HOW TO SET UP A FOREIGN COMPANY IN SAUDI ARABIA?

Saudi Arabia economy is experiencing growth in all industry sectors and along with its natural resources, geographic and cultural location between three continents it is an attractive destination for doing business. As a result of this growth, the country has gained a solid economic foothold, becoming one of the top twenty largest economies in the world.

In line with the Saudi Vision 2030, Saudi government has worked to encourage foreign investors to invest into the Kingdom. Therefore, this will have a knock-on effect by raising the country’s economic level and diversify income sources away from oil and gas.

Foreign companies can establish subsidiaries in Saudi Arabia with 100 percent ownership or they have the option to set up a company in Saudi Arabia and partner with a Saudi national. 

The most common business licenses in Saudi Arabia to establish a company include: 

• Limited Liability Company (LLC)
• Joint Stock Company (JSC)
• Foreign company branch
• Or any other legal form approved by the authority

WHAT ARE THE CONDITIONS FOR SETTING UP A FOREIGN COMPANY WITH 100% OWNERSHIP IN KSA?

• Foreign companies must be in existence for 1+ years with positive audited financials – applies to an LLC and JSC entity type.
• Foreign companies must have at least 3+ years with profitable audited financials – applies to a foreign branch setup.
• Paid-up capital requirements will vary depending on business activity and legal entity structure.
• Paid-up capital must be deposited to a local Saudi bank account once the entity is registered with the authorities.

WHAT ARE THE DOCUMENTATION REQUIREMENTS FOR SETTING UP A COMPANY IN SAUDI ARABIA?

• A copy of the commercial registration/trade license and the memorandum and articles of association is to be duly attested by the Ministry of Foreign Affairs and the Saudi Embassy.
• Resolution with powers to open the subsidiary must be duly attested by the Ministry of Foreign Affairs and the Saudi Embassy. 
• Documents relating to the appointed general manager of the new Saudi entity must be attested by the Ministry of Foreign Affairs and the Saudi Embassy. 
• The foreign company audit report is required to be attested by the Ministry of Foreign Affairs and the Saudi Embassy. 
• Foreign company legal documents must be in Arabic language or officially translated into Arabic and certified, notarized, and attested. 

WHAT ARE THE LICENSE TYPES AVAILABLE FOR SAUDI COMPANY REGISTRATION?

The eight main license types that foreign investors can consider registering a Saudi company include: 

• Services Investment license – activities such as e.g., installation, maintenance and repair, recycling, cleaning, construction of residential and non-residential buildings, commodity brokerage, testing and examination, research and development, designing and programming software, etc. 
• Industrial Investment license – activities such as e.g., all industrial related, such as heavy and light industries and transformative industries.
• Professional Investment license – activities for example engineering consultancies, IT consultancies, technical consulting, training consulting, translation services, investment, and advisory services, etc. 
• Trading Investment license – activities such as e.g., wholesale, retail, and online sales of products.
• Economic and Technical Liaison Offices – activities such as e.g., representation before government, associations, trade unions, clubs, etc.
• Agricultural Investment License – activities for instance cultivation, raising and production of chickens, beekeeping and honey production, cultivation of spices, aromatic crops and drug and pharmaceutical crops, breeding of camels and similar animals.
• Scientific/Technical Investment License – activities of scientific offices of pharmaceuticals.
• Real Estate Investment License – activities such as e.g., real estate development of residential buildings using modern methods of construction, buying, selling, subdividing of land and real estate, and on-the-map selling activities, management and leasing of real estate with own or leased property (non-residential)

WHAT IS AN EXTERNAL APPROVAL & IS THIS REQUIRED FOR MY SAUDI COMPANY REGISTRATION?

Depending on your business activity and the day-to-day running of your business, it may require additional approval from a supervising authority.  An external approval is a validation/approval from a third-party governmental establishment permitting a business to do some sort of activity or action. The most common types of external approvals are – No Objection Certificates (NOC) and approval letters. For example, should you wish to set up a school and apply for a service license, the government education authority will require external approvals i.e., the Ministry of Education. A company must meet the prerequisites and provide the correct educational experience and qualifications of staff to receive NOC and approvals from the education authority to be licensed and for the business e.g., school and its staff to operate correctly.

TOP SUPERVISING GOVERNMENT AUTHORITIES IN SAUDI ARABIA 

Below we have listed some of the main external approval authorities in Saudi Arabia. Depending on your selected business activity, your Saudi company may require NOC and approvals.

• Ministry of Health 
• Ministry of Commerce and Industry 
• Technical and Vocational Training Corporation 
• Ministry of Environment Water and Agriculture 
• Ministry of Education
• General Commission for Audiovisual Media 
• Transport General Authority 
• Communication and Information Technology Commission 
• Saudi Food and Drug Authority 
• Ministry of Industry and Mineral Resources
• Ministry of Municipal Rural Affairs and Housing 
• General Authority of Civil Aviation 
• Saudi Ports Authority 
• Ministry of Sport 
• Ministry of Tourism 
• General Entertainment Authority 
• High Commission for Industrial Security 
• Saudi Energy Center
• Saudi Conventions and Exhibitions General Authority 
• Ministry of Environment, Water and Agriculture 

TAKEAWAY

Some various procedures and requirements ought to be prepared and take into consideration to successfully set up and operate a company in Saudi Arabia. Creation Business Consultants will help you throughout the entire company incorporation process. From initial tax advice, designing the right structure for your company, guidance on selected business activities, drafting the correct documentation, representing and registering your KSA company with the authorities, receiving your MISA license and Commercial Registration (CR) to all post CR processes including visa, Iqama, and banking support. Our team of experts will simplify the process and handle all the red tape involved with your Saudi company registration so you can focus on your business. Contact a member of our team to learn more about setting up a company and corporate services in Saudi Arabia. Email us at [email protected] or call +966 54 511 2494

Scott Cairns,
Managing Director