- Al-Ahsa (East Arabia)
- Asir (South Arabia)
But that’s not all. Saudi Arabia is the regional economic superpower. It’s the only Arab state that’s part of the G20. Half of its GDP comes from oil production and export, though. Foreign employees are often seen in Saudi Arabia. In fact, almost 80% of the total workforce comes from foreign workers, according to Saudi Arabia’s government statistics. 8,773,896 out of 10,855,342 registered workers are the foreign workforce.
It’s clear to see that Saudi Arabia both depends on and welcomes foreign workforce. But what about opening a business and investing? For now, the state is more than lenient toward foreign investors. If you’re one of them, read on to find out what you need to open a company in Saudi Arabia.
First Step — Get the Investment License
Your first step is going to be to acquire an investment license for foreigners. Saudi Arabia’s General Investment Authority — SAGIA — issues these licenses. This license will enable you to invest legally in Saudi Arabia.
Although, if you want to incorporate or purchase a foreign branch for your already existing company, you’ll need commercial registration. It’s a certificate you can get from the Ministry of Investment and Commerce. This certificate is a must for foreign branches.
The percentage of foreign ownership inside a company in Saudi Arabia depends on the number of conditions. Restrictions for share or ownership capital depend on the activities you license for your company. For instance, if you’re running a service-based business, you can own up to 100% of the company.
On the other side, industry operations like trading have a 25% local ownership requirement. Remember — always verify the latest rules before you try to purchase or incorporate a KSA organization. Let’s repeat the requirements for this stage:
- You need a commercial registration Saudi Embassy has certified.
- Get the last year's financial statement. (Also from Saudi Embassy)
Middle Step — Go to the Saudi Ministry of Commerce
For the second step, you’ll need to go to the Ministry of Commerce of Saudi Arabia. There, acquire Documents of Memorandum of Association. For Documents of Memorandum of Association, you’ll need the following paperwork:
- For a branch of a foreign company, you’ll need to submit related decisions for opening a foreign branch in Saudi Arabia.
This is a must for completing the Issuance of Commercial Registration. Regarding Issuance of Commercial Registration, if you’re interested in starting a new company in Saudi Arabia, you’ll need to pass the following requirements:
Submit the Commercial Registration of your parent business. Also, submit the decisions of the board of directors of the organization regarding the reasons for opening foreign branches.
New companies, on the other hand, will have to submit the Memorandum of Association. You’ll have to submit the proof of ownership and appoint the General Director as well. Don’t forget to submit the General Director’s personal identification or passport.
Last Step —Submit Documents
The last stage involves opening some paperwork and visiting the Saudi Ministry of Investment. You can also submit files on the Ministry’s site. The paperwork involves files not only from the Saudi Ministry of Investment:
- General Authority file of Tax and Zakat
- Saudi Ministry of Social Development and Labour file
- General Organization of Social Insurance file
You’ll need to get the General Director’s working Visa from the Saudi Ministry of Investment. For the General Director’s working Visa, you’ll need to submit the following files:
- General Director’s letter of appointment
- Proof of their personal identification or passport
The following steps won’t use up a lot of your time. But take care. If you want to be successful, you should either explore Business Setup Consultants in Saudi Arabia or follow the directions of Saudi’s authority to the letter.
One more thing. Saudi Arabia won’t any longer sign legal agreements with foreign businesses that don’t get regional headquarters in their state after 2023. So, you’ll either need a local presence. Or find a local agent or distributor in Saudi Arabia.
Types of Business You Can Open in Saudi Arabia
You can start 3 types of business in this state as a foreign investor. Each of them comes with strengths and flaws. And, of course, with various range of company operations, conditions for registering, and minimal capital investments. Most of the time, these are based on the degree you commit your business to Saudi Arabia. And the type of company activity you propose.
Regarding subsidiary companies, LLC, or Limited Liability Company is the most popular type of business. As well as foreign investment in this state. You’ll have to invest in your LLC at least 500,000 SR. Also, have between two and fifty shareholders and one or more managers. You don’t need to have a Board of Directors. However, your shareholders can act as a Board if the need arises. Remember to enter this in your Memorandum of Association. LLCs also require auditors and can engage in all ranges of company activities.
You can also run a branch office in Saudi Arabia. As a branch office, you can engage in commercial activities inside the score of your license. Like in other nations, the parent company takes complete liability regarding the activities of the branch office. Even though you won’t be an incorporated, local entity, you’ll have to deposit at least the same amount of capital subsidiary companies need. The branch office formation process is often simpler than for LLC. Because you don’t have to get Articles of Association approved. Or have reserved requirements.
The Representative Office is the last type of business you can open in Saudi Arabia. You can open representative offices either as:
- Technical and Science Office (TSO)
- Temporary Company Registration (TCR)
TSO acts mostly as a liaison office for manufacturers. Also, provide tech support for local markets through distributors. TCR acts as a short-term business type made for particular government contracts. Just like representative offices elsewhere, they are limited in the scope of activities. Particularly when it comes to promoting or soliciting businesses.
TSO acts as a second-biggestliaison between foreign businesses and local markets (through Saudi Arabia’s distributors. TCR can do contracted operations. But not engage in other forms of solicitation or promotion.