1. Healthcare & Pharmaceuticals: Dual-Licensing and Statutory Oversight
The healthcare and pharmaceutical sectors are governed by multiple regulators, primarily the Saudi Food and Drug Authority (SFDA) and the Ministry of Health (MoH).
- Licensing: Companies involved in the manufacture, import, or distribution of pharmaceuticals shall obtain separate SFDA licenses for each activity. Clinical trial sponsors shall register protocols with the relevant authority and comply with Good Clinical Practice standards.
- Ownership Structures: Certain healthcare operations may still require exclusive or majority Saudi ownership or local supervision for certain facilities under the Private Health Institution Law, particularly when it comes to clinical services.
- Data Protection: Health data is classified as sensitive under the Kingdom’s Personal Data Protection Law (PDPL), necessitating careful handling, storage, and cross-border transfer protocols.
Legal Tip: Investors should engage legal counsel to ensure that facility-level licensing, staff credentialing, and IP rights for medical products align with SFDA requirements.
2. Financial Services & Fintech: Regulatory Gatekeeping and Licensing
Entry into the financial services sector requires strict adherence to regulatory approvals from either the Saudi Central Bank (SAMA)[1] or the Capital Market Authority (CMA), depending on the business model.
- Licensing Regimes: Foreign entities cannot operate as financial institutions without full licensing. Non- licensed FinTechs/start-ups may apply under the SAMA Regulatory Sandbox or CMA Fintech Lab and demonstrate capital adequacy, governance, and compliance systems.
- Legal Structure: Foreign ownership is allowed but subject to Ministry of Investment of Saudi Arabia (MISA) and the Ministry of Commerce (MoC) approval and often requires a Saudi partner depending on the service category.
- Ongoing Compliance: Financial institutions shall adhere to Anti-Money Laundering (AML) obligations, customer due diligence, and periodic reporting to the designated authorities.
Legal Tip: Legal structuring should account for dual licensing, sandbox-specific limitations, and the potential transition to full licensing upon exit from the experimental phase.
3. Real Estate & Construction: Ownership Restrictions and Environmental Compliance
The legal environment for real estate investment in Saudi Arabia is generally favorable but layered with zoning and ownership obligations.
- Foreign Ownership: Under the Real Estate Ownership and Investment by Non-Saudis Law, foreign investors licensed for commercial activities shall obtain approval from the relevant licensing authority to own or lease property required for such activities. Certain strategic zones are still restricted.
- Construction Permits: All developments require permits from the Ministry of Municipal, Rural Affairs and Housing (MOMRAH), which are contingent on compliance with national building codes and environmental standards.
Legal Tip: Early due diligence should include land title verification and zoning compatibility to mitigate litigation or administrative penalties.
4. E-Commerce & Retail: Commercial Registration and Digital Compliance
The e-commerce sector is mainly governed by the E-Commerce Law of 2019.
- Commercial Licensing: A natural or a legal person conducting e-commerce business shall be registered with the Ministry of Commerce, obtain a Commercial Registration (CR), and register their e-store through the Business Platform.
- Advertising Laws: Promotions, influencer marketing, and social media campaigns are regulated by the General Authority for Media Regulation (GAMR) and must comply with content, disclosure, and decency requirements.
Legal Tip: Contracts with influencers and e-commerce businesses should be reviewed under Saudi law to ensure enforceability and compliance with disclosure and licensing obligations.
Mitigating Legal Risk through Sector-Specific Strategy
Saudi Arabia’s legal system continues to move toward transparency and investor certainty, but sector-specific nuances remain a material risk. Licensing delays, conflicting regulations across agencies, and enforcement variability require a proactive and well-informed approach.
At Shehata & Partners, we help clients structure and localize their investments to align with current Saudi laws while remaining agile for future regulatory shifts.
Whether entering the Kingdom or expanding operations, legal clarity remains your strongest competitive edge.
To speak with our KSA-focused legal team, get in touch with Shehata & Partners.
