The Council of Ministers of Saudi Arabia adopted a resolution dated 03/06/1444H (corresponding to 27 December 2022G) clarifying the consequences in terms of eligibility to compete for government contracts for companies that fail to locate their Regional Headquarters (“RHQ“) in Saudi Arabia.  This clarification has been anticipated for some time, since the Kingdom first announced at the end of 2020 that multinationals wishing to continue contracting with the government would need to locate their RHQs in the Kingdom by 2024.

The new resolution establishes various controls (“Controls”) applicable to government contracting with certain companies that do not have an RHQ located in Saudi Arabia (“In-Scope Companies”) and/or with parties related to them (“Related Parties”). The Controls are expected to come into force as of 19/06/1445H (corresponding to 1 January 2024G). Following the Saudi Government’s efforts to encourage multinationals operating in the Middle East and North Africa region to set up an RHQ in Saudi Arabia, the Controls are a long-awaited official clarification as to the possible implications of not doing so.

Overview and Scope of Application

Generally, the Controls have the effect of restricting Government Authorities (as defined below), whether subject to the Government Tenders and Procurement Law or not, from contracting with In-Scope Companies or Related Parties with respect to the procurement of goods or provision of services, as detailed below. 

Government Authorities

The Controls impose restrictions specifically on “Government Authorities”, which term is defined to include Saudi Government ministries, authorities, agencies, commissions, establishments, and independent agencies with public legal personalities. The term does not appear to include companies owned in whole or in part by the Saudi Government.

In-Scope Companies

The Controls restrict Government Authorities from contracting with In-Scope Companies, which term is defined as multinational entities that have an RHQ in the Middle East and North Africa region, but not in Saudi Arabia, and that are expressly listed in a register (“Register”) that will be periodically updated and published on Etimad, the unified electronic portal for Saudi government procurement. 

Related Parties

The Controls also restrict Government Authorities from contracting with any Related Parties, which term is defined as any agent of In-Scope Companies, or any distributor, supplier, or provider of their goods or services in relation thereto.

Restrictions under the Controls

The restrictions introduced by the Controls apply to Government Authority public tenders, limited tenders, and direct contracting. Generally, Government Authorities may contract with an In-Scope Company or Related Party only if certain criteria are met, in emergency situations, or if there is no alternative for the required good or service. For example, in public tenders, an In-Scope Company or Related Party may only be selected if it submitted the only acceptable technical bid or, if there are more than one, its financial bid is significantly below that of the second-best financial bid.


The Controls do not apply to dealings or procurements by a Government Authority with a cost not exceeding SAR 1 million (which threshold may be amended from time to time) or business or purchases carried out outside of Saudi Arabia.

Reporting obligations

Government Authorities that contract with any In-Scope Company or Related Party will be required to submit a report to the Court of Audit and the Expenditure and Project Efficiency Authority (EXPRO) signing the relevant contract, which must include a rationale for concluding the transaction.

Exemption Committee

The Controls also establish the Exemption Committee that will be empowered to review and approve requests submitted by Government Authorities to exempt In-Scope Companies and Related Parties from the Controls. The Exemption Committee may approve or reject a request in a manner consistent with public interest. A Government Authority may appeal a decision of the Exemption Committee before the Minister of Finance, who may issue a final and binding decision regarding the appeal.

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Zahi Younes has 21 years of experience in the Middle East, specializing in the areas of cross-border and domestic mergers and acquisitions, divestitures, international and domestic joint ventures, global corporate reorganizations, securities and capital markets. He also has a focus on the Telecommunications and Information Technology, Healthcare and Pharmaceuticals, and Retail and Consumer Goods sectors.


Abdulrahman AlAjlan has 16 years of litigation and commercial experience in Saudi Arabia. He represents clients at the Sharia Courts, the Board of Grievance, the SAMA Committee, Labor Committee, Committee for Negotiable Instruments and all other courts and tribunals. Abdulrahman has extensive arbitration experience, both as an arbitrator and also representing clients in arbitration proceedings.


George Sayen has been involved in handling Saudi Arabian legal matters since 1987 and has resided full time in Riyadh since 1988. He is actively involved in advising both Saudi Arabian and foreign clients on a wide range of corporate and commercial and regulatory matters, including corporate/commercial transactions, major projects, M&A, employment, joint ventures, government contracting and competition law.


Tamim specializes in corporate transactions and actively assists Saudi-based and foreign entities in the healthcare & pharmaceuticals, IT & communications, industrials and food sectors, on corporate matters. Tamim interacts with regulators on a regular basis including the Saudi Arabian General Investment Authority (SAGIA), Ministry of Commerce and Industry (MoCI), Saudi Food and Drug Authority (SFDA) and the Communications and Information Technology Commission (CITC).


Christiana O'Connell-Schizas joined Legal Advisors in 2014 and leads our Saudi Employment and Compensation team. She actively advises both Saudi Arabian and foreign clients on strategic employment law matters including restructurings, mergers and acquisitions and outsourcings in addition to day-to-day employment law support.


Yousef joined Legal Advisors Abdulaziz Alajlan & Partners in 2020. He is actively involved in advising both Saudi Arabian and foreign clients on a wide range of corporate and commercial transactions, litigation, general matters and advisory work including M&A issues.

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