Saudi Arabia: Sharia Advisory Committee Established

Arab News, 22 April 2022: Saudi Arabia’s Stock Exchange or Tadawul has announced it will establish a Sharia Advisory Committee.

The Committee will help the Exchange offer new Sharia-compliant investment tools and products.

It will have representatives from the Kingdom’s largest financial institutions. They will include Bader Al Omar, Head of Jadwa Investment; Abdulrahman Al Ghusn, Associate in Alinma Investment and Abdullah Al Barrak, Senior Sharia advisor at Al Rajhi Capital.

They will help draft a unified Sharia-compliant rulebook which will be approved by the members’ respective Sharia boards.

They will also have responsibility for overseeing and approving the list of Sharia-compliant listed companies from time to time.

The Exchange will supervise the Sharia Advisory Committee but will not participate in the company screening and selection process.

They will not do this to ensure independence and transparency in decision making.

It will also consult the Committee as necessary on its products and services.

The Exchange will also work with IdealRatings to provide Sharia screening services of listed companies in the capital market in the Kingdom.

The list will be reviewed and approved by the Advisory Committee.

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Saudi Arabia: Real Estate Law Amendments Proposed

Saudi Gazette, 19 April 2022: The Saudi Arabian authorities have proposed amendments to the Kingdom’s Real Estate Law.

Under the proposed amendments to the Law on Real Estate Ownership and Investment by non-Saudis, foreign diplomatic missions accredited to the Kingdom will be able to own their official headquarters and residences of the head of their missions and their members. They will be able to do so on a reciprocal basis.

International and regional organisations will also be able to own their official headquarters. They will be able to do so in line with the limits of the agreements governing them. Ownership will be granted providing a licence is obtained from the Foreign Affairs Minister.

The amendments have been proposed to raise and improve the efficiency and effectiveness of the procedures and controls related to the ownership or use of real estate by non-Saudis in cities and economic zones in the Kingdom targeted for development, including Mecca and Madina.

It targets non-Saudi natural and legal persons, who are either residents or non-residents, as well as citizens of the GCC states.

It states it is not permissible, other than through inheritance, to acquire the right to own, use or have easement over real estate located within the boundaries of the Two Holy Mosques, for those banned from entering there.

The proposed Law will not prejudice the acquisition of the right of ownership or any other original right over real estate through inheritance, as well as the regulations and decisions of the Cabinet and the Royal Orders which prevent ownership in some locations.

The existing Law on Real Estate Ownership and Investment by non-Saudis would be repealed. The new law will come into force 90 days after it has been published in the Official Gazette. The Implementing Regulations to the Law will be issued by an Order from the Prime Minister.

Also reported in Okaz on 19 April 2022. For full story, click here.

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Saudi Arabia: Implementation of Saudisation in Key Health Sectors Starts

Saudi Gazette, 12 April 2022: Saudi Arabia’s Human Resources and Social Development Ministry has announced they have started implementing Saudisation in some key health sectors.

These include 60% Saudisation in health specialisation professions, 30% Saudisation of engineering and technical professions in medical appliances and 40% Saudisation in sales and medical appliances and supplies professions throughout the Kingdom.

The Saudisation has been implemented following the expiry of the grace period.

The Saudisation Decision was aimed at Saudidising health specialties including medical laboratory, radiology, physiotherapy and therapeutic nutrition jobs in all medical facilities operating in the Kingdom.

The minimum salary to calculate Saudisation has been set at 7,000 Riyals for specialists and 5,000 Riyals for technicians.

The Decision to Saudidise professions in the medical appliances sector includes the Saudisation of sales and advertising professions and will be introduced in medical appliances and supplies in two phases. It will be 40% in the first phase and 80% in the second phase.

The Saudisation of engineering and technical professions for medical devices will also be introduced in two phases. It will be 30% in the first phase and 50% in the second phase.

Also reported in Al-Eqtisadiya on 11 April 2022. For full story see https://www.aleqt.com/2022/04/11/article_2295806.html.

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Saudi Arabia: New Investment Law Being Drafted

Saudi Gazette, 7 April 2022: Saudi Arabia’s Investment Ministry has announced it is drafting a new Investment Law.

The new Law will allow local and foreign investors to be treated equally.

The Ministry added they are currently completing studies on various provisions in the draft law.

It will come into force after the necessary approvals have been obtained from the higher authorities.

This is expected in the near future.

Foreign investors will have the freedom to manage, sell and dispose of their economic projects, as well as own properties to ensure the smooth operation of the economic project.

They will also have the freedom to conclude commercial contracts, acquire, liquidate or sell any company, facilitate procedures and provide facilities with the necessary support and assistance together with all of the relevant authorities.

Funds will be able to be transferred from inside and outside the Kingdom. These include transferring the proceeds and profits of economic projects and selling and liquidating them through regular channels using any currency recognised inside the Kingdom or disposing of it by any other legitimate means. It also includes protecting intellectual property, confidential commercial information and personal data and approaching the relevant courts or arbitration centres in the Kingdom.

Local and foreign investors will be subject to the same sectoral approval requirements for licenses and registration, as well as for approvals or permits for certain economic activities or special economic zones.

The confiscation of direct investments in whole or in part will be banned unless a relevant court ruling has been issued.

They will not be able to be expropriated in whole or in part except for the public benefit and in return for fair compensation either.

There will be provisions in the new law to impose fines of 500,000 Riyals on anyone who violates the Law or its Implementing Regulations.

They will be fined once they have been given a deadline to remedy the violations.

The investor’s registration or license will be cancelled as well and all or some of the investment facilities granted to the investor revoked.

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Saudi Arabia: Saudisation of Key Jobs in Fun Cities to Begin

Saudi Gazette, 31 March 2022: Saudi Arabia’s Human Resources and Social Development Minister has announced the Saudisation of key jobs in fun cities and family recreational centres is going to begin.

Under the programme, 100% of jobs in fun cities at malls will be Saudidised.

70% of jobs in permanent and seasonal fun cities and family recreational centres will be Saudidised as well.

The programme will start from 23 September 2022.

Key jobs which are going to be covered by the programme are branch managers, department managers, department supervisors, assistant branch managers, cash supervisors, customer service jobs, sales specialists and marketing specialists.

Under the relevant Ministerial Decision, some jobs will be exempt.

They will include cleaning workers, loading and unloading workers and operators of specific games which require competence and specialist certificates.

The Ministry have recently issued a procedural guide to inform employers and establishments about the mechanism to calculate Nitaqat percentages of Saudisation and the penalties for violations of the regulations.

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Saudi Arabia: First Woman Appointed to Saudi Bar Association Board

Saudi Gazette, 23 March 2022: Saudi Arabia’s Justice Minister and Chairman of the Saudi Bar Association has announced they have issued an Order appointing the first woman to the Association’s board.

They are one of five new members appointed.

The new members are Ethar Al-Daej, Jasser Al-Jasser, Dr Osama Al-Qahtani, Anas Al-Zamil, Dr Louay Al-Akkas.

The Minister has also approved the professional conduct rules for lawyers.

They are aimed at developing the legal profession and enhancing its professional standards as well as transparency and responsibility.

In addition, they are aimed at strengthening legal protections for lawyers as well as their clients and redefining their responsibility towards clients, colleagues, judicial authorities and society.

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Saudi Arabia: Full Implementation of Personal Data Protection Law Postponed

Arab News, 23 March 2022: Saudi Arabia’s Authority for Data and Artificial Intelligence has announced it has postponed the full implementation of the Personal Data Protection Law until 17 March 2023.

They were responding to feedback received.

They have received feedback from various stakeholders. Also reported in Al Madina on 22 March 2022. For full story, click here.

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Saudi Arabia: Judicial Costs System to be Implemented From 17 March 2022

Okaz, 16 March 2022: Saudi Arabia’s Justice Ministry has announced the judicial costs system will be implemented from 17 March 2022.

The Implementing Regulations to the Law will specify the details of the criteria for estimating judicial costs for lawsuits and requests.

The system will improve the efficiency of the justice system and enhance the use of alternative methods of dispute resolution.

It will also help reduce malicious and fictitious lawsuits and improve preventive justice and the documentation of contracts.

The system does not apply to general penal cases, disciplinary cases and requests related to them, or  cases and requests which fall within the jurisdiction of the personal status courts, except for cassation requests or re-examination requests. For full story, click here.

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Saudi Arabia: Consultation on Draft Rules and Regulations to Protect Customers of Banks and Other Financial Institutions Launched

Saudi Gazette, 15 March 2022: Saudi Arabia’s Central Bank has launched a consultation on draft rules and regulations to protect the interests of customers of banks and other financial institutions. It will last for 30 days.

The consultation has been launched as part of the Bank’s efforts to protect the rights of consumers in getting fair and transparent treatment in financial services in line with global best practices in this area.

The Bank has identified several principles which banks and other financial institutions must comply with when dealing with customers. They must deal with customers fairly, honestly and equitably, as well as take care of them, especially those on low incomes and education, the elderly and those with special needs.

Financial institutions must also protect the privacy of information and data, as well as customers from fraud. The Bank has asked them to enforce technical and control systems to limit and detect fraud, embezzlement or misuse and take the necessary action if they occur.

Financial institutions must provide the best products, services and prices to meet the customer’s needs and desires as well as address customer’s complaints and set policies which help detect potential conflicts of interest.

The Bank has urged financial institutions to encourage customers to read contracts, their appendices and any other document which requires the customer’s approval or signature to provide information to customers clearly and accurately and avoid misinformation, fraud and deception.

The financial firms must also include all the terms and conditions in the application form for obtaining the product or service, provided the warning statements include the possible consequences when using the product or service other than what was agreed on, as well as informing the customer of any change which occurs at least 30 days from the entry into force of this change.

The Bank has also banned financial institutions from requesting a customer’s signature on any blank document or complete data of the incomplete document. Financial institution must also protect and preserve clients’ documents and signatures.

The general rules of conduct state that financial institutions must not make any change with an increase in fees and commissions which natural customers must pay after obtaining the service or product and signing the contract or agreement or the like.

There will be an exemption in the fees and commissions related to the third party provided it is related to the customer’s use of the financed asset and the customer must be notified of this when concluding the contract. The financial institution must put the list of fees and commissions in a clear place on its building and branches as well as on its websites as well.

Financial institutions must not exceed the fees, commissions and costs of administrative services they obtain from natural customers or the equivalent of 1% of the financing amount or 5,000 Riyals, whichever is less.

It may be deducted only after the contract is signed, with the exception of real estate appraisal fees, which may be deducted after the customer obtains initial approval to grant real estate financing.

The Bank has instructed financial institutions to explain to customers all the information, services and products provided to them clearly and transparently. This will include information regarding prices, commissions, fines, types of risks and benefits and the rights and duties of the customer.

Financial institutions must ensure all electronic channels are available intact and in a safe way. In the event of customers incurring any direct loss as a result of hacking of these channels or because of a security breach, they must be compensated for any resulting losses.

Financial institutions have also committed to apply more than one standard for identity verification when accessing electronic services, taking the necessary measures to reduce electronic fraud and include the purpose for which text messages containing the verification code were sent to customers.

The Bank has stressed financial institution must not benefit from any returned amounts which may arise because of an error or a technical malfunction. It has also advised of the need for amounts to be returned to affected customers without delay and other customers who were exposed to the same error within five working days and without waiting for a claim, in addition to repairing the defect or malfunction.

Financial institutions must also inform the affected customers about the error and the remedial measures taken through one of the documented channels and announce this through all available channels.

Financial institutions should provide multiple channels to receive complaints, inquiries and requests to enable customers to submit complaints according to their preference easily and conveniently. These channels may include toll free numbers, branches or websites, smart phone applications and e-mails. It must also put the complaints handling mechanism in a conspicuous place in the building of the financial institution and its branches.

If the customer is not satisfied with the outcome of the treatment of their complaint and wants to escalate the complaint, they must be provided with the mechanism to approach the higher authorities in the financial institution or be directed to the competent authority in line with their preference.

Financial institutions must also provide a free phone number which customers can use from inside or outside the Kingdom to submit complaints and inquiries. The number must be published on the home page of the financial institution’s website clearly for the client as well as other channels.

Financial institutions should take humanitarian cases into account when dealing with customers who have emergency financial difficulties and find appropriate solutions for them before starting to take legal measures against them.

In addition, financial institutions and their employees must not discriminate between clients in an unfair way based on race, gender, religion, colour, age, disability or marital status.

Banks, money exchanges, payment service companies and firms issuing credit and debit cards have to ensure their business customers don’t pass or impose additional fees on holders of credit cards and Mada cards when paying through point-of-sale devices, operations through payment service providers and e-commerce websites.

Banks, money exchanges and payment service companies must also set the upper limit for transfers, daily withdrawals, point-of-sale operations, online purchases and payment operations. They have to notify customers of this limit when they obtain the service and review it at least once a year.

Banks and other firms must also inform customers of the cash withdrawal limit and fees for withdrawals through technical devices and systems such as exchange machines and not calculate the annual fees for credit or monthly discount cards until after they are activated by the customer. The card issuer has the right to cancel the card if it is not activated within 90 days of the issued date.

The regulations also state the firm receiving the transfer must ensures the beneficiary’s name matches the IBAN number and the transfer amount will be returned to the issuing authority if there is a difference between them.

All customer data recorded in the transfer form will be verified and the customer notified before agreeing to carry out the transfer process within the expected date of the arrival of the transfer amount to the transferee, as well as the amount of fees and commissions, including fees imposed by the third party, if any, and their details, along with the net amount which will be received by the transferee.

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Saudi Arabia: Consultation on Draft Regulations to Saudi Arabia’s Personal Data Protection Law closes 25 March 2022

SDAIA, the Saudi Data & Artificial Intelligence Authority, has just released draft Regulations to the new Personal Data Protection Law, due to come into effect on 23 March 2022. The draft Regulations provide helpful clarity on many aspects of the PDPL, although ambiguity remains on a variety of topics.

Any business likely to be affected by the Law should scrutinise the draft Regulations, and consider making submissions on any areas of concern. Further information on the consultation process is available here.

The draft Regulations contain a number of significant issues, and we have not sought to address them all here. We do, however, make some observations about transfers of personal data outside the Kingdom. Unless well drafted, with practical considerations in mind, the transfer provisions have significant potential to cause issues for international businesses and for businesses that rely on cloud services hosted outside the Kingdom. This topic caused the most concern when the Law was first published in September 2022.

Do the draft Regulations satisfactorily address these concerns? Probably not, but with some adjustments they might work.

In summary, the potentially bureaucratic requirements around regulatory approvals prior to transfers abroad, as well as the question of whether the consent of the data subject negates the need to obtain such approval, would benefit from further scrutiny by SDAIA.

In Art. 28.1, the draft Regulations restate a basic requirement to host and process personal data in the Kingdom – but they also contemplate personal data being transferred outside. Such transfers would be subject to the controller undertaking a privacy impact assessment and obtaining the written approval of the relevant ‘regulatory authority’ (such as an industry sector regulator) having liaised with the ‘competent authority’ (being SDAIA, initially) on a case by case basis.

Our main concern here is the bureaucratic aspect. If each regulatory authority needs to liaise with SDAIA, and also set up a process by which controllers apply to the regulatory authority for approval, this is unlikely to be efficient in practice. The Law indicates that there will be a registration portal for data controller (presumably operated by SDAIA, as the competent authority); if controllers could obtain general approval were simply by mentioning their proposed transfer activities as part of the registration process, then this would seem practical and effective. This approach is not what is indicated in the draft Regulations, and the ambiguity around reference to a ‘case by case’ approach raises further concerns.

Our recommendation is for SDAIA to reflect on how it anticipates the approval process to roll out at a practical level, and to adjust (i.e. simplify) the requirements of Art. 28.1, accordingly.

In Art. 28.2, the transfer provisions contain a statement that transfers of personal data to recipients outside the Kingdom can occur for public interest purposes (not defined); or where providing services to individuals (not corporates?) and the transfer is subject to the consent of the data subject and not in a manner contrary to what the data subject might expect. Art 28.2 includes reference to Art. 29, which provides for transfers to jurisdictions not assessed as providing an adequate level of data protection. (Art. 30 contemplates SDAIA developing a list of jurisdictions that it considers to provide an adequate level of protection to personal data.) The implication seems to be that, where the recipient is in a jurisdiction assessed as providing adequate protections, then the consent of the data subject will legitimise such transfers.

One question that arises is whether this provision permitting transfers subject to data subject consent can be read independent of Art. 28.1, requiring approval of the regulatory authority. Being able to rely on consent alone would be a practical approach, particularly if the approval of the regulatory authority will be as bureaucratic as it appears in the current draft.

Our recommendation is for SDAIA to clarify whether Art. 28.1 is “subject to” Art.28.2, thus allowing consent-based transfers without needing to obtain approval as contemplated in Art. 28.1. (If Art. 28.1 is streamlined in the manner discussed above, this point may be of less concern.)

As noted above, Art. 30 contemplates SDAIA developing a list of jurisdictions that it considers to provide an adequate level of protection to personal data. For transfers to jurisdictions not assessed as providing an adequate level of protection, and excluding circumstances where the vital interests of the data subject are at stake, Art. 28.3 of the draft regulations contemplate a requirement for controllers to apply to SDAIA, at least 30 days in advance of proposed transfers.  Art. 29 provides further requirements relating to transfers to such jurisdictions, including a requirement for controllers to undertake risk and impact assessments, and to provide appropriate safeguards (such as adoption of standard clauses, BCRs, etc.) .

The need to apply to SDAIA again seems unnecessarily bureaucratic. Elsewhere, a permit from an authority might be one option available to a controller (rather than a universal requirement for such transfers), and not required in circumstances where risks have been assessed and appropriate safeguards put in place.

Our recommendation is for SDAIA to adjust the requirements of Art. 28.3 so that the need to apply to SDAIA for approval is only required where the controller assesses that the risk to the data subject is high and there is uncertainty about whether proposed safeguards are likely to be adequate.

As noted above, the draft Regulations contain a variety of other concerns, and further scrutiny is essential. We will be happy to share further insight on this significant development, and to provide support in the preparation of submissions to the consultation process if required. Please follow our Digital & Data ‘showcase’ page on LinkedIn, and contact email Nick O’Connell directly for any specific support.

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