The Kingdom of Saudi Arabia (KSA) offers a vibrant landscape for foreign investors and entrepreneurs looking to establish businesses. With the implementation of Vision 2030, the Saudi government is actively fostering foreign investment and streamlining the process for company formation. This article provides an overview of the various legal entities available to foreign investors and outlines the steps required to establish a business in KSA.

Types of Legal Entities

Foreign investors have several options when selecting a legal structure for their business in KSA:

1. Limited Liability Company (LLC)

A Limited Liability Company can be formed by one or more individuals or legal entities. The owners’ liability is confined to their capital contributions, meaning the company itself is responsible for its debts and obligations. The minimum capital requirement for establishing an LLC is 500,000 Saudi Riyals.

2. One-Person Limited Liability Company

This entity is a variation of the LLC, created by a single individual or entity. Like the standard LLC, its financial affairs are separate from those of its owner. The minimum capital required is also 500,000 Saudi Riyals.

3. Joint Stock Company (JSC)

A Joint Stock Company is formed by one or more individuals or entities, with its capital divided into tradable shares. Shareholders’ liability is limited to the value of the shares they subscribe to. The minimum capital needed to establish a JSC is 10 million Saudi Riyals.

4. Branch of a Foreign Company

Foreign companies are allowed to establish branches in KSA, enabling them to operate under the identity of their parent company while conducting business within the Kingdom.

5. Professional Joint Stock Company

This type of company is established by individuals licensed to practice certain professions. A professional joint stock company requires at least two partners who are jointly liable for the company’s debts and obligations. The minimum capital for this entity is 500,000 Saudi Riyals.

Steps for Establishing an Investment Facility

Step 1: Reserve the Trade Name

To reserve a trade name, the following documents are required:

• A copy of the foreign company’s registry if the name is foreign.
• A certified authorization for the applicant along with proof of identity.

Responsible Authority: Ministry of Commerce

Step 2: Obtain a Foreign Investment License

Acquiring a foreign investment license is mandatory prior to establishing a company. Required documents include:

• An extract from the commercial register of the establishment.
• Certified financial statements for the last three fiscal years.
• All documents must be translated into Arabic or English by a certified translator and should be authenticated.

Responsible Authority: Ministry of Investment

For individual investors, obtaining a distinguished residency is necessary, available in two forms:

• Renewable Residency: Initially costs 100,000 Saudi Riyals and is renewed annually with a cumulative discount of 2%.
• Permanent Residency: A one-time fee of 800,000 Saudi Riyals applies.

Responsible Authority: Distinguished Residency Center in Saudi Arabia.

Step 3: Submit the Company Application

After securing the necessary licenses, submit an application through the Saudi Business Center platform. Processing typically takes one to three business days. Upon approval, the company’s articles of association will be documented.

Step 4: Issue a Commercial Register

The following documents are required to obtain a commercial register:

• Commercial register of the parent company.
• Decision to open a branch (if applicable).
• Notarized articles of association (for new companies).
• Appointment decision for the general manager.
• Proof of identity for both owners and the general manager.
• Responsible Authority: Ministry of Commerce

Step 5: Open Files with Relevant Authorities

Establish files with the following entities:

• General Authority of Zakat and Income
• Ministry of Labor: For employee sponsorship.
• General Organization for Social Insurance: To protect employee rights.
• Municipal License: Required for the company’s location.
• Bank Accounts: A corporate bank account must be opened with any licensed bank in KSA.

Required Documents:

• Company articles of association.
• Certificate of non-similarity of trade name.

Step 6: Issue the General Manager’s Visa

To secure a visa for the general manager, provide:

• The decision to appoint the general manager.
• Proof of identity for the general manager.

In Conclusion establishing a business in the Kingdom of Saudi Arabia presents significant opportunities for foreign investors. By understanding the various legal entities available and following the requisite steps for registration and compliance, foreign individuals and companies can effectively navigate the process and establish a foothold in the Saudi market. Given the evolving regulatory landscape, it is vital for investors to remain informed about changes in laws and procedures to ensure successful business operations in KSA.

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