Why would you want to start a business in Saudi Arabia? Saudi Arabia may be an excellent alternative for international investors looking to invest in the Middle East. In the third quarter of 2020, foreign direct investments totaled over $1,000 million. The state budget for the year 2021 was almost 264 billion dollars. The country’s Gross Domestic Product (GDP) is constantly growing, and over 38 million people are increasingly tech-savvy and business-oriented.
The incorporation of a company in Saudi Arabia is quite challenging. Setup Company in Saudi Arabia with Creation Business Setup Consultants is the easiest way for a foreigner who may want to start a business. The types of businesses that investors may establish are varied, ranging from limited liability corporations (accessible to natural people) to branch offices and representative offices. With the assistance of local consultants, the process of launching a company in Saudi Arabia may be accomplished much easier.
Types of businesses that may be established in Saudi Arabia
Investors who wish to create a company in Saudi Arabia may pick one of the defined business forms, as stipulated by the New Companies Regulations, which have been in force since May 2, 2016. The possible choices are a corporation with limited liabilities; a joint venture, a joint-stock company, a limited partnership enterprise, and joint liability company.
Foreign enterprises interested in establishing a company in Saudi Arabia may do it in one of the following ways: a branch location or representation office.
The Foreign Investment Law 2000 and the Implementation Regulations 2013, which outline the sectors of activity that are banned to foreign investors, also govern the procedure of forming a corporation in Saudi Arabia.
Investors who want to establish a company in Saudi Arabia must first get an investment license from the SAGIA – Saudi Arabian General Investment Authority. Before beginning any business activities on the country’s territory, the license must be secured, and Saudi Arabia company registration specialists can provide in-depth advice on the processes that are in place in this situation.
Saudi Arabian business registration procedures
Business licensing in Saudi Arabia entails several stages, and local experts may serve as agents for international investors looking to establish their enterprises in the kingdom. First, you must accomplish the following points:
1. The creation of the Saudi business’s statutory papers, which include the Memorandum and Articles of Association;
2. Preparation of other paperwork, such as shareholder identification papers or incorporation papers in the case of foreign corporations;
3. Registering the address and making sure it is registered with the Trade Register;
4. Lodging all the papers with the Trade Register.
5. Opening a company bank account in a local bank, into which you will place the share capital;
6. Applying for a VAT number and registering with the Saudi tax authorities.
The last stage in the Saudi Arabia company registration procedure is to get the defined licenses and permits, which vary depending on the firm’s sector. Similar processes must be followed when registering a foreign branch in Saudi Arabia.
What else is important to know
Investors who wish to establish a business in Saudi Arabia, whether foreign or local, must meet a number of prerequisites before proceeding with the procedure. While having a registered location and a unique trade name is necessary regardless of the kind of company to be started, additional considerations must be made and depend on the chosen business organization.
The minimum number of shareholders, directors, and share capital requirements, for example, depends on the kind of business.
Foreign investors who want to start a company in Saudi Arabia commonly form limited liability corporations (LLCs), which are one of the most enticing forms in the country since they may also be formed in other countries. For example, to register a private limited liability company in Saudi Arabia, at least one shareholder and one director are necessary, and the whole process takes around two months.
When it comes to the minimum share capital, an LLC must pay at least 100,000 SAR (about 26,700 USD) at the time of incorporation. The minimal shareholder and management requirements for a joint-stock or public company are two and three, respectively, who are not needed to be Saudi citizens if they do not intend to live in Saudi Arabia while conducting business here. In this scenario, the minimum share capital required for the business registration procedure in Saudi Arabia is 500,000 SAR (around 134,000 USD).
The limited partnership is another company structure that international investors in Saudi Arabia often choose. While there is no minimum share capital requirement for this organization, it must have at least two partners and one director.
For those who desire to register a foreign company in Saudi Arabia, the subsidiary may be a limited liability company (private or public) if the owners want it to be an independent firm, or a branch office if they want it to be a dependent entity. Financial companies usually choose this legal solution because of the activity restrictions.
Legal steps for incorporating a company in Saudi Arabia
As previously stated, foreigners must get a license from SAGIA, which is a process that entails specified expenses. The Saudi consulate must legalize the company’s documentation. Later on, the investors will need to acquire clearance from the Companies Department, which is part of the Ministry of Commerce and Industry, for the company’s trading name. The application must include the company’s articles of incorporation, which must be drafted before a Saudi Arabian public notary.
The next stage in forming a business in Saudi Arabia is to get the firm’s trade name and a summary of its articles of association published in the official gazette.
Depending on the legal organization selected for incorporation while beginning a company in Saudi Arabia, investors will also need to register a corporate bank account, into which they will deposit the local legislation’s minimum share capital.
Once all the legalities are completed, you can start operating your company. We are confident that you will have a successful business career in this emerging location.
