Advisory Agreement Template for Saudi Arabia

An Advisory Agreement is a legally binding contract that formalizes the relationship between professional advisors and their clients in Saudi Arabia. This document serves as the foundation for all advisory services, whether you're engaging a financial consultant, business advisor, or specialized professional services firm. Under Saudi law, particularly the Commercial Court Law and Professional Companies Law, having a properly structured advisory agreement is essential for legal compliance and protection of both parties' interests.

When do you need this document?

You need an Advisory Agreement whenever you're establishing a professional advisory relationship that goes beyond casual consultation. This includes situations where you're hiring investment advisors for portfolio management, engaging business consultants for strategic planning, or working with specialized professionals for regulatory compliance. The agreement is particularly crucial when dealing with regulated sectors such as banking, insurance, or capital markets, where specific licenses and qualifications are required. Government entities and semi-government organizations also require formal advisory agreements to ensure transparency and accountability in their professional relationships.

Key legal considerations

Your Advisory Agreement must clearly define the scope of services to avoid disputes and ensure deliverables are met. Confidentiality clauses are critical, especially when advisors will access sensitive business information or trade secrets. Fee structures should be transparent and compliant with Saudi regulations on professional service pricing. The agreement should distinguish between advisory relationships and employment to avoid unintended labor law obligations under the Labor Law. Liability limitations and indemnification clauses protect both parties while ensuring fair allocation of risks. Additionally, the agreement must include appropriate termination clauses that respect both parties' rights and obligations.

Legal requirements in Saudi Arabia

Under Saudi Arabia's Commercial Court Law, advisory agreements must comply with general contract principles while respecting Sharia law requirements. If your advisor is a professional company, the agreement must conform to the Law of Professional Companies, including proper licensing and registration requirements. For financial advisory services, compliance with the Capital Market Law is mandatory, requiring advisors to hold appropriate licenses from the Capital Market Authority. The agreement should specify the governing law and include dispute resolution mechanisms that are enforceable in Saudi courts. Anti-Commercial Fraud Law requirements mandate transparency in fee arrangements and service descriptions. Finally, ensure that foreign advisors have proper work authorization and that the agreement doesn't create unintended commercial agency relationships under the Commercial Agencies Law.