If you are an overseas investor planning to register a company in Saudi Arabia, you may find this blog post useful. The article briefly describes the various types of legal entities that are most common in this country. If you have not yet decided what type of ownership to choose for opening your company, we will inform you about all possible options and help you choose one of them.
Popular legal company types
The very first question that arises before an overseas entrepreneur intending to open a company in another country is the question of choosing the organizational and legal form of the company.
In Saudi Arabia, a company can be incorporated in one of the below types:
- a company with joint and multiple liability.
Foreign companies are allowed to open a branch in Saudi Arabia or a rep office.
LLC, JSC and branches are the most popular with foreign investors.
However, it is worth considering that overseas investors to work in certain segments of the industrial sector need to obtain an investment license in Saudi Arabia.
NOTE: Setting up a JV in Saudi Arabia is very convenient since it does not require registration formalities and is not entered in the commercial register.
LLC registration in Saudi Arabia
LLC is perfect for the provision of various services, retail trade, online trade, registration of real estate for a legal entity.
If you are interested in setting up an LLC in Saudi Arabia, check out the key features:
- Partners: varies from 1 to 50.
- Equity: the vast majority of companies have no statutory minimum capital requirements.
- No public subscription: For this purpose, LLC must be transformed into JSC.
- Responsibility of partners: limited by the size of their participation share.
- Management: sole or board of directors.
- Privacy: all partners are responsible for maintaining confidential information.
Major advantage of setting up an LLC in Saudi Arabia is that one can establish a company and start operating activities as soon as possible. There is also no requirement for local residents to be on the board of a company.
JSC set up in Saudi Arabia
Many business people prefer to open a company in this form, where the founder is responsible only for his share of the authorized capital.
If the JSC plans to undertake public sector projects, banking or insurance activities, it will need a royal decree permit.
- Shareholders: It is possible to register a closed JSC in Saudi Arabia with only one shareholder, if it is a government agency.
- Equity: minimum 133292 USD with 25% payment at the time of registration.
- Shareholders’ responsibility: in accordance with equity participation.
- Management: up to 11 directors.
- Operations with shares: you can buy or pledge your shares.
- Transfers: no pre-emptive right to transfer shares.
Creating a branch of a foreign company in Saudi Arabia
Overseas investors can open a branch in the Kingdom of Saudi Arabia, as well as R&D offices. All these structures must be authorized.
Branches are considered an enclave of the parent company with the right to participate in projects in both the public and private sectors.
However, it is important to take into account that, by definition, they cannot engage in commercial and marketing activities, or conduct advertising campaigns.
If you are planning to open a business in Saudi Arabia, you can contact our firm's specialists and request advice on FDI regulation in the Kingdom of Saudi Arabia.
Also, if you want to quickly and easily register a company in Saudi Arabia, entrust the registration paperwork to the professionals of our company.