The merger of commercial companies in the Saudi Arabian Stock Exchange (Tadawul) and its impact on the rights of Foreign Direct Investment (FDI) in the Saudi system

• Author: Ali Saeed Alshamrani
• Position: College of Islamic Law (Taif University), Saudi Arabia
• Pages: 35-49

Vol. 4 No. 1

March, 2018

ISSN 2410-3918

Acces online at www.iipccl.org

35

Academic Journal of Business, Administration, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

The merger of commercial companies in the Saudi Arabian Stock Exchange

(Tadawul) and its impact on the rights of Foreign Direct Investment (FDI)

in the Saudi system

Ali Saeed Alshamrani

College of Islamic Law (Taif University), Saudi Arabia

Abstract

This work focuses on the rights of Foreign Direct Investment (FDI) in Saudi Arabia when

a merger occurs between two or more commercial companies in the Saudi Arabian Stock

Exchange (Tadawul). This article aims to give a comprehensive and critical review of the new

Saudi Arabia Companies Law 2015 and also the Foreign Investment Law 2000, and the extent

to which these laws provide protection for foreign investors in Saudi Arabia. The article

is divided into eight sections, as follows. The f‌i rst provides an overview of FDI in Saudi

Arabia; the second discusses the concept of the merger of commercial companies according

to the Saudi Companies Law 2015; the third section examines common types of merger of

commercial companies in Saudi Arabia, while the fourth considers the regulatory framework

of such mergers; the f‌i  h section examines the regulation and supervision of FDI in Saudi

Arabia; the sixth goes on to discuss the means of se lement of foreign investment disputes in

the country; the seventh section considers the legal challenges facing FDI in the country; and

in the f‌i nal section a summary is provided.

Keywords: Foreign Direct Investment, Shariah, Saudi Arabia, Tadawul, SAGIA, Capital Market

Authority.

Introduction

At present, many countries rely on a racting capital from abroad, which is called

Foreign Direct Investment (FDI). FDI contributes to economic growth by increasing

total capital accumulation in the host economy. It has been recognised that maximising

the benef‌i ts of FDI for the host country can be signif‌i cant, including technology

spillovers, human capital formation support, enhancement of a competitive business

environment, contribution to international trade integration and improvement of

enterprise development. Moreover, further than economic benef‌i ts, FDI can help

the improvement of environmental and social conditions in the host country by

relocating modern technology and leading to more socially responsible corporate

policies.1 Therefore, all developing and developed countries alike seek to provide

the appropriate environment to a ract FDI. The Kingdom of Saudi Arabia (KSA) is

one of those countries that has been seeking economic diversif‌i cation since the 1970s.

According to the United Nations Conference on Trade and Development (UNCTAD),

1 Selma Kurtishi-Kastrati, ‘The E ects of Foreign Direct Investments for Host Country’s Economy’,

European Journal of Interdisciplinary Studies (2013) 5 (1) 26; Hira Arain, Liyan Han, Li Zhang,

‘E ects of Information Systems and Technology on Foreign Direct Investment in Developing Coun-

tries’, International Journal of e-Education, e-Business, e-Management and e-Learning (2017) 7 (2)

146.