BUSINESS STRUCTURES for FOREIGN ENTITIES & ENTREPRENEURS

The preferred business structures through which foreign entities do business, invest or operate in Saudi Arabia are: the Limited Liability Company, the joint-stock company, or the “joint venture”. Foreign companies can also operate in the Kingdom by establishing a branch office, representative office, or technical and scientific services offices. All such operations must obtain the necessary licenses or permits from the Saudi Arabian General Investment Authority (“SAGIA”), Saudi Ministry of Commerce & Industry and other appropriate agencies.

Limited Liability Companies: Limited liability companies (LLCs) are the most common form of business organization utilized by foreign investors.

  1. Establishment of 100% Foreign Owned LLC (Private Limited Liability Company) Kingdom of Saudi Arabia requires the obtaining of an Investment License from the Saudi Arabian General Investment Authority (“SAGIA”).

    The following is just a brief look at part of the process for establishment of an LLC.

    1. Specified documents must be submitted to the Saudi General Investment Authority (“SAGIA”), to obtain an investment license to incorporate a 100% owned LLC, including meeting the capital requirements. Our strategic consultations are most beneficial in assisting and guiding client through the process.
    2. After obtaining the SAGIA Investment License, specified documents must be submitted to the Ministry of Commerce and Industry to enable the incorporation of a limited liability company. One of the important documents that must be submitted is a draft of the company’s Articles of Association that must comply with applicable Saudi law and regulations. This is an important area in which our expertise is most beneficial to a client. It is not uncommon for the Ministry’s officials to impose what they consider to be necessary changes to the Articles of Association.
    3. After the Ministry of Commerce and Industry approves the Articles of Association the Notary process must be completed. Assisting in completion of the Notary process is another area in which our consultative service is most beneficial to clients. The Articles of Association along with other specified documents must be submitted to the Notary. If not strategically handled this can be a painstaking process.

      After completing several other procedures and numerous filings, the final step in the incorporation process is to obtain the Commercial Registration number. Applications for work permits can start once the Commercial Registration Certificate is issued.

      A Professional Fee excluding out-of-pocket disbursements and government fees will be charged for the services to be rendered a client desiring to establish a LLC. Sixty percent (60%) of the Professional Fee is paid in advance and the balance will become due and payable upon completion of the incorporation process.
  2. Establishment of a Foreign Company’s Branch in Saudi Arabia:

    The following is just a brief look at part of the process for the foreign company to establish a Saudi branch office.

    1. Wholly foreign-owned entities may establish Branch Offices in Saudi Arabia. Setting up a branch of the parent company in Saudi Arabia requires the obtaining of an Investment License from the Saudi Arabian General Investment Authority (SAGIA). This involves the submission of an application form accompanied by certain supporting documents to the Application Department of SAGIA. Certain conditions must be met before an Investment License will be granted. The process of preparing and submitting correct documents with the application and satisfying capital requirements is an area where our strategic consultative services are most beneficial to clients.
    2. Once the SAGIA Investment License has been granted, in order to obtain the Commercial Registration Certificate for the foreign investor specific documentation must be submitted to the Ministry of Commerce & Industry in Riyadh. The Riyadh office reviews and then refers the documentation to the Ministry of Commerce’ s branch office located in the city in which the foreign company’s branch will be located. At this stage a copy of the Commercial Registration Certificate will be provided. Additional steps are required to obtain the original Commercial Registration Certificate. Applications for work permits can start only after the issuance of the original Commercial Registration Certificate.

      A Professional Fee excluding out-of-pocket disbursements and government fees, will be charged for the services to be rendered to foreign owned entities that want to establish a branch in Saudi Arabia. Sixty percent (60%) of the Professional Fee is paid in advance and the balance will become due and payable upon completion of the process to establish the branch.
  3. Establishment of Scientific and Technical Offices for Foreign Companies
    After fulfilling specific registration procedures and obtaining the relevant license from the Ministry of Commerce, foreign companies can open offices in the Kingdom. Scientific and Technical services offices can conduct market surveys, and undertake product research, and provide scientific and technical services support for their products to agents, distributors and consumers of their products. However, they are prohibited from directly or indirectly engaging in commercial activities in the Kingdom.
  4. Establishment of a Representative Office: A foreign-owned entity undertaking multiple public sector contracts may obtain a “representative office” license from the Ministry of Commerce. The representative office may supervise and coordinate the entity’s administrative activities within Saudi Arabia, but would be prohibited from directly or indirectly engaging in commercial activities in the Kingdom.

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