Is there a restriction on the shareholding ratio of foreign companies registered in Saudi Arabia?

In Saudi Arabia's business landscape, foreign ownership limits are an important threshold that foreign investors must cross to enter the local market. This restriction is not an immutable unified standard, but presents complex and differentiated characteristics according to industry attributes, regional policies and economic development needs. An in-depth understanding of the specific content, applicable scenarios and breakthrough paths of these restrictions is decisive for foreign investors to formulate reasonable investment strategies.

2025 New Policy under Foreign Ownership Change

1.100 per cent foreign ownership is allowed in most industries

the new Saudi Investment Law will be fully implemented in 2025, abolishing the foreign investment licensing system and allowing foreign investors to set up 100 percent wholly-owned companies in most industries (except in sensitive areas such as military, security, and Mecca/Medina real estate). This policy change has significantly relaxed the access conditions for foreign investment and provided foreign-funded enterprises with greater operational autonomy.

2, specific industries still need joint venture model.

Insurance, telecommunications and oil and gas: foreign ownership is usually not more than 49%, joint ventures with Saudi Arabia are required, and Saudi Arabia is required to hold a certain proportion of shares (e. g. local ownership in the insurance industry is not less than 40%).

Financial: subject to approval by the Saudi Central Bank (SAMA), foreign ownership may be limited.

Government procurement, public works, education, health care: although there is no explicit limit on the proportion of foreign ownership, there are implicit requirements for local cooperation or guarantors, and foreign enterprises may encounter practical obstacles in bidding and operation if they do not have a local Saudi partner.

Typical cases of industry shareholding restrictions

1. Trade industry

foreign ownership: 100 per cent foreign ownership is allowed, subject to strict conditions.

Registered Capital Requirements: Minimum registered capital is 28 million Saudi Riyals and is required to be paid-up.

Operational requirements: Foreign-funded enterprises need to have international business capabilities and market experience. For example, Chinese enterprises should have three branches in different countries outside Saudi Arabia.

2. Manufacturing

foreign ownership: 100 percent foreign ownership allowed.

Registered Capital Requirements: Minimum registered capital is 500000 Saudi Riyals and is required to be paid-up.

Industry Licensing: Apply for an Industrial License (MODON) and meet the requirements of the Saudi Employment Policy (Saudization), such as hiring a certain percentage of Saudi employees.

3, Mining Industry

foreign ownership: 100 percent foreign ownership allowed.

Registered Capital Requirements: The minimum registered capital is 25.000 Saudi Riyals.

Operational requirements: Comply with Saudi regulations governing mineral resources and may be required to cooperate with local companies in exploration and production activities.

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