First
Any public entity—including those with the authority to establish companies or to participate in their establishment—that aims to establish a company or to participate in its establishment, or to own an existing company or to buy shares or stocks in it; that aims to establish an entity whose purposes include investment or any activity aimed at making profit; or that aims to amend the system of an entity subordinate to it to enable it to invest or to make it aimed at making profit, shall follow the following steps:
1. Communicating with the Public Investment Fund to consider that the establishment of the company, participation in its establishment, owning an existing company, buying shares or stocks in it, or establishing an entity whose purposes include investment or any activity aimed at making profit, or amending the system of an entity subordinate to it to enable it to invest or to make it aimed at making profit, is made through the fund.
2. When the letter of the entity is received by the fund, it shall respond within a period not exceeding 90 days from the date of completion of the necessary information and requirements.
3. If the fund determines that the application of the entity is inappropriate, and the entity determines that there is a continued need to establish that company, to participate in its establishment, to own it, or to buy shares or stocks in it; or to establish the entity; or to amend the system of the entity subordinate to it to enable it to invest or to make it aimed at making profit, then the entity shall refer its request—accompanied by the response of the fund regarding the inappropriateness of the application—to the Ministry of Finance.
4. The Ministry of Finance shall—jointly with the entity—study the application and take whatever they deem appropriate in accordance with the governance referred to in clause Eighth(1) of these rules, within a period not exceeding 90 days from the date of receipt of the application by the ministry.
5. If the Ministry of Finance and the entity submitting the application do not come to an agreement, and the entity determines that the need to establish a company, to participate in its establishment, to own an existing company, or to buy shares or stocks in it; or that the need to establish an entity whose purposes include investment or any activity aimed at making profit, or to amend the system of an entity subordinate to it to enable it to invest or to make it aimed at making profit still exists, the entity may submit to His Majesty a request clarifying that need and its justifications, and what the Ministry of Finance and the Public Investment Fund have determined in regard to this request, for the consideration of His Majesty and for him to undertake what he deems fit in this regard.
Second
The provisions provided in clause First of these rules do not apply to the following:
1. The General Organization for Social Insurance, the Saudi Central Bank, the National Center for Privatization, the National Development Fund and the development funds and banks subordinate to it, and any of the companies owned by any of them, whether wholly-owned or if they own shares or stocks in them.
2. Companies or entities established in accordance with the provisions of the royal decree of the general budget of the state.
3. The General Authority for Awqaf and the General Commission for the Guardianship of Trust Funds for Minors and Their Counterparts, if the establishment of the company by either of them, the participation in its establishment, the ownership of an existing company, or the purchase of shares or stocks in it; the establishment of an entity whose purposes include investment or any activity aimed at making profit; or the amendment of the system of an entity subordinate to it to enable it to invest or to make it aimed at making profit, is made using funds outside those provided by the state to it in any way.
Third
The Ministry of Commerce and the Capital Market Authority—each within its competence—shall not take any procedure regarding the establishment of any new company, or the registration of any disposal transferring ownership of shares or stocks in existing companies to any public entity, except in accordance with the provisions of clauses First and Second of these rules.
Fourth
Public entities shall—with the exception of those stipulated in clause Second of these rules—submit to His Majesty to complete what is necessary regarding the provisions prescribed by law, including the relevant orders and decisions, which authorise any of those entities the power to establish companies, to participate in their establishment, or to own existing companies, to buy shares or stocks in them; to establish an entity whose purposes include investment or any activity aimed at making profit; or to amend the system of an entity subordinate to enable it to invest or to make it aimed at making profit, in accordance with what is provided in these rules.
Fifth
Public entities shall—with the exception of those stipulated in clause Second of these rules—within a period not exceeding 60 days from the date of entry into force of these rules, inventory the companies they established, participated in their establishment, owned, or owned shares or stocks in them; and inventory the entities established whose purposes include investment or any activity aimed at making profit, or those companies or entities for which a request for approval has been previously submitted, along with the appropriate alternatives to deal with the ownership of those companies, shares or stocks, as well as the appropriate alternatives to deal with those entities. They shall then provide the Public Investment Fund with a list of this, attaching all the necessary financial and legal information and data to study the status of those companies or entities in accordance with the governance of the fund, to come up with a clear vision about them, and the appropriateness of transferring any of them to the fund or not, or to adopt the request of the entity which it has previously submitted to consider approving it, and to complete what is necessary regarding it, provided that this does not affect the continuation of the work of those companies and entities until a decision is made about whether to transfer the ownership of any of them to the fund or not, or to adopt the request of the aforementioned entity.
Sixth
1. The Public Investment Fund shall—within a period not exceeding 180 days from the date of completion of the information referred to in clause Fifth of these rules—submit to His Majesty the extent of the appropriateness of transferring the ownership of the company, the shares or stocks in it, or the transfer of the entity whose purposes include investment or any activity aimed at making profit from the public entity to the fund, provided that the submission includes the views of the public entity in this regard.
2. In the event that the Public Investment Fund deems the transfer to be inappropriate, the matter must be referred to the Ministry of Finance to study this with that entity to take the necessary action in regard to it—within a period not exceeding 90 days from the date of its referral to the ministry—in accordance with the governance referred to in clause Eighth(1) of these rules.
Seventh
In the event that the Public Investment Fund agrees to transfer the ownership of the company, the ownership of the shares or stocks in it, or the transfer of the entity whose purposes include investment or any activity aimed at making profit, to it, in accordance with what is included in clause Sixth of these rules, this shall for a financial amount, any other consideration, or any other arrangements. Its valuation and the mechanism of payment must be as agreed between the Minister of Finance and the Governor of the Public Investment Fund, and this matter is exempt from all procedures in this regard. If that company provides exclusive services or products, it must be treated in accordance with the provisions governing it.
Eighth
A committee is hereby formed under the chairmanship of the Ministry of Finance and with the membership of the Ministry of Economy and Planning, the Ministry of Commerce, and the Strategic Management Office of the Council of Economic and Development Affairs, to undertake,—within a period not exceeding 90 days—the following:
1. Setting the governance to study and decide on applications and matters referred to the Ministry of Finance in accordance with clauses First and Sixth of these rules, provided that the governance includes entrusting the authorities of the ownerships to the Minister of Finance and the head of the entity in companies in which the Public Investment Fund does not determine the transfer of ownership, shares, or stocks to it in accordance with the provisions stipulated in these rules.
2. Establishing the governance for government companies in a manner that enhances their effectiveness and raises their efficiency and performance.
The committee shall submit the governances referred to in paragraphs 1 and 2 of this clause to the Council of Economic and Development Affairs for approval.
Ninth
The Prime Minister may amend the periods stipulated in clauses First and Sixth of these rules.
Tenth
The Ministry of Finance shall—in coordination with the Ministry of Commerce and the Public Investment Fund—prepare a report containing an assessment of the results of the application of these rules and the challenges faced by the ministry or any of the public entities, the appropriate proposals for this, and the mechanism for addressing them, and shall submit it within a period not exceeding three years from the date of entry into force of these rules.
Published in Umm Al-Qura 5027 issued on 5 April 2024.
