Selling a Company in Saudi Arabia: Riyadh

Saudi Arabia has substantially liberalised its foreign investment framework over the past several years. The Ministry of Investment of Saudi Arabia (MISA) now permits 100% foreign ownership in most sectors, removing the historical requirement for a Saudi national or entity to hold a majority stake. A small number of sectors remain restricted or require special approval, including certain activities on the negative list and sectors tied to national security or specific regulatory regimes. Any transaction involving a change of foreign ownership, or the introduction of a foreign acquirer to a previously wholly Saudi-owned entity, will typically require a MISA licence review, and the timeline and conditions attached to that review should be understood early in a process.

Saudi Arabia's Regional Headquarters (RHQ) programme requires multinational companies to establish a regional headquarters in the Kingdom to remain eligible for government contracts, a policy that has driven a wave of international companies establishing or acquiring Saudi operating platforms. For sellers, this creates a distinct category of buyer: international groups seeking an established Saudi entity, workforce, and track record rather than starting a licence application from scratch. Businesses with existing government or giga-project contract relationships, and the compliance history that comes with them, are a particularly attractive acquisition target under this dynamic.

The Public Investment Fund (PIF) and its portfolio companies are among the most consequential participants in the Saudi economy, both as direct investors and as anchor customers whose contracts and giga-project mandates shape demand across healthcare, logistics, manufacturing, and services. PIF-affiliated entities and the broader ecosystem of sovereign-adjacent investment vehicles bring long investment horizons and considerable capital, and their involvement, whether as a buyer or as a reference customer, can materially affect how a business is perceived by the wider buyer universe. Understanding which sovereign-adjacent relationships a target business holds, and how transferable they are, is an important diligence item.

A substantial share of the Saudi private sector remains organised around large family-owned groups, many of which are now navigating a generational succession wave as founding shareholders hand control to second- and third-generation family members. This has produced a growing pipeline of family businesses evaluating a sale, partial recapitalisation, or bringing in outside capital and governance for the first time. These transactions require attention to family shareholder consent, historical governance practices, and often a more relationship-driven, discretion-sensitive process than a conventional auction, reflecting the value Saudi family groups place on confidentiality and continuity.

Saudi-owned shares in a company are generally subject to Zakat, a religious levy administered by the Zakat, Tax and Customs Authority (ZATCA), while the share of profit attributable to foreign ownership is subject to corporate income tax, generally at 20%. Transactions involving a change in ownership structure should account for how the Zakat and tax split is affected, and for any outstanding ZATCA assessments as part of diligence. Where a transaction has the effect of increasing concentration in a relevant market, engagement with the General Authority for Competition (GAC) may be required, and the scope of that requirement should be assessed early, stated generally rather than assumed, given how fact-specific GAC thresholds can be.