Article 49 of the Saudi Water Law
المادة 49 من نظام المياه · الفصل العاشر: خدمات المياه
Article 49 requires a service-activity licensee to get the Authority's approval before merging with others or acquiring most of their shares or assets, and to notify the Authority of any preliminary agreement.
Official text (Arabic)
This article has not been amended since the law was issued.
يجب على المرخَّص له بنشاط تقديم الخدمة الحصول على موافقة الهيئة قبل الاندماج مع أشخاص آخرين، أو امتلاك معظم حصصهم، أو موجوداتهم، ويجب عليه إشعار الهيئة بأي اتفاق مبدئي يتم التوصل إليه في هذا الشأن.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 49 explained in plain English
This article governs mergers and acquisitions to which a licensee of a service-provision activity is a party. It contains two obligations:
First: obtaining the Authority's approval in advance before any of the following:
- Merging with other persons.
- Acquiring most of their shares.
- Acquiring most of their assets.
As the text says, what counts for shares and assets is acquiring most of them, and the article does not state a specific percentage.
Second: notice of a preliminary agreement. The licensee must notify the Authority of any preliminary agreement reached on this matter. The notice obligation starts at the stage of the preliminary agreement, and it is separate from the obligation to obtain approval.
Note that the article addresses the licensee as the party that merges or acquires. It does not specify the procedures for requesting approval or the time for deciding on it.
This article complements Article 48, which prevents the licensee from assigning its license or disposing of the licensed assets without the Authority's written permission. The purpose of the two provisions together is to keep the Authority informed of any change in the structure of service providers.
Mergers and acquisitions may also be subject to other laws not covered here, so the parties to a transaction would do well to consult a lawyer specializing in water law, commercial matters and companies.
Practical example
A company licensed for a desalination activity in the Western Region reaches a preliminary agreement to buy most of the shares of another company. Under this article it must notify the Authority of that preliminary agreement, and the acquisition may not be completed until the Authority's approval is obtained.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 49 of the Saudi Water Law
Do mergers between water companies need approval?
Yes. Under Article 49, a licensee of a service-provision activity must obtain the Authority's approval before merging with other persons.
Must the Authority be notified of a preliminary agreement to acquire a company?
Yes. The article requires the licensee to notify the Authority of any preliminary agreement reached on this matter.
What does acquisition mean in this article?
Acquiring most of the shares or most of the assets of other persons, without the article specifying a particular percentage.
More articles on Water Service Licenses and Infrastructure
- Article 17
The article bars the relevant bodies from issuing licenses or approvals for any facility that may obstruct the use of surface water except with the Ministry's prior approval.
على الجهات المعنية عدم إصدار رخص أو موافقات على إقامة أيّ منشأة قد تعوق استخدام المياه السطحية إلا بموافقة مسبقة من الوزارة.
- Article 47
The article makes issuing, renewing and amending licenses, exemptions and permits for service provision activities the Authority's responsibility, and bans carrying out any of these activities without a license except those exempted by the Authority's regulations.
1- تتولى الهيئة إصدار الرخص، والإعفاءات، والتصاريح اللازمة لمزاولة أي نشاط من أنشطة تقديم الخدمة، أو الإعداد لمزاولته، وتجديدها، وتعديلها. 2- فيما عدا الأنشطة ا
- Article 48
The article prohibits a licensee for a service provision activity from assigning its license or disposing of the licensed assets in any way before obtaining the Authority's written permission, without affecting the performance of the activity.
لا يجوز للمرخَّص له بنشاط تقديم الخدمة -قبل الحصول على إذن مكتوب من الهيئة- التنازل عن رخصته، أو التصرف في الأصول المرخَّص لها، سواءً بالنقل، أو البيع، أو الرهن
- Article 50
Article 50 requires the Authority, in coordination with the Ministry, to make the necessary arrangements to ensure service continues if a service-activity licensee is unable to carry out its activity for any reason.
إذا تعذر على المرخَّص له بنشاط تقديم الخدمة القيام بنشاطه المرخَّص له به لأي سبب، فعلى الهيئة -وبالتنسيق مع الوزارة- اتخاذ الترتيبات اللازمة؛ لضمان استمرار تقدي
- Article 51
Article 51 gives the Authority's inspectors the right to enter sites and facilities licensed by the Authority to check compliance with the Law, and allows the Authority to coordinate with the competent bodies if they are prevented or obstructed.
1- لمفتشي الهيئة الحق في دخول المواقع والمنشآت المرخَّص لها من قبل الهيئة؛ للتأكد من مدى الالتزام بتطبيق أحكام النظام. 2- في حال منع أو إعاقة مفتشي الهيئة عن تأ
- Article 52
Article 52 tasks the Ministry or its delegate with building water harvesting infrastructure and networks outside the jurisdiction of the secretariats, municipalities and special zones when there is no licensee, and treats public water infrastructure as state property.
1- تقوم الوزارة أو من تفوضه في حال عدم وجود مرخَّص له في المناطق الواقعة خارج نطاق اختصاص الأمانات والبلديات والمناطق الخاصة؛ بإنشاء بنى أساسية، وشبكات، وأنظمة
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.