Article 18 of the Saudi Private Health Institutions Law

This article sets out three cases in which the license is cancelled:

1. Transfer of ownership of the private health institution to another owner.
2. Change of the institution's activity.
3. Change of the place designated for carrying on the activity.

The condition common to them is that this takes place without the Ministry's approval, that is, the Ministry of Health.

What does this mean in practice?

• The license is tied to the owner, the activity and the place together, so any change in one of them needs prior approval.
• Whoever buys an existing clinic or complex cannot rely on the sale between himself and the seller; he must obtain the Ministry's approval, or the license is cancelled.
• Moving the clinic to another building, even in the same neighborhood, counts as a change of the place designated for the activity.

The text says "is cancelled", so the effect follows from the change occurring without approval. The article does not address the procedures for requesting approval.

These cases differ from the cases in which a license expires under Article 19, such as its period ending without a renewal request, or six months passing from the death of the institution's owner, with the license possibly being kept for the heirs' benefit if they apply within six months of the death. It is preceded by Article 17, which creates the inspection committees in the health affairs directorates.

Because deals to sell or move health institutions can lose the license if done without approval, it is wise for the parties to consult a lawyer who specializes in commercial and corporate cases before signing, and to make completion of the deal conditional on obtaining the Ministry's approval.