18 May 2020

Top Saudi lawyer defends legal robustness of troubled oil kingdom

Khoshaim & Associates managing partner hails measures to open up the Middle East's largest economy as it faces a deep recession

Zayed Khoshaim SCCA

The oil market meltdown is hitting Saudi Arabia badly and the kingdom appears to be heading into its deepest contraction in two decades.

However, Zeyad Khoshaim, managing partner at Khoshaim & Associates, says various reforms have been put in place, whose cumulative effect is to create a clear, strong, and efficient system to deploy and extract capital.

Khoshaim, whose firm has had a cooperation agreement with Allen & Overy since 2012, was talking to the Oxford Business Group online broadcasting channel Global Platform.

He said the overhaul made to the local legislative framework in Saudi Arabia had provided solid foundations for investors looking to play a part in the Kingdom’s economic development.

“In my view, Saudi Arabia has created a fantastic platform, in terms of governance, transparency and protection of capital, that allows international players that are minded to invest in Saudi Arabia to ensure the safety of their investments and the growth of their capital to be preserved and to be supported in the years to come," he said.

He said recent measures included enhancements to the capital markets regulations, including the setup of a robust M&A framework, liberalisation of rules allowing foreign investment into key areas of Saudi Arabia’s economy, and the introduction of a Saudi Arbitration Law that provided parties with added flexibility.

Following the last oil slump of 2014 to 2016, the Crown Prince Mohammed bin Salman launched a major economic transformation plan called Vision 2030, and made a number of changes to the legal system, including taking powers away from the mutawa religious police, allowing women to drive and cinemas to open, offering non-Muslim visas to boost tourism and creating new business zones.

Khoshaim said: “International investors can come in and establish branches of their international corporate entities. They can also establish companies, subsidiaries, be it in the form of limited liability companies or in the form of joint-stock companies.

“Saudi Arabia allows trade activities to be conducted 100% by foreign investors in areas such as e-commerce, trade, general services, health care, education and so forth.”

The reforms do not extend to allowing foreign law firms to set up in Saudi Arabia, although they are permitted to form associations.

In its latest forecast, issued last month, the IMF predicted Saudi Arabia’s economy would contract by 2.3%, with non-oil GDP falling by 4%, delivering a major blow to efforts to diversify the economy away from oil.