from the Saudi Tadawul Group. Oversight and reporting measures were also imposed for a period of three years to ensure compliance. Additionally, a trustee will monitor the implementation of the imposed remedies.
Unfortunately, GAC did not disclose the details of its findings or the reasoning behind its decision, which is a common practice in the MENA region. This lack of transparency may lead to uncertainty regarding the authority's stance on specific issues and could affect the predictability of future decisions.
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