Following Vision 2030, the goal of the Kingdom has been to diversify its economy, thus leaving behind its conventional oil dependency. So, establishing a commercial venture or business in Saudi Arabia has extended its appeal to many international investors and entrepreneurs.
The Saudi government has expedited the procedure Through the Ministry of Investment of Saudi Arabia (MISA), to promote global engagement in its economy.
For non-Saudis wishing to enter this exciting industry, here is an extensive guide on how to start a business in Saudi Arabia.
Why Form a Company in Saudi Arabia?
Before you delve deeper into the intricacies involved in company formation, let us first analyze why you would consider forming a company in Saudi Arabia.
Strategic Location
Owing to its location, Saudi Arabia is a link between European, Asian, and African markets thus making it an indispensable hub for commerce and business.
A solid economy
Petrochemicals, oil, manufacturing, and technology are major contributors to the Kingdom’s robust and diversified economy.
Governmental Support
Over the years, the Kingdom of Saudi Arabia has instituted several measures to attract international investments. The latest is Vision 2030, which seeks to broaden the country’s economic base. It has implemented an incentive program to aid in company formation and draw in investors globally. The registration fees and other initial expenses for business setup in Saudi Arabia are halved for those who register within the first year, a promotion that attracts new players in the market.
Tax Advantages
Commercial Registration
Upon completing the MOCI commercial registration process, you will get a commercial registration certificate (CR) and a tax card.
What are the Documents Necessary to Set Up a Saudi Company?
It will depend on the company structure. The documents required include:
- Company trade license copy or equivalent (most recent);
- Memorandum & Articles of Association (include copies of any amendments/changes);
- Resolution and Power of Attorney
- Shareholders, Directors, and authorized signatories’ passport copies.
Market Entry
Home to over thirty-five million people, Saudi Arabia offers access to an expanding and sizable consumer base.
Business Entity Types in Saudi Arabia
Various business formats are available in Saudi Arabia based on your requirements and goals.
LLC, or limited liability company
LLC is a popular option, for medium to small-sized enterprises. It needs at least two shareholders and offers limited liability protection to its owners.
Joint Stock Company (JSC)
Larger businesses and those aiming to go public might consider a JSC. Five stockholders are needed, at the very least.
Branch Office
International businesses are permitted to open branch offices in Saudi Arabia to carry out tasks under the brand of their parent company.
Representative Office
This is the best choice for businesses who want to explore the Saudi market without getting involved in trade.
Is it possible for foreigners to own and start a business in Saudi Arabia?
Indeed, international businesses are welcome to apply and establish a 100% foreign-owned company in Saudi Arabia. Global investors will receive a business license from the Saudi Arabian Ministry of Investment (MISA). However, in the form of a local partner, Saudi involvement can be necessary for some economic endeavors.
What Kind of Businesses Are Prohibited from Being Done by Foreigners?
There are several restrictions on commercial activities foreigners must follow while establishing a company in Saudi Arabia. Consultancy (not applicable to certain management consulting services), the medical field, the military industry, recruiting, oil exploration, drilling, production, and real estate investment in Makkah and Madina are areas with restricted business operations. The most frequent licenses that help people register in Saudi Arabia are related to services, trade, and industry.
Start a business in Saudi Arabia for foreigners – an overview
To determine your needs, meet with a credible consultant. The experts will prepare an application for your foreign corporation with the Saudi Arabian Ministry of Investment (MISA) after reviewing your company information. Once the company registration is finalized, you will receive the Commercial Registration (CR). Ultimately, they will finish the procedures related to the establishment of the firm and arrange the next steps for obtaining the General Manager Iqama (a Saudi resident visa) and opening a company bank account.
Saudi Arabian Company Formation Procedures
Establishing a business in Saudi Arabia entails a few crucial steps:
Market Analysis
To begin with, thoroughly investigate the market to learn about your target market, competitors, and legal requirements.
Decide on a Business Activity
Choose which specific business activity you want to do and be sure it complies with Saudi laws.
Select a Business Structure
Take ownership, liability, and capital requirements into consideration when choosing the best business structure for your purposes.
Set Aside a Company Name
Select a distinctive and legally compliant company name, then reserve it with the Ministry of Commerce and Investment (MOCI).
Write a Memorandum of Association (MOA) draft.
Formulate the Memorandum of Agreement (MOA), containing the goals, share capital, information about shareholders of the organization, and governance framework.
Get the Approvals You Need
Obtain authorization from pertinent authorities, such as the Ministry of Investment and Foreign Affairs.
Make the MOA notarized.
Notarize the Memorandum of Agreement (MOA) with a Saudi notary public or other appropriate authority.
Share Capital Deposit
Obtain a bank certificate as proof of depositing the necessary share capital at a nearby bank.
Register with MOCI.
Send the notarized MOA with the other documents to MOCI – Ministry of Commerce and Investment to register your business.
Licensing and Authorizations
Based on the nature of your commercial entity, you must obtain any additional approvals and licenses from relevant authorities.
Commercial Registration
On completing the MOCI’s commercial registration process, you will get a commercial registration certificate (CR) and a tax card.
What are the Documents Necessary to Set Up a Saudi Company?
It will depend on the company structure. The documents required include:
- Company trade license copy or equivalent (most recent);
- Memorandum & Articles of Association (include copies of any amendments/changes);
- Resolution and Power of Attorney
- Shareholders, Directors, and authorized signatories’ passport copies.
Key Considerations & Challenges
Saudi Arabia has a lot to offer, but it has certain difficulties and things to remember.
Requirement for Local Partners
For certain types of businesses, foreign investors can require a local partner or agent.
Adherence to Regulations
Saudi laws can be complicated and dynamic, necessitating careful observance of them.
Corporate Governance
Effective corporate governance techniques are essential for navigating regional company laws and traditions.
Local Culture Awareness
Successful commercial operations require an understanding of and respect for Saudi culture and customs.
Forming a 100% owned company in Saudi Arabia
Establishing a business in Saudi Arabia provides greater commercial prospects. You may use the Kingdom’s strategic location, economic potential, and government assistance by adopting the appropriate strategy. Considering Saudi Arabia’s ongoing economic transition, setting up shop here may be a wise strategic choice for sustained success and growth. Start your Saudi Arabian company formation adventure now to take advantage of all the prospects this dynamic country offers.
Getting Professional Help
Getting expert help from experienced business consultants gives you an upper hand with pertinent information regarding the law of the land. to avoid any complexity in setting up a company in Saudi Arabia. It is advisable to seek rightful advice and assistance from experts. They can help you navigate the regulatory and legal landscape and ensure that the procedure for setting up your firm is smooth and compliant.
Favourable tax incentives, such as exemptions in particular economic zones, are provided by Saudi Arabia.