On April 25, 2016, H.R.H. Deputy Crown Prince Mohamed Bin Salman announced the Kingdom of Saudi Arabia “Vision 2030”, a plan to radically transform the Kingdom’s economy in, what many commentators saw as, a response to budgetary pressures arising from the slump in crude oil prices.

Vision 2030 sets out a comprehensive road map to promote more efficient government services and to diversify the Kingdom’s economy by boosting private sector job creation and developing the non-oil economy.

Legal Developments

Potential hourly wage system

The Ministry of Labor and Social Development (MOL) is discussing a potential new employment system for Saudi employees named “Flexible Work” (Flexible Work). Flexible Work will be a system whereby an employee may be paid an hourly wage on a weekly basis in arrears, and various entitlements currently required under the Labor Law for conventional employees would not be required, such as:

Legal developments

Saudi Arabia finally adopted a modern bankruptcy law on Wednesday 14/02/2018G by virtue of a Royal Decree No. M/50 dated 28/05/1439H (corresponding to 14/02/2018G) (the “BL”). The BL is based on bankruptcy protection laws around the globe, and it replaces the existing outdated framework on bankruptcy which was embedded within the Commercial Court Law and the Bankruptcy Protective Settlement Law.

These days it seems as if all roads in Saudi Arabia lead to Saudi Vision 2030 and the National Transformation Programme (NTP), the government’s strategy to modernise and diversify the Saudi economy.

Amongst other things, the government has signalled that it wants to see a far greater level of private sector participation in many areas of the economy than has previously been the case. This has led to a number of reforms designed to facilitate and pave the way for that investment and especially foreign investment.

These days it seems as if all roads in Saudi Arabia lead to Saudi Vision 2030, the government’s strategy to modernise and diversify the Saudi economy. Amongst other things, the government has signalled that it wants to see a far greater level of private sector participation.  This has led to a number of reforms designed to facilitate and pave the way for that investment, especially foreign investment.

What is the Cape Town Convention?

The Convention on International Interests in Mobile Equipment (“Convention”) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (“Aircraft Protocol”) were signed in Cape Town, South Africa, on 16 November 2001.

The Kingdom introduced its first ever bankruptcy law in 2018 which has created a foundation for a business rescue culture in Saudi Arabia. Companies undergoing financial difficulties are equipped with the tools that allow them to either trade out of a difficult period or liquidate the business in a manner which does not leave creditors out of pocket. More recently, to complement the existing insolvency regime, rules of cross-border bankruptcy proceedings came into effect on 16 December 2022 (“Rules”).

Routes to Reorganisation

A Comparative Study of the Insolvency Procedures Available in the United Arab Emirates, Kingdom of Saudi Arabia, United States and England and Wales

First published in the INSOL Restructuring Alert (November 2023)

Introduction

Patrick Gearon and Roger Elford, Charles Russell Speechlys

This is an extract from the 2020 edition of GRR's the Europe, Middle East and Africa Restructuring Review. The whole publication is available here.

In summary