Setting Up In Saudi Arabia

SETTING UP IN SAUDI ARABIA

WITH SAUDI ARABIA BECOMING AN INCREASINGLY IMPORTANT MARKET FOR THE REGION’S PRODUCTION INDUSTRY, ILEA MIDDLE EAST’S LEGAL BOARD ADVISOR AND PARTNER AT CHARLES RUSSELL SPEECHLYS, MARK HILL, LAYS OUT THE LEGAL DOS AND DON’TS FOR OPERATING IN THE KINGDOM.

With a huge influx of cultural events backed by massive investment and underpinned by the country’s 2030 Vision, Saudi Arabia is very much a topic on the lips of everyone in the Middle East’s production and events industry. It’s no surprise, then, that the Kingdom was the subject of the latest ILEA Expert Session. Taking place on 8 September, Setting Up and Operating in Saudi Arabia in the Events and Production Space saw ILEA Middle East’s Legal Board Advisor and Partner at Charles Russell Speechlys, Mark Hill, deliver an educational look at what UAE-based companies should think about when operating in the country. Speaking to TPMEA after the session, Hill reflected on the event’s stronger-than-expected take-up. “We sent off the invites thinking that we might have eight to 10 people and we ended up with around 35,” he began. “The demand for what was intended to be a small and intimate session is

clearly there. Legal contracting, how to operate effectively in the production and events space and how to get into new territories and markets properly are subjects on everybody’s mind at the moment.” Touching on a few of the topics covered in the session, Hill commented that the best route into operating in the Kingdom “for 90% of companies”, is to launch a Limited Liability Company (LLC) or branch. “Most people are looking at going down those routes these days,” he said. Other possible routes into Saudi Arabia are Temporary Commercial Registration (TCR) and Technical Services Office (TSO), however, according to Hill, in most cases these options are, “too limited”. He commented: “A TCR is project specific, so it will only work in certain contexts. A TSO would be oriented towards doing nothing more than supporting promotional activity, so it’s really a bar to being able to engage directly in

“Saudi Arabia is seeking to change its international, local and cultural profile. The kind of comments that are coming out of the investment authority and other organisations support that.” ILEA Middle East’s Legal Board Advisor, Mark Hill

commercial activities within the Kingdom. For those reasons a branch or LLC tend to be more suitable options.” In the past companies have found it very difficult to obtain the necessary paperwork to operate in the Kingdom – “there have always been challenges, particularly from the investment licence perspective,” said Hill – but now things are improving quickly. “Saudi Arabia is seeking to change its international, local and cultural profile,” Hill continued. “The kind of comments that are coming out of the investment authority and other organisations support that.” The comments that Hill alluded to came in a recently released statement from the Saudi Investment Authority claiming that processing time for licences could be cut to just four days. While that estimate is perhaps on the optimistic

side, Hill believes that it’s a good sign, at very least. “For the Investment Authority to make that kind of bold statement is very encouraging,” he commented. “It’s certainly a sign of intent that the government is aiming to make things easier and smoother moving forward.” However, even with the concerted effort to increase the speed and ease of obtaining the necessary licences, Hill warned that there are still a few barriers to entry into the Saudi market. “Unless you have GCC ownership within your structure, you are required to get not only the commercial licence but also the investment licence. So that is still a hurdle,” he said. “It’s certainly becoming easier to overcome, though.” And it’s not just commercial and investment licences that are required. “You have to get extra approvals in both the events space and the

production space,” Hill said. “So, whether it be the audio-visual media approval or the National Programme for Exhibitions and Conferences, there are an additional range of approvals that are required to operate in this space. And you have to run all of these things in tandem.” Hill commented that, “being flexible in terms of the kind of set-up or operation that you would like to have” is helpful when setting up in Saudi. “Some of my clients are looking at agency appointments rather than a direct set-up,” he commented. “That means appointing someone with the ability to expand a market for them in the Kingdom. That way you don’t need to have a licenced entity operating within the country in order to appoint an agent on your behalf.” And when it comes to contracting, Hill advised that although Saudi Arabia operates

under different laws, regulations and practices, “they are underpinned in the same way as anywhere else”. He commented: “The principals are the same. Contracts are all about knowing who does what, when, and for how much – and what happens to the intellectual property rights after the project comes to an end. And the way of knowing that is simply writing things down. “It can be an industry-style contract,” he continued. “As industry lawyers, we don’t need to write a War and Peace epic to get the job done. But writing it down certainly stops any doubt. The other thing that is just as important in the Kingdom as anywhere else is the contract provides leverage for any difficult discussions you may have relating to delivery, procurement and payment.” Summing up, Hill was pleased with how the session went. “The day went really well,” he said. “I’ve been involved with ILEA as a board member from the very beginning; I’ve done a lot of talks over the years and this was as successful as any.” Photo: Charles Russell Speechlys & ILEA www.ilea-me.com www.charlesrussellspeechlys.com