How to set up a company up in Saudi Arabia

How to set up a company up in Saudi Arabia

Saudi Arabia is the largest economy in the Gulf region and is becoming an increasing viable destination for foreign investors and companies to expand into to take advantage of the growing Saudi market.

Recent regulatory changes in the Kingdom have also significantly increased the attractiveness for companies to set up - allowing 100% foreign ownership through the Ministry of Investment of Saudi Arabia (MISA) platform.

This process, however, can be arduous and time consuming and using a service agent based in the Kingdom that can oversee the formation from initial registration to full operation will save time and money whilst the business concentrates on its expansion objectives and strategy. PRO Partner Group have their own PRO support services to assist with the critical government registrations and have access to local law firms that are industry sector specific and well versed to assist in the company formation process.

What documents do I need to set up in KSA?

To register as a 100% foreign owned LLC or branch company you first need to receive a licence from the Ministry of Investment (MISA) in Saudi Arabia. The company will need to submit a concise and well documented business plan to allow MISA to completely understand the business operations and expansion strategy in KSA. This will form part of the initial approval process within MISA.

After an initial approval is received, with clarification on the activity classification, you will then need to have the following company documents legalised, attested and certified at the Saudi embassy/consulate in your home country.

  1. Trade Licence (Commercial Registration)
  2. Articles of Association / Memorandum of Association
  3. Certificate of Incumbency
  4. Audited financial statement for the last financial year
  5. Passport copy of the assigned General Manger of the Saudi entity

Once these documents are in place, they are submitted online to MISA along with the appropriate payment. This will activate the more formal application process which, once approved, will generate the MISA licence.

What types of company can I set up in Saudi Arabia?

MISA recognises the following legal entities:

  1. Limited Liability Co (LLC) - 100% foreign ownership is permissible through MISA
  2. Limited liability one-person company
  3. Joint Stock Company
  4. Foreign company branch
  5. Solidarity professional company

A limited liability company (LLC) is the most common form of legal entity chosen by foreign investors in the Kingdom.

One of the main advantages of the LLC is that the company’s shareholders are liable for the debts incurred by the respective business only to the amount they have participated at the company’s capital.

Also, a limited liability company can engage in the full range of activities which fall under the approved objects of the company and often looked upon more favourably when responding to commercial opportunities in both the public and private sector. A limited liability company can also sponsor its employees for residency purposes.

Should I set up a branch or LLC in KSA?

Although 100% foreign ownership is allowed for both a branch and LLC set ups, there are advantages to considering an LLC over a branch and it has become the preferred route for most foreign company formation in the Kingdom. This is based mainly on the liability protection and the speed of primary registration which is now similar to that of a branch.

Both entities must provide a certain amount of share capital, this can vary according to the company’s activities, but generally 500,000 SAR is acceptable, and both entities are subject to local taxes as a branch is considered to be a permanent establishment (PE). A branch, however, does have the advantage of not having to draft new company Articles of Association.

What are the steps to set up an LLC in Saudi Arabia?

Setting up a new business in the Kingdom can be quite arduous and time consuming, but the process is getting easier, and MISA are extremely active in helping foreign investors set up in the Kingdom. At PRO Partner Group we have identified 15 key steps and divided the process into 3 separate phases.

Primary Registration

Foundation of the Legal Entity and applying for MISA licence

This stage is the prerequisite to any of the following stages. It provides the foreign company permission to own a business in Saudi Arabia, through the MISA investment license, and to gain legal legitimisation of that business through Commercial Registration. It includes the following 5 steps:

    1. Legalisation and attestation of required documents at the Saudi consulate in the foreign investor’s country.
    2. Company name registration
    3. Drafting of the new Articles of Association
    4. Issuance of commercial registration (CR)
    5. Registration with the Chamber of Commerce (CoC) and activation of CoC account

    Secondary Registration

    Authorisation to Hire Staff

    For the legal entity to become operational and be authorised to hire people involves registering the new company with all the necessary ministries and government entities and finding and registering a suitable physical address. These include registration with:

    • Ministry of Labour
    • General Organisation for Social Insurance (GOSI)
    • General authority of Tax and Zakat (GAZT)

    Final phase

    Acquiring Residency and Opening a Bank Account

    This is the last stage of the process that will allow the GM’s one-time entry working visa to be transferred to a residence permit (Iqama). The GM will also need to

    • Complete a health check.
    • Acquire health insurance.
    • Register on the Muqeem portal

    Upon the completion of this stage, the GM can then start the process of opening a bank account for the company.

    How long does it take to set a company up in KSA?

    This is influenced mainly by the type of entity and the range of activities being registered, but generally speaking, assuming the correct legalised documents are in place in a timely manner and we have a Power of Attorney present to assist with the phase 2 formation steps, then we expect most companies being set up in KSA to take around 6 months to become fully operational.

    How can PRO Partner Group help?

    PRO Partner Group can assist companies to prepare and set up in Saudi Arabia. From their office in Riyadh, they can provide local expertise and guidance to companies who are looking to enter or grow within the Saudi market.

    If you need assistance on how to set up you company in KSA or any other related company set up, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or the Kingdom of Saudi Arabia, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.

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