Latham & Watkins has been granted a regional headquarters (RHQ) licence by Saudi Arabia, as international law firms increasingly look to the kingdom amid its rise as an economic powerhouse.  

The move follows a 1 January deadline when all multinational companies operating in the kingdom were required to have their MENA headquarters there or risk losing out on lucrative government contracts.  

Latham’s RHQ will be based in Riyadh and will provide strategic direction and management support across the MENA region, the firm said. It will be led by Salman Al-Sudairi, managing partner of the MENA region, and Safaa Arthold, the director of administration of the MENA region.  

The RHQ scheme has been introduced as part of efforts by Crown Prince Mohammed bin Salman to wean Saudi Arabia’s economy off oil by creating new industries that also create jobs for Saudis, according to Reuters.

It has brought the kingdom into competition with regional business hub Dubai, which many international law firms have long viewed as their de facto Middle East headquarters. However that could be set to change, with Latham following the likes of Kirkland & Ellis, White & Case and Clyde & Co in obtaining an RHQ licence in Saudi Arabia. 

The licence comes with a number of benefits, including 30 years of tax relief on corporate income and withholding taxes related to the RHQ, as well as the ability to issue an unlimited number of visas to RHQ employees.  

Key requirements include that the RHQ must employ at least 15 full-time employees including at least three C-level executives, and that the RHQ cannot engage in revenue-generating activities – instead it must operate as the “centre of administrative control” in the MENA region. Participating companies must also have all their existing MENA entities report to their RHQ in Saudi Arabia once it is established. 

Another key element of the scheme is that as of the start of this year eligible companies that have not set up their MENA headquarters in Saudi Arabia have not been able to enter into contracts with its government entities. That includes all agencies, ministries, public bodies, departments, institutions and independent agencies with a public legal personality, meaning the rule covers the largest cross section of business in the kingdom. 

Latham, which said its clients in the Middle East included governments and government-owned entities, has been operating in the region since 2008 and currently has around 40 lawyers across offices in Tel Aviv, Dubai and Riyadh.  

Last year it became one of the first international law firms to be granted a Foreign Law License to practise in Saudi Arabia, following changes to the kingdom’s Code of Law Practice intended to encourage foreign firms to set up in Saudi Arabia so legal work is engineered within the country.

Al-Sudairi commented: “We are delighted to receive our regional headquarters license, which marks another important milestone for our practice in this key market.  

“Our regional headquarters in Riyadh will lead on setting our strategic vision for Saudi Arabia and the rest of the MENA region. From tech to energy, finance to sports, there is tremendous growth opportunity in this market, and we’re well-positioned to support our clients’ success in the region and beyond.”