Finance Reform in Saudi Arabia: Will Legislative Proposals Fill the Void?

Analysis

Following the issuing of five financial laws by Saudi Arabia's Council of Ministers, including the long-awaited Real Estate Mortgage law, Hesham Al Homoud, a Partner in Al Tamimi & Company's Saudi Arabian office, examines the legislative changes and their potential impact.

What are the legislative changes?

Five new Laws have been introduced, dealing with:

- the Law on the Supervision of Finance Companies;

- Lease Finance;

- Real Estate Finance;

- the Enforcement (or Execution) Law;

- the Registered Real Estate Mortgage Law.

Which of these changes are most significant?

The laws relating to Enforcement Law and Registered Real Estate Mortgage law are the most important of the new laws because of their impact on business and interests, in particular, to foreign investors. However, the five new laws need to be seen as a package and it is the totality of the package which will have the greatest impact rather than any single law.

What is the rationale behind the legislative changes?

During the last decade, the Saudi government has implemented a number of initiatives to develop the Saudi financial and business system.