Starting in February 2025, a landmark change to Saudi Arabia’s investment framework will take effect. The updated Investment Law allows companies to cover two distinct business activities under one registration. This tweak may seem minor, but in practice, it provides significant flexibility and efficiency for investors.
Let’s delve into what this means, why it matters, and how to maximise its benefits.
What’s the change?
Under the new Investment Law (Royal Decree M/19, published August 2024), investors are no longer limited to a single activity per license. Saudi Arabia now grants investors the freedom to register up to two activities under a single license. For example, a manufacturing or industrial license can now add a trading activity within, allowing greater flexibility to foreign investors. That means no more juggling multiple licenses or navigating complex compliance across different permits.
Why it matters for businesses
- Streamlined setup
- Historically, adding new business lines meant launching a separate entity or filing new licenses, each requiring approvals, fees, and administrative hassle.
- Now, adding up to one extra activity is as simple as updating the original investment registration.
- Cost-efficient operations
- Fewer licenses = lower application and renewal fees.
- You pay once for two business activities instead of twice.
- Simplified compliance
- With fewer entities, corporate governance, bank relationships, and audit routines become cleaner and more cost-effective.
- Greater agility
- Roadside pivot? You can test a new line (e.g., adding e-commerce to consultancy) without the full burden of extra approvals.
How it works step-by-step
Step 1: Pick your primary and secondary activity
Choose from the MISA-approved ISIC4 list. The primary activity is your core business, and the secondary should complement it.
Step 2: Submit registration at MISA
On the unified registration portal, include both activities. MISA processes within 10 working days.
Step 3: Receive Commercial Registration (CR)
Once approved, your CR from MoC will include both activities in a single document.
Step 4: Operate with flexibility
You’re licensed to act in two areas—without additional applications—though excluded or restricted sectors (e.g., defence) still require MISA’s specialised approval.
Startups and freelancers testing new service models stand to benefit the most from this reform, as it enables them to experiment with multiple offerings under a single license. Tech and consultancy firms can also take advantage by expanding into complementary areas such as training, events, or software development without needing separate registrations.
For SMEs with evolving scopes—like a manufacturing company adding logistics services—this flexibility streamlines operations and reduces overhead. Similarly, businesses in fast-moving sectors, such as edtech, fintech, and healthtech, can consolidate adjacent services under a single legal entity, thereby improving efficiency and scalability.
While the new investment law in Saudi Arabia offers greater flexibility, several essential considerations remain for businesses to keep in mind. Certain activities remain excluded or restricted for foreign investors and require additional approvals from specific government authorities. These include sensitive sectors such as defence, security, and oil exploration, which are regulated more tightly. Before applying for your license, it’s essential to consult the official MISA activity list and check whether your intended activities fall under these restricted categories.
In terms of annual compliance, businesses must meet regulatory obligations based on the most heavily regulated activity listed under their license. For example, if one of the two activities is subject to stricter reporting or capital requirements, those will generally apply across the board. This ensures consistent oversight; however, companies should be prepared for potential additional documentation or licensing steps.
Regarding dispute resolution, the new law strengthens investor protections by allowing arbitration to resolve conflicts. This is a significant step forward in creating a more investor-friendly legal environment. However, it’s essential to note that the enforcement of arbitration awards remains under the jurisdiction of Saudi courts and is subject to Sharia law principles. This means that while international arbitration is possible, the final enforceability and judgment may still align with local judicial norms. Businesses should factor this into their risk assessment and legal strategy when entering the Saudi market.
This reform aligns perfectly with Vision 2030’s goal of simplifying bureaucracy and enhancing investor confidence. It replaces the old Foreign Investment Law (2000) with a unified Investment Law that applies to all investors—both Saudi and foreign—with clear treatment and protections.
The government has also transitioned from licensing to registration, further reducing bureaucratic hurdles and processing times.
Allowing two activities under a single license is more than a convenience—it represents flexibility, cost savings, and a more innovative regulatory approach. If your business operates across adjacent sectors, this update could provide the competitive edge you need.
If you are planning to start your company in Saudi Arabia, please consult with our experts to discuss tailored market entry and phased expansion plans across the region.
