Saudia Arabia: Private Sector, Joint Ventures and Agents
Saudia Arabia: Private Sector, Joint Ventures and Agents Last updated on Sunday 25th April 2010
Foreign companies working for the Saudi Arabian government are required to have Saudi representation or joint-venture partners in the Kingdom.
The local representative will receive notices regarding forthcoming projects and should insure that the foreign company is on the list of bidders. He is further expected to advise the foreign company on the best ways of presenting proposals to Saudi clients. All foreign companies working in Saudi Arabia must register with the Ministry of Commerce.
Non-Saudis are not permitted to act as commercial agents in Saudi Arabia. The commercial agent cannot perform his duties until he has been registered with the Ministry of Commerce. His function is vital since he is held responsible for the company and its personnel in the Kingdom. Details of these requirements can be obtained from:
Department of Commercial Registration
Ministry of Commerce
PO Box 1774
Telephone: +966 1 401-2220 / 401-4708
Fax: +966 1 403-8421
A foreign contractor and his Saudi agent fall under a regulation issued in 1978. The regulation stipulates:
If a foreign contractor does not have a Saudi partner, then he should have a Saudi service agent.
The Saudi agent must be living in the Kingdom and must be registered as an agent for the foreign company in the Commercial Register of the Ministry of Commerce.
An Agency Agreement governs and defines the obligations and relations between the Saudi agent and the foreign contractor.
The foreign contractor pays fees to the agent in return for his services. These fees should not exceed 5% of the cost of the total contract.
More than one Saudi agent may be employed by a foreign contractor involved in different kinds of work.
An exception to local agents is only in the sales and services contracts with the Ministry of Defence and Aviation. The use of an agent here is forbidden.
For government bidding, a company may be represented by only one agent. Regulations ban an agent from representing both the consulting engineer and the implementing contractor in a single contract.
No more than one service agent is allowed for each Saudi project in which a company is interested. A foreign company may, however, have more than one Saudi agent performing services as opposed to commercial functions.
A Saudi agent is not permitted to represent more than ten foreign companies.