THE ART OF BEING LOCAL
IN Saudi Arabia

COMPANY FORMATION IN Saudi Arabia

Establishing a company in Saudi Arabia offers attractive opportunities in one of the most dynamic economic regions of the Middle East. To successfully gain a foothold, it is essential to carefully examine both the legal framework and the choice of the appropriate legal form. Equally important are the country’s cultural and social particularities, as they have a significant impact on business life. With thorough preparation, expert guidance, and a solid understanding of local conditions, the vast potential of the Saudi market can be strategically harnessed.

InterGest Saudi Arabia supports you throughout the entire process – from selecting the right company structure and ensuring compliance with local regulations to smooth and efficient implementation. Start now with a strong partner at your side!

 

Dr. Lilian Akkouch brings a wealth of expertise in business consulting, aiding international firms in their successful entry into the Saudi market.
Her unique combination of an in-depth understanding of local business culture and adherence to international standards ensures optimal results for clients.

Why to invest in the Kingdom of Saudi Arabia?

  1. An Attractive and Encouraging Investment Environment:
    Saudi Arabia boasts a robust economy characterized by political stability and comprehensive reforms aimed at improving the business landscape. The government is committed to fostering a welcoming atmosphere for foreign investors, offering full (100%) ownership to foreign companies in numerous sectors. Additionally, notable financial incentives and tax exemptions for startups and SMEs significantly lower operational costs and encourage growth.

  2. Strategic Location and Global Connectivity
    Nestled at the crossroads of Asia, Africa, and Europe, Saudi Arabia serves as a prime logistics hub. This strategic positioning enables companies to access vast markets with ease, facilitating their expansion into regional and global arenas.

  3. Advanced Infrastructure
    The Kingdom features high-quality infrastructure, including cutting-edge transportation and communication systems. This infrastructure not only enhances operational efficiency but also contributes to reduced operational expenses for businesses.

  4. Availability of Skilled Labor
    With a rich pool of skilled and educated professionals across various sectors, Saudi Arabia makes it easy for companies to hire qualified human resources without significant challenges.

  5. Simplified Procedures and Rapid Establishment
    The Saudi government has streamlined bureaucratic processes through digital platforms like the Saudi Business Center. Services such as one-day limited liability company incorporation, trade name reservation, and contract notarization can be completed entirely online, expediting the establishment process.

  6. Tax Exemptions and Financial Incentives
    Foreign investors in select sectors can benefit from tax exemptions for up to five years, along with unrestricted profit repatriation—a significant advantage for businesses looking to operate globally.

  7. Legal and Security Stability
    The Kingdom offers a well-structured legal framework that safeguards investor rights, including intellectual property protection and transaction transparency. Moreover, Saudi Arabia’s security stability adds to its appeal as a long-term investment destination.

  8. Economic Diversification and Growth Opportunities
    Saudi Arabia's ongoing economic diversification is pivotal. Opportunities abound in various sectors beyond oil, including industries such as technology, tourism, and renewable energy.

  9. Access to Global Markets
    Leveraging its strategic location and international trade agreements, Saudi Arabia presents businesses with exceptional access to lucrative global markets, particularly within the Middle East and North Africa region.
    These advantages align with Saudi Vision 2030, which aims to diversify the economy and attract foreign investment, making this an opportune time to invest in the Kingdom.

What are the types of companies in the Kingdom of Saudi Arabia?

It’s essential to understand the various types of business entities available under the new corporate law (Royal Decree No. M/132, effective January 19, 2023).

  1. Partnership Company: Formed by two or more individuals (either natural or legal), where partners are jointly liable for the company’s debts, risking their personal assets.

  2. Limited Partnership Company: Comprising General Partners, who bear personal liability for debts, and Limited Partners, whose liability is restricted to their capital contribution and who do not participate in management.

  3. Joint Stock Company: Created by one or more persons, with capital divided into tradable shares. Shareholders’ liability is limited to their share value, with a minimum capital requirement of SAR 500,000, of which at least 25% must be paid upon incorporation. Managed by a board of directors elected by shareholders.

  4. Simplified Joint Stock Company: A more flexible variant of the joint stock company, which can be formed by one or more individuals. This structure has no minimum capital requirements, allowing for more streamlined management.

  5. Limited Liability Company (LLC): The most common business entity in Saudi Arabia. Formed by one or more individuals (up to 50 partners), where liability is limited to the amount of their capital contributions.

  6. Professional Company: Tailored for liberal professions (e.g., law, medicine, engineering), which may take the form of a limited liability or a joint liability company.

  7. Foreign Company: Foreign investors may establish companies in Saudi Arabia with a license from the Saudi Arabian General Investment Authority. This supports technology and expertise transfer into the local market but requires adherence to additional terms and procedures compared to local companies.

  8. Holding Company: An entity (joint-stock or limited liability) that controls subsidiary companies by owning shares.

  9. Joint Venture Company: A private arrangement between two or more parties to undertake specific business projects without forming a separate legal entity.

What needs to be considered when setting up a company in Saudi Arabia?

1. Choosing the Right Legal Entity:

Selecting the appropriate type of company is crucial, as it dictates the nature of your activity, legal obligations, capital requirements, and management structure.

2. Legal Procedures and Registration:

It's vital to adhere to legal protocols to ensure proper company registration:

  • Reserve a Trade Name.

  • Prepare the Articles of Association.

  • Obtain the Commercial Registration.

  • Register with Relevant Government Agencies: This includes the Zakat, Tax, and Customs Authority, the General Organization for Social Insurance, the Saudi Post National Address, and the Chamber of Commerce based on your location.

3. Financial and Capital Requirements:

Capital needs vary depending on the company type and sector:

  • Limited Liability Company: No general minimum, although certain sectors may require at least 1 million SAR (e.g., industrial sector).

  • Foreign Companies: Minimum capital is 100,000 SAR.

  • Specific Activities: Some may necessitate higher capital (e.g., 25 million SAR for agricultural ventures).

  • Additional Fees: Consider costs such as commercial registration fees, publication fees, and VAT (15%).

  • Open a Bank Account: It's important to establish a commercial bank account for capital deposit and financial management.

4. Required Documentation:

  • Certified commercial registration (if a branch of a foreign firm)

  • ID cards of owners/partners (including passports for foreign nationals)

  • Certificate of good conduct

  • Capital deposit certificate (from a local bank)

  • Certified lease agreement for headquarters

  • Power of attorney (if applicable)

5. Licenses and Permits:

  • Commercial Licenses: Certain activities may need additional permits from relevant authorities (e.g., health or environmental licensing).

  • For Foreign Companies: An investment license from the Ministry of Investment requires only two documents—the commercial registration of the parent company and the latest financial statements.

6. Special Requirements for Foreign Companies:

  • Full Ownership: Many sectors allow for 100% foreign ownership without the need for a local partner.

  • Prohibited Activities: Certain sectors, such as oil exploration, are restricted for foreign entities.

  • Conditions: Investors must be free of any legal disputes and comply with local standards and specifications.

InterGest Saudi Arabia, located in Riyadh - the economic and political heart of the Kingdom, is dedicated to supporting international companies in successfully entering and thriving in the Saudi market. Our comprehensive service offerings span the entire administrative process, from company formation to accounting, taxation, payroll, and HR management. We ensure a seamless start and ongoing operations for our clients. Leveraging our deep market insights and robust network, we adeptly guide businesses through all legal and organizational requirements

Where to find Intergest Saudi Arabia?

InterGest Saudi Arabia is located in Riyadh, the vibrant capital of Saudi Arabia, places us right in the heart of a global business hub. This not only immerses us in a rich cultural heritage but also positions us within an innovative development landscape.

Moreover, our presence in Riyadh enables us to leverage the unique opportunities presented by Saudi Arabia’s Vision 2030. This strategic positioning empowers us to build essential connections with key stakeholders and participate in pioneering initiatives throughout the region.