Articles – Page 13 – Hammad & Al-Mehdar Law Firm

Dubai’s Virtual Asset Law

Posted on June 21, 2022 - 6:43 am by perpetual-admin

The digital era is emerging at a rapid pace globally, which is synonymous with the success across the United Arab Emirates, and in particular Dubai, who is ensuring that it remains up to speed with its digital advancement.

From the issuance of the first of its kind Law No. 4 of 2022 on the Regulation of Virtual Assets (the “Virtual Assets Law”), to the establishment of the Virtual Asset Regulatory Authority (the “VARA”) that would regulate and oversee the sector, Dubai is working towards “shaping this new ever-evolving sector” as tweeted by the Vice President and Ruler of Dubai, his Highness Sheikh Mohammed bin Rashid.

Virtual Assets are defined under the Virtual Assets Law as a digital representation of the value that can be digitally traded or transferred, or can be used as an instrument for exchange, payment, or investment purposes, including virtual tokens, and any digital representation of any other value specified by the VARA in this regard.

VARA is an independent authority, established under the Dubai World Trade Center Authority, to oversee the Virtual Assets Law, licensing and governance of virtual assets, non-fungible tokens (NFTs), and cryptocurrencies. The Virtual Assets Law specified VARA’s main responsibilities, which include, but are not limited to the following:

Regulating and licensing the issuance of virtual assets and virtual tokens;
Regulating and licensing virtual asset service providers, in addition to controlling and supervising their activities to ensure their compliance with the provisions of the Law;
Organizing and controlling the operation and management of virtual asset platforms, distributed ledger technology, and virtual asset portfolios;
Monitoring digital trades and transactions; and
Preventing manipulation of virtual asset trading prices.

The provisions of the Virtual Assets Law apply to virtual asset services provided all over the Emirate, including special development zones and free zones, with the exception of the Dubai International Financial Centre (“DIFC”); the Dubai Financial Services Authority, which regulates all the companies in the DIFC, who is preparing its own regulations for the virtual asset sector.

According to the Virtual Assets Law, it is prohibited for any person to carry out any of the below listed activities in Dubai, or any of the freezones therein, unless they are duly permitted to do so by the VARA.

Furthermore, they must obtain the necessary prior approvals and permits from the VARA before commencing the procedures for licensing it from the competent commercial licensing authority. The following activities are subject to the VARA’s permits and controls in accordance with the provisions of the Virtual Assets Law:

Provision of virtual asset platform operation and management services;
Provision of services of exchange between virtual assets and currencies, whether national or foreign;
Provision of services of exchange between one or more form(s) of virtual assets;
Provision of virtual asset transfer services;
Provision of virtual asset custody, management or control services;
Provision of services related to virtual asset portfolios; and
Provision of services related to offering and trading in virtual tokens.

Additionally, a person wishing to carry out any of the above activities must have the headquarters of their business in Dubai, provided that they take one of the legal forms approved by the competent commercial licensing authority in the Emirate.

Following the issuance of the Virtual Assets Law, crypto firms are rushing to launch in Dubai. Notably, FTX, a global crypto derivatives exchange, and Binance, the world’s largest cryptocurrency exchange set up operations in Dubai after they secured approvals from the VARA. Similarly, BitOasis, the region’s leading virtual assets provider, based in the United Arab Emirates, has received provisional approval from the VARA, to continue its business operations in Dubai, while applying for a license in accordance with the VARA’s requirements.

Moreover, Dubai exceeded its digital advancement efforts, with the recent announcement by the VARA on the establishment of its Metaverse HQ, making it the first regulatory authority to have presence in the emerging digital space.

Legal Challenges That CTOs Need to Consider

Posted on July 24, 2022 - 6:55 pm by perpetual-admin

Most people do not widely understand the role of a chief technology officer (CTO), but it is one of the most crucial of all C-suite positions. CTOs are tasked with various duties in pursuit of a variety of abstract goals, which usually include driving innovation, identifying new technologies that are entering the market, and managing all IT operations.

The digital transformation has begun to redefine the role of the CTO and companies are seeking to ensure that it is in line with business priorities. This means the responsibilities of the CTO are changing drastically and being impacted by new legal regulations. As a result, it’s crucial that whatever innovation they are championing is be compliant with the law of the land.

One of the legal challenges that CTOs face is in the collection, storage, management, and protection of their clients’ information. They must prevent any kind of cyber threat using digital solutions and platforms that are legally compliant with the law.

Legal Issues That Need to Be Prioritized

Digital transformation significantly impacts IT security, regulation, data protection, and contract design. CTOs should consider the following legal issues:

Compliance
Intellectual property protection
Data security

Intellectual Property (IP) Law

The key components of IP law that CTOs need to consider during the digital transformation are as follows:

Trademarks
Copyrights
Trade secrets

A trademark is a distinctive name, logo, or symbol used to distinguish one product or service from another. Trademarks allow potential customers to evaluate the reputation of the manufacturer or service provider.

Original artistic works, such as music and film, are often protected by copyright. Authors have exclusive rights to reproduce and distribute copies publicly, create derivative works, and perform their work. However, to obtain the initial copyright they are entitled to under common law, the author must register their work with the relevant authority.

A trade secret refers to a legally protected piece of information that a company doesn’t wish to disclose to the public. Such secrets include:

Formulas
Processes
Patterns
Compilations
Programs
Methods
Devices
Techniques

Contract Law

Digital transformation carries risks that business owners and CTOs must be aware of. Digital servers and independent software developers are two examples of these risks.

CTOs should consider encryption software, train employees about the safe storage of proprietary information, and use non-disclosure agreements (NDAs) to ensure that no information is leaked out.

Compliance

As a result of digital transformation, companies are rethinking how they relate to and serve their customers. Many companies focus on collecting, storing, and using customer data. These murky legal waters need to be carefully traversed.

When implementing digital transformation, the concerns of CTOs should revolve around:

Data mining and control
Use of data for advertisement
Data protection and compliance

Companies must clearly distinguish between personal and non-personal information to comply with data protection laws. Additionally, they should also adhere to all applicable state and industry regulations when storing user information. To ensure they are adhering to all applicable codes of conduct, a global company may want to consult with an experienced law firm.

The Evolving Role of the CTO

The high rate of advancement in technology has led to a significant transformation of the role of the chief technology officer. To perform their role effectively, the CTO must exemplify adaptability in the face of the changing technological landscape and prioritize the integration of IT strategies within the company’s brand strategy.

Consequently, a well-evolved CTO understands that their job description fits neatly within flexible parameters. What’s more, in order to help the company grow, a CTO must be willing to step outside their comfort zone. The COVID-19 pandemic has had a significant impact on the CTO’s role over the past two years, requiring them to operate in a state of constant evolution to ensure company survival.

How Tech Is Impacting Businesses in the UAE and Saudi Arabia

With the UAE having one of the world’s highest rates of Internet penetration, the pandemic has spurred a rise in e-commerce activity across the country. E-commerce ventures in the United Arab Emirates have more than doubled within the last two years. When it comes to cutting-edge digital transformation technologies, the United Arab Emirates and Saudi Arabia are the global leaders.

As a result of Saudi Arabia’s strong IoT adoption, four technologically advanced economic cities have emerged. This has been an essential part of Saudi Arabia’s efforts to diversify its economy and attract foreign direct investment.

Technological advancements have bolstered the Middle East’s economy in recent years. The government and private sector have all made significant investments in 5G, AI, IoT, blockchain, cloud computing, and cyber-security.

The United Arab Emirates and Saudi Arabia have invested heavily in artificial intelligence, positioning them at the forefront of the fourth industrial revolution. It is expected that the Kingdom of Saudi Arabia will remain a global leader in the implementation of smart city projects thanks to big data and artificial intelligence (AI).

Consumers in the United Arab Emirates have taken notice of the growth of e-commerce in recent years. Visa and MasterCard have grown in prominence, and more than half the global population now use their cards to make purchases of all kinds. As a global consumer market, the UAE has always been a major player in the industry.

A Good CTO in the MENA Region Must Be Innovative

In the Middle East and North Africa, digital technology is changing the way businesses and governments operate. This increased use of technology is enhancing the region’s economic growth and competitiveness. As a result of the Middle East’s insatiable appetite for innovation, the region is well-positioned to take advantage of the latest digital opportunities.

CTOs must have the vision and foresight to see how new technologies can help their organizations compete more effectively in the region. Today’s top-performing CTOs can’t just sit back and watch as their competitors embrace new technologies.

With new technologies, it’s essential to keep an eye on the customer. An increasingly tech-centric, collaborative, and agile organization necessitates a shift in the role of technology leadership.

It may become challenging for Chief Technology Officers to comply with all legal requirements that arise during digital transformation, especially within the Gulf region. Just as technology changes, numerous laws are amended, and thus at times, CTOs may not be up to date with the latest legal requirements. In this case, it is crucial to work with an experienced law firm that guides you accordingly throughout your business’s growth stages.

Data Protection and Compliance in the Ed-Tech Industry

Posted on July 24, 2022 - 6:59 pm by perpetual-admin

Recent global developments have made cybersecurity crucial for all sectors. Ed-Tech has experienced tremendous expansion at all educational levels in the last few years due to the pandemic.

Today, nearly every student has at some point attended their lessons using online meeting platforms. These Ed-Tech platforms are helping to gradually digitize the education sector. But as more educational institutions transition to virtual learning, Ed-Tech privacy has become a top concern for students, parents, professors, and school administrators. This means that while Ed-Tech businesses continue developing and providing fantastic learning solutions, they must prioritize student privacy.

Data privacy is a major issue for everyone, but it becomes much more important when dealing with the personal data of minors.

These challenges are associated with the shift to adopting digital tools to enhance education. Ed-Tech has emerged as the primary target of regular, intense cyber-attacks, which are growing exponentially each year. Invasion incidents usually occur because of a lack of data security and privacy implementation. Even a business with strict data security guidelines might fall victim to cyber assaults. This results from the fact that most Ed-Tech initiatives include several partners such as third-party vendors and these associates might not always adhere to the same standards.

It is crucial to maintain thorough protection against any external data theft. As such, Ed-Tech providers should comply with all the laws and regulations governing data protection.

What is Ed-Tech?

Ed-Tech can be defined as the concept of using IT resources in the classroom to create a more interactive, inclusive, and personalized learning environment.

Tablets and even robots that can take notes and document lectures for ill students have replaced the bulky desktop PCs that were previously the standard in classrooms.

The proliferation of Ed-Tech tools is transforming classrooms in several ways. Ed-Tech robots make it simple for students to stay interested through engaging learning activities while IoT devices are praised for their capacity to turn any space into a digital classroom for kids.

How is Ed-Tech Used?

Ed-Tech is a heavily debated subject. There are worries that Ed-Tech is a move to phase out certain in-class tasks to cut expenses because a sizable component of the educational system is unionized.

Ed-Tech developers highlight technology’s capacity for improvement, which frees the instructor to take on more of a facilitator role.

Due to time limits, it can be challenging for a teacher to follow the curriculum, stay up with lower-level students, and keep the class’s top students interested in their work. Ed-Tech can potentially improve results for both the class as a whole and individual students by automating the evaluation of aptitude and modification of difficulty.

There have been two phases of technology deployment in the classroom. The first was the addition of hardware to the lecture hall and the second was the introduction and development of various forms of education-enhancing software. Many of these applications are cloud-based and use algorithms to determine how quickly or slowly to move a learner along various learning objectives based on studies in education.

Ed-Tech Trends Across the UAE and Saudi Arabia

As schools quickly adopted technology to address limitations on in-classroom instruction during the COVID-19 outbreak, the education landscape in the Gulf underwent a seismic upheaval. The Middle East’s education technology market is now worth $350 billion and is expected to grow to $3.2 trillion by 2025.

The UAE’s favorable growth prospects for the Ed-Tech sector are only made possible by a highly skilled workforce and a government that supports education and facilitates the ease of doing business.

Online education was viewed as “supplemental aid” until the pandemic. The same regulatory organizations today approve of completely digitized education and enable, encourage, and support it in both early childhood education and higher education.

The experience of the pandemic has enabled ministries to fully understand the potential benefits of Ed-Tech, as well as its drawbacks. Although governments initially forced it upon ministries due to public health concerns, it has created new opportunities.

As things settle into the new normal, most educational institutions in the Gulf plan to run more like digital businesses.

In this new context, ICT will operate in a mixed learning environment as a “cognitive partner.” Institutions will rely on digital technologies to engage students, handle homework and exams, and conduct digital versions of auxiliary activities like virtual campus tours and recruitment.

Broad-reaching digital efforts are being implemented by Gulf educational institutions. This includes a greater focus on automation and process re-engineering for digital campuses, quick absorption and acceptance of digital education technology, and improved digital data governance and trust.

Artificial intelligence is another promising field within the education sector. Some of the forward-thinking institutions in the Gulf are already exploring more sophisticated use cases,such as personalized and adaptive learning. In contrast, the early use cases concentrated on automating processes like attendance monitoring and test grading.

Ed-Tech Regulations in the GCC and How Companies Can Protect Themselves

The growing frequency of data breaches in the Gulf has heightened the debate over data protection and privacy and sparked various initiatives in both the public and commercial sectors.

Ever since the General Data Protection Regulation (GDPR) was adopted by the EU, businesses in the GCC have been striving to implement policies and methods to comply with these new regulations. Thanks to technological advancements, data is in more demand and more readily available than ever before. However, as recent events have demonstrated, malicious people can use personal data for political and economic purposes.\

GDPR has highlighted the interconnectivity of our digital world by bringing data protection issues to a global audience. The GCC has passed measures to guarantee compliance with the GDPR and other global data protection rules.

Therefore, Ed-Tech companies in the GCC are in a better position to protect themselves if they adhere to GDPR laws and other national-level regulations on data protection.

With the greater focus on data privacy and regulations in the GCC, Ed-Tech companies must take stringent measures to ensure they are compliant with the laws and regulations governing data protection.

We give our clients strong substantive expertise in all facets of the education industry together with the most effective business and litigation strategies. We concentrate on the specific requirements of fast-growing businesses involved in the creation of cutting-edge educational tools, resources, and solutions, and we also work with the universities and other organizations that use these technologies.

An Overview of IPO Readiness and Future Trends in the GCC Region

Posted on July 24, 2022 - 7:03 pm by perpetual-admin

There has been a recent surge of mega listings across the Gulf, driven by Saudi Arabia and the United Arab Emirates. Investors from around the world are increasingly attracted to the promise of substantial dividends from promising industries and innovation across the region.

Nations in the GCC region are actively taking advantage of the increasing demand and high energy prices to publicize state-owned businesses. Are you planning to be a part of the booming Initial Public Offering shift? Will your company benefit from going public? Are you IPO-ready? Here is all you need to know about IPO readiness and upcoming trends in the Gulf region.

Why An IPO?

An initial public offering does the following:

· It provides real-time access to finance.

· It improves the public’s view of a company by making it more credible and visible.

· It makes it very easy for a company to establish share option plans for its workforce. These plans will serve to motivate employees and help the company find good staff.

· It also enriches capital markets with fresh concepts and investment possibilities.

Putting together an IPO requires careful planning and preparedness.

What is IPO Readiness?

When a business is IPO-ready, it has all the systems in place to comply with the legal requirements for selling stock to the public. These systems include:

· Internal controls

· Financial reporting

· Governance

This information will be available to investors on demand from when your business goes public and throughout the IPO process. Investors, analysts, and the media will closely examine your company’s internal operations and financial data. Moreover, new public firms must adhere to a mass of additional reporting and legal requirements for the duration of their existence.

Why You Need IPO Legal Cover

It is undeniable that you will require competent legal representation if you are commencing the process of making your business public. There are many different aspects to this process that your company must be acutely aware of. If you forget any one of them, the results could be unfortunate.

Legal and professional fees will be recurring expenses, however they are imperative in developing and managing the following:

· Putting together, submitting, and finishing the listing application.

· Providing guidance on the dangers and laws surrounding the IPO transaction, such as publicity and transparency.

· Giving direction on the functions of the leading regulatory players, exchange listing requirements, and securities regulations.

· Counter-examining and confirming everything to ensure no problems would subject the company to lawsuits after the IPO.

IPO Trends in the Middle East to Look Out For In 2022 And Beyond

Bloomberg data shows that IPOs in the Middle East have raised $11.4 billion during the first five months of this year. This is more than any other year’s first six months. Since petrochemicals company Borouge started trading in Abu Dhabi earlier this month – raising $2 billion – the sum will only go up.

For this year, the energy industry is one of the few bright spots for IPOs. This is because oil prices have gone up by 50%, helping Gulf economies and equity markets. Share sales in Europe are at their lowest level in 20 years because of high inflation, rising interest rates, and a depressed economy in general. In contrast, the Middle East has more or less managed to avoid these problems and has continued to successfully attract investors from other countries.

Trends Beyond the Oil Sector

In recent years, diversification has become a top priority for GCC governments. The recovery is being driven by growth in areas other than oil. Sectors like monetary services are doing well since the pandemic. The key to Saudi Arabia’s economic regeneration is its vast domestic market and the government’s commitment to big projects.

Enterprises praise their forward-thinking policies and methods. With half of the world’s people only an eight-hour flight away, the Middle East has now become a true economic powerhouse. It serves as a prime mover for trade, exchange, advancement, and revenue generation.

GCC trade growth will be bolstered by the hope that supply chain slowdowns and cross-border activity delays are set to improve in the next few quarters. If you have been thinking of an IPO, this might be the right time to start getting ready.

In summary

The proliferation of 5G technology and the growth of online platforms and marketplaces are leading to new ways to run successful businesses. As a result, the regional business environment will change in a way that will significantly affect economic patterns and social dynamics. The GCC’s non-oil industries will continue to lead the economy over the next ten years, giving the regional markets and stock prices an immense boost.

What does this mean for you? It simply means that you ought to prepare adequately for that coming IPO. Having the right legal support team by your side is key to making this happen.

Mergers & Acquisitions 2022

Posted on August 3, 2022 - 7:39 am by perpetual-admin

The Saudi market showed more resilience and has started to mature in new sectors such as VC Capital, by attracting global investors and increasing the number of VC firms locally. It is expected that the region in general will witness more M&A deals to streamline costs.

The year 2022 is expected to bring further developments and adoption of new laws and regulations that will aim to boost the Saudi business environment and empower and attract talent. Industry watchers sense Saudi’s Vision 2030 may operate as a long-term economic catalyst to spur deals from companies looking to achieve operational synergy through economies of scale.

We share high-level insights on the M&A market across Saudi Arabia, along with the key legal developments which further reinforce deals.

For the full chapter, click here:

GLI-M&A22_Chapter 12_Saudi Arabia GLI-M&A22_Chapter 12_Saudi Arabia

The Growth & Impact of Digital Banking in Saudi Arabia

Posted on September 5, 2022 - 8:37 am by perpetual-admin

As the world becomes increasingly digitised, so too does the way we bank. In Saudi Arabia, the banking sector has undergone a digital transformation in recent years with new technologies and services being introduced to make the banking experience more convenient and efficient for customers.

By 2024, the number of people who use digital banking apps is projected to reach 2.5 billion. In Saudi Arabia specifically, banks are planning to make significant investments in digital over the coming years. Between 2017 and 2019, fintech transaction values have increased 18 per cent year-on-year in Saudi Arabia and are expected to reach USD$33 billion by 2023. This is in line with the Saudi Vision 2030, which aims to make the Kingdom a global investment powerhouse and diversify its economy away from oil.

How KSA’s Digital Banking Sector is Evolving

When it comes to banking, Saudi Arabia is considered a late adopter of digital transformation compared to other countries in the world. However, in recent years, the Kingdom has made great strides in its journey towards a digital future.

As part of Vision 2030, there has been a focus on developing the digital infrastructure and capabilities of Saudi businesses. This has been evident in the investments made by the government and private sector into fostering a healthy digital ecosystem for banking and financial services. Last year, the government granted its first digital banking licences to two locally established banks.

STC Pay was launched by telecoms provider STC in 2018 and is one of the most popular digital banking apps in Saudi Arabia. The app offers a range of features such as the ability to pay bills, send money, and make online purchases. Users can also take advantage of special discounts and offers from STC and partner businesses.

The second digital bank that was approved by the Saudi Monetary Authority (SAMA)

was Saudi Digital Bank, which was created by Abdul Rahman bin Saad al-Rashed and Sons Company — one of the most well-respected construction and real estate businesses in the Kingdom. The bank offers a host of digital services such as personalised banking, mobile payments, and money transfers.

Since the launch of these two digital banks, several more have been approved and there has been an increase in the number of people using digital banking services in Saudi Arabia. According to one survey, 82% of Saudi respondents use a digital bank at least once per week and 88% of people would choose digital banking services over visiting a branch in person.

To further develop the digital banking ecosystem, the government has invested in initiatives to support small businesses. In 2016, the Saudi government launched Monshaat, an online platform that offers a range of services for small businesses, including access to financing. This is in line with the Vision 2030 goal of supporting entrepreneurship and small businesses and will help to create an ecosystem that will promote the development of smaller digital banking and fintech companies in Saudi Arabia.

The Challenges of Digital Banking

Despite the clear benefits of digital banking, there are still some challenges that need to be addressed to further develop the sector in Saudi Arabia. One significant issue is the lack of awareness about digital banking and its benefits amongst the older generation. However, since the majority of Saudi Arabia is under the age of 35, this is likely to change over time as more people become comfortable with using digital banking services.

Perhaps the biggest challenge facing digital banking in Saudi Arabia is the risk of fraudulent activity. Phishing scams are a particular problem and there have been several high-profile cases in recent years. According to the Kaspersky Digital Payments survey, 57% of Saudi respondents have encountered some kind of scam activity while using online banking services. This is a significant concern and something that needs to be tackled to ensure the continued growth of digital banking in the Kingdom.

Overall, digital banking is a key part of the government’s Vision 2030 goal to modernise the Saudi economy and make it more competitive on the global stage. By making it easier for people to access banking services and providing support for small businesses, the government is promoting the development of a thriving digital ecosystem.

Dispute Resolution in a Modern Economy

Posted on September 5, 2022 - 8:41 am by perpetual-admin

Saudi Arabia, the world’s largest oil producer, has been undergoing a major transformation in recent years as it looks to diversify its economy and reduce its reliance on petroleum revenues. As part of this process, the government has laid out a plan to transform Saudi Arabia into a more business-friendly environment. Part of this transformation includes reforming the legal system with respect to commercial law.

Dispute resolution is a key area of commercial law, and Saudi Arabia’s legal system is currently undergoing a process of reform in this area. As the nation begins to attract significant Foreign Direct Investment (FDI), international businesses are set to benefit from greater transparency and confidence in the legal system with respect to disputes.

KSA’s Economic Changes & the Legal System

Saudi Arabia’s legal system is based on Islamic law (sharia) and is therefore distinct from the common law systems of many Western nations. The government has been working to standardise the legal system in recent years, and this process has accelerated in light of the Kingdom’s plans to diversify its economy. These changes are designed to make Saudi Arabia a more attractive destination for Foreign Direct Investment (FDI) and to create a more business-friendly environment.

Some of the key changes that have been made in recent years include:

E-Commerce Licencing

As part of a move to provide greater protection to consumers, the government has informed e-commerce enterprises that they must now apply for a licence in order to operate in Saudi Arabia. Online retailers can either make this application via the Ministry of Commerce or the Freelance Platform. This registration can be performed entirely electronically, removing barriers to entry for businesses.

New Companies Law

In 2022, the Saudi government signed off on a new companies law, which is designed to make it easier for businesses to set up and operate in the Kingdom. The law includes a number of key reforms, such as the introduction of a new type of company called a Simplified Joint Stock Company with an aim to meet the needs of entrepreneurs.

This new law also addresses ownership, governance and employment to help simplify the process of setting up a business while also regulating the business landscape. Speaking to Asharq Al-Awsat, Osama al-Obaidi, Professor of Commercial Law at the Institute of Public Administration (IPA), said that these legal changes will “boost corporate governance principles, facilitate regular procedures, and reduce disputes.”

Commercial Arbitration

The Saudi government has also been working to promote arbitration as a means of dispute resolution and this is an area where businesses can expect to see further reform in the future. The Saudi Center for Commercial Arbitration (SCCA) was established in 2014 and is working to promote the use of arbitration among businesses operating in the Kingdom. It provides training and education on the benefits of arbitration and assists businesses amid disputes.

The Impact on Dispute Resolution

The reforms to Saudi Arabia’s legal system will have a significant impact on commercial disputes. Businesses operating in the Kingdom will benefit from greater clarity and certainty with respect to their legal rights and obligations. While Saudi’s business leaders are still slightly hesitant to engage with arbitrators, there is a growing recognition of the benefits of arbitration as a means of dispute resolution.

This will position Saudi Arabia as a more attractive destination for investment since foreign enterprises will be afforded greater protection thanks to the recognition of transnational arbitration awards and the availability of impartial dispute resolution. It removes an element of risk for international businesses and will encourage more companies to invest in Saudi Arabia.

As Saudi Arabia continues to evolve as an economy, businesses can expect to see further reform in the legal system. Overall, these reforms are proving to be a positive development for businesses operating in the Kingdom and will help transform the nation into a safe and profitable destination for FDI.

Digital Banking & The Future Legal Considerations

Posted on September 29, 2022 - 3:04 pm by perpetual-admin

The digital banking sectors in the UAE and Saudi Arabia are growing exponentially, allowing them to catch up with the more technologically developed countries in the world. The UAE’s fintech industry is currently growing at a steadier rate than Saudi Arabia’s, but the Kingdom is not far behind. Thanks to Saudi Telecom Bank leading the way, Saudi Arabia is quickly gaining ground in the digital banking revolution.

Inevitably, there are legal considerations for some digital banking technologies emerging in these countries. Regulations are being updated and new legislation is being drafted to account for the changes in technology. As such, it is important for businesses to keep up to date with the latest legal developments in order to ensure compliance.

Digital Banking Trends Over the Last Four Years

Starting around 2018, mobile technologies became a key feature of digital banking. Millennials and Generation Z saw the value in digital banking and this growing demand resulted in an increase in mobile banking applications.

Some other major trends in the digital banking sector have included:

A stronger focus on online security in relation to online banking.
A shift from desktop to mobile digital banking.
The emergence of digital banks with no brick-and-mortar presence.
The use of APIs (Application Programming Interface) to create more open banking.
The use of blockchain technology (as part of Web 3 technologies) to help create more private and secure online banking channels.
The emergence of artificial intelligence and the Internet of Things to create more digital banking experiences.
The introduction of the metaverse and the concept of banking in virtual reality.

All these present new legal considerations for digital banking in the region. At the same time, these innovations also present exciting opportunities for businesses to explore. It’s worth looking at a few of these in more detail to see what legal challenges they might face over the next couple of years.

The Cybersecurity Implications of Using APIs in Digital Banking

Open banking is the new norm within Saudi Arabia and UAE. As part of the former’s Vision 2030 initiative, the use of APIs across banking institutions is helping people and companies share banking information faster and more efficiently.

Since much of this financial data is being communicated through third-party applications, security is a major legal concern. Financial information is one of the most sensitive types of data that can be transmitted digitally, and the sharing of this information can sometimes become problematic.

The integration of multiple technologies and applications can increase the risk of cyberattacks, which cause major legal ripples for both banks and customers. Due to many financial institutions wanting to rush API implementation into their financial infrastructure, some technical vulnerabilities might have been overlooked.

When this happens, many legal problems can occur. The affected parties might sue the bank for damages if a security breach occurs. A data breach can also lead to regulatory issues, especially if customers’ personal information is involved. Only a robust cybersecurity investment and a detailed response plan can help to avert and mitigate these potential risks.

Blockchain Technology & Its Unique Challenges

Blockchain technology is a powerful tool that can help businesses overcome certain cybersecurity issues. At the same time, blockchain (or distributed ledger technology) has its own legal implications and risks to consider.

A major aspect of this relates to the lack of accountability during an event in which financial data is compromised. While blockchain is generally considered secure, it’s still possible for data to be breached if passwords or other security keys are stolen.

Data input points could also be compromised, leading to the proliferation of false financial information. Despite the ledgers in blockchain technology being secure, compromising data from the entry point is still a possibility, hence leading to further security risks.

Should data be stolen, the distributed nature of the blockchain makes it difficult to pinpoint responsibility. Pinning blame on one company could create a legal quagmire, resulting in long investigations and little clarity for those who have been affected.

This is one of the key reasons why many businesses have been hesitant to fully adopt blockchain technology. No technology is perfect, which is why businesses need to be aware of the potential legal risks they might face when implementing new digital banking solutions.

The Potential Legal Risks of Newer Technologies Such as the Metaverse

We’ve all heard about the Metaverse and Mark Zuckerberg’s mission to restructure the World Wide Web as an interconnected world based in virtual reality.

However, the Metaverse itself still remains a concept in development. Facebook’s parent company — Meta is still working on perfecting the technology. But with VR technology getting more advanced by the day, it’s only a matter of time until the Metaverse becomes reality.

This means it’s inevitable that someday, digital banking will enter the Metaverse. While some critics may consider the Metaverse as a frivolous concept, it will eventually have a profound impact on the way we bank and do business — with the potential for some interesting implications.

Many financial institutions are recommending that banks get ready to use the Metaverse to help new banking customers build relationships with their banks. Since many people no longer visit their bank in person when they open their first accounts, the Metaverse can offer a new digital way to experience this in virtual reality.

Of course, the legal aspects of using the Metaverse mostly fall in the realm of cybersecurity again. With such a complicated digital landscape to design this, there will be many security aspects to consider. The potential legal risks could be higher than with any other digital banking solution currently available.

The Use of These Technologies in UAE & Saudi Arabia

The rapid arrival of these digital banking technologies in the UAE and Saudi Arabia has led to a big discussion about the legal and regulatory aspects of their use. But it’s also an exciting time for the region, as both countries are working hard to be leaders in the digital banking world. Thanks to the introduction of over 40 financial free zones and the fintech sandboxes in both countries, there are a lot of opportunities for businesses to operate in these economies.

The Push For Alternative Energy In The GCC

Posted on September 29, 2022 - 3:07 pm by perpetual-admin

The worldwide energy industry is headed towards an extraordinary excursion and the Gulf Cooperation Council (“GCC”) is pushing to be a pioneer in this rising market. The United Arab Emirates (“UAE”) and the Kingdom of Saudi Arabia (the “Kingdom” or “KSA”) are two of the central figures in the movement toward utilising more sustainable and environmentally friendly energy sources, and both have made large investments in research and development for these fields.

From NEOM to ADNOC, the UAE and Saudi Arabia are working to establish themselves as leaders in the global energy market, and it is clear that alternative energy will play a major role in their plans. These two nations have access to the necessary technical expertise and financial resources to drive a more clean-energy strategic focus in the future.

GCC Clean Energy Drive Requires $50b for Grid-related Speculations

The GCC would require approximately $50 billion by 2026 to boost the proposed increments from renewables, as highlighted in a recent white paper, ‘Clean Energy — Going Beyond the Grid’.

Improvements in sustainable power innovation are one of the critical mainstays of the UAE’s Operation 300bn and Saudi Arabia’s Made in Saudi Initiative, which are both national plans that envision improving the contribution of renewables in the energy blend of their nations.

The UAE National Energy Plan 2050 calls for clean energy to achieve 50% of the country’s complete energy blend by 2050. This would lower the carbon footprint by 70%, requiring an investment of $190 billion along the way.

Two of the biggest single-site solar plants in the world are currently being created in Abu Dhabi and Dubai. Both will add to the developing UAE green economy while advancing the nation’s status as a global renewable energy player.

Furthermore, Saudi Arabia is focused on deriving 50% of its energy from renewables by 2030 and the Kingdom also intends to spend up to $50 billion on this sector by 2023. Under the normal expansion in grid-related ventures, the transmission and circulation gear industry are supposed to top $312.8 billion universally by 2026.

Minerals Projects

Inside the unique energy sector, organisations with a history of upgrading power age and energy stockpiling arrangements are assuming a significant part in empowering the practical creation of minerals universally. This is subsequently assisting the world to decarbonize more quickly.

Perhaps the best illustration of that, is in Saudi Arabia, where at the height of the COVID-19 pandemic in 2020, consent was given to supply a 45 MW power plant to the biggest gold venture for the Saudi Arabian Mining Company.

The Mansourah-Massarah plant uses a crossover of motor innovation and solar power, and Finnish energy company Wärtsilä has the mandate to introduce six power motors — working in close coordination with project worker for hire, Larsen, and Toubro and EPC project worker, Outotec.

The task is important for Saudi Arabia’s Vision 2030, which plans to expand revenue sources for the Saudi economy by moving away from oil dependency and increasing the mining of under-exploited assets such as gold.

Changes to the Legal and Regulatory Framework Governing Clean Energy

The GCC’s ambitious plans for alternative energy will have major legal implications, both in terms of the regulatory frameworks that need to be put in place and the contracts that need to be negotiated.

Accordingly, a coordinated approach to alternative energy may need to be taken by the GCC and the applicable GCC national laws and regulations may need to be further developed and enhanced in order to become a suitable regional market for alternative energy.

Saudi Arabia

The Ministry of Energy (“MoE”) has introduced the National Renewable Energy Program (“NREP”), which aims to diversify the Kingdom’s energy resources. Several incentives were issued to promote investments into the renewable energy projects under the NREP, which include direct foreign ownership and land incentives that include subsidized leases for projects. This will further entice foreign entities to invest in the Kingdom’s renewable energy schemes, while also resulting in the formation of innovative technologies within the renewable energy sector that include solar photovoltaic technologies, waste to energy technologies, wind energy technologies and concentrated solar power technologies. All such renewable technologies have been identified and developed under the NREP to further diversify the Kingdom’s local energy supply and to further encourage foreign investment along with public-private participation within the energy industry.

To that end, MoE, in collaboration with the Ministry of Industry and Mineral Resources and Non-oil Revenue Development Center, introduced further initiatives that allow companies whose activities involve renewable energy and solar power plants to apply for and obtain industrial licenses. These initiatives aim to support the renewable energy industry and economic growth while enhancing the Kingdom’s capabilities regarding renewable energy, and to achieve an optimum energy usage in electrical productions. Furthermore, the Gulf Cooperation Council (“GCC”) grants industrial projects with benefits and facilities to promote the industrial sector and to attract investments to countries in the GCC under the scope of the Common Industrial Regulatory Law of the GCC Countries (the “Law”). This Law grants companies’ certain exemptions from customs duties in relation to manufacturing and industrial projects. Such exemptions are aimed to enhance investments and increase production and adoption of renewable energy in the KSA.

In addition to having solar power plants, KSA’s 2030 target includes the usage of the aforementioned Solar Photovoltaic (“PV”) Systems. The Water & Electricity Regulatory Authority (“WERA”) issued a regulatory framework for the use of Small-Scale Solar PV Systems. The framework aims to promote the use of Small-Scale Solar PV Systems and ensure efficient and safe production, installation, operation, and maintenance of these systems within the Kingdom. Under the regulatory framework, customers may build/possess and operate on a premises in which a Small-Scale Solar PV System may be installed. This Solar PV System helps convert solar energy into electricity and gives a more efficient way of obtaining electricity using renewable energy, thus, reducing the usage of oil and instead using a renewable energy source that does not emit carbon.

Moreover, the Kingdom has also introduced the Saudi Green Initiative (“SGI”) which works to combat climate change as its main goal while also aiming to offer significant investment opportunities for local and foreign investors in the energy sector in KSA. The SGI’s programs which include environmental protection, energy transformation and sustainability, aims to reduce carbon emissions and increase domestic usage of renewable energy. To that end, the kingdom developed cost-effective technologies for efficient carbon management, with the aim of eliminating gas combustion by 2030.

The UAE

The UAE has taken a leading role in the development of renewable energy in the GCC, and currently has the largest installed capacity of solar PV in the region.

The objective of the Dubai Clean Energy Strategy 2050 is for clean energy to contribute 25% of Dubai’s overall energy output by 2030 and 75 per cent by 2060. To achieve this, the Dubai Electricity and Water Authority (“DEWA”) has launched a number of initiatives, including the Shams 1 solar-thermal plant (100MW) and the Mohammed bin Rashid Al Maktoum Solar Park, which represents a total investment of AED 1.2 billion and is the largest single-site solar park in the world.

In addition to this, the Dubai Green Fund has been established to provide financing for renewable energy projects. The Fund is open to both local and international investors and offers a number of benefits, including tax exemptions and visa facilitation.

In the realm of transportation, the Dubai Supreme Council of Energy has initiated free charging, parking, and registration fees. The Dubai Autonomous Transportation Strategy also aims to have 25% of all trips made using driverless vehicles by 2030.

The Future

Ultimately, the GCC is at the forefront of the global energy transition, and its ambitious plans for alternative energy will have major legal implications.

In order to meet its renewable energy targets, the GCC will need to make significant changes to its current regulatory frameworks and invest in developing the infrastructure needed to support large-scale renewable energy projects.

The GCC is also likely to face challenges in relation to water availability and land use, as well as the need to develop a skilled workforce for the renewable energy sector.

Despite these challenges, the GCC is well placed to become a global leader in renewable energy, and its commitment to this transition will have far-reaching legal implications.

Ebaa Tounesi

Associate – Corporate & Commercial Practice

Emerging Trends of Saudi Arabia’s Sporting Industry

Posted on October 12, 2022 - 12:20 pm by perpetual-admin

Entertainment and sporting events have not always been the first things that come to mind in relation to Saudi Arabia. However, in recent years the country has made great strides in developing its entertainment industry, with a particular focus on sports. This has been driven by several factors, including the country’s large and young population, and the government’s desire to build a more diverse and modern economy.

While the sporting industry in Saudi Arabia is still in its early stages of development, it is currently growing at a rapid pace. This is evident in the increasing number of sports facilities and events being held in the country and the growing number of Saudis participating in sports. In addition, the Saudi government has been investing heavily in the sporting industry, both in terms of infrastructure and supporting local athletes.

Key Developments in Saudi Arabia’s Sporting Sector

The Saudi government has taken a keen interest in the role of sports and sporting events in the country’s development. In line with its Vision 2030 reform agenda, the government has set out to increase participation in sports and improve the quality of sporting facilities and events within the Kingdom. This has led to many developments within Saudi Arabia’s sporting sector, including the ones outlined below.

Increase in Major Sporting Events

One of the most notable developments in Saudi Arabia’s sporting industry has been the increase in major sporting events being held in the country. Over the past five years, the country has hosted several high-profile sporting events, including the Saudi Arabian Grand Prix in 2021, the Joshua v Ruiz II – “Clash on the Dunes” in 2018 and the Saudi Cup international horse racing event in 2020. Saudi Arabia has now put forward its bid to host the FIFA World Cup in 2030.

The Introduction of ESports

Esports — competitive electronic gaming — is not recognised by many countries as a sport. This means it can be difficult for professional gamers to find an appropriate venue to compete at an international level. However, in recent years, Saudi Arabia has begun to nurture its own esports scene, which has included the establishment of the Saudi Esports Federation in 2017. In the summer of this year, the federation launched the Gamer8 Festival, which was a highly successful 8-week esports event held across Riyadh.

The Growth of Women’s Sport

The Saudi government has taken a keen interest in increasing women’s participation in sports over the last decade. In 2012, the nation sent its first female athletes to the Olympic games and from 2017 onwards, women have been allowed to compete in sports tournaments held in the country. 2020 saw the launch of the Saudi Women’s Premier League, ushering in a new era for women’s football in the Kingdom.

The Rise of Sports Tourism

The Saudi government is also looking to develop the country’s sports tourism industry. In 2018, the Kingdom hosted the first season of the World Boxing Super Series at King Abdullah Sports City in Jeddah, which attracted boxing fans from all over the world. The country is also set to host the Spanish Super Cup semi-final in 2023 and the Formula E Diriyah E-Prix early next year. These types of events are not only a boost for the sporting industry, but also for the country’s economy as a whole.

Savvy Games Group Strategy

In September 2022, Saudi Crown Prince Mohammed bin Salman announced the government’s goal of becoming a global hub of games and esports, with the launch of the Savvy Games Group Strategy. This ambitious plan includes a focus on developing the local games industry, as well as supporting Saudi Arabian gamers to compete at an international level. As part of the plan, the government will establish 250 games companies in the country by 2030, creating over 39,000 jobs. In total, government investment in this strategy is expected to reach SAR 142 billion by 2030.

Next World Event

The Saudi Esports Federation just hosted the inaugural Next World Forum in September 2022. It was a two-day event that saw a number of prominent Esports industry speakers gather to discuss the future of the sector. Among them were Grant Johnson, the chairman and CEO of Canada’s Esports Entertainment Group and Chester King, the vice president of the Global Esports Federation. The forum was a huge success, with over 1,000 people in attendance from across the globe.

What Does the Future Hold?

The sporting industry in Saudi Arabia is still in its early stages of development. However, the sector is growing at a rapid pace and the government is fully supportive of its growth. This is evident in the many developments that have taken place in recent years, including the increase in major sporting events, the arrival of esports and the active promotion of women as both sports spectators and competitors.

In addition to this, the Saudi government is keen to develop the country’s sports tourism industry as part of its move to diversify the nation’s economic activity. With the government’s continued support, it is likely that the sector will continue to grow in popularity and size, welcoming a new era of sports in Saudi Arabia.