With Saudi Arabia’s Vision 2030 in progress, more businesses want to explore the opportunities of starting their business or expanding in the kingdom. Before getting started with efforts for business setup in Saudi Arabia, it is important to understand what type of companies can be formed in the kingdom. Depending on the type of company you want to open, the process of setting up, management, number of shareholders, and type of operations may differ significantly. Just go through this brief blog to check out the different types of companies you can open in Saudi Arabia.
Types of Companies
The following are the types of companies you can set up in Saudi Arabia:
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The Establishment (Sole Proprietorship)
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An LLC.
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An Agency Agreement
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A GCC Branch Company
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A Joint Stock Company
The Establishment
An establishment is a company that can be registered with just one owner. Such companies are sole proprietorships, and the owner is solely responsible for the company’s debts. However, only Saudi nationals and residents of the GCC (Gulf Cooperation Council) can leverage this type of company setup. These types of companies are much easier to set up in the kingdom.
LLC (Limited Liability Company)
LLC is another common type of business setup in the Kingdom. It is popular among Saudi nationals, GCC residents, and foreign investors. This type of company can be set up with a minimum of one director and one shareholder. The process is fairly simple for Saudi citizens and GCC nationals. However, it is complex and more extensive for foreign investors as they have to acquire different licenses and permits. A license from MISA or the Ministry of Investment License is mandatory for foreign investors.
Other licenses and registrations like the ministry of commerce may be necessary depending on the type of business. Foreign businesses often leverage third-party companies for assistance in acquiring licenses and fulfilling other requisites for company setup.
Agency Agreement
A Saudi Agency Agreement is the quickest way for foreigners to start a company in the kingdom. It is an agreement between a foreigner and a Saudi or GCC national. Such companies are not considered legal entities. However, the commercial agency agreement has to be registered with the ministry of commerce and industry. According to the agreement, the Saudi representative of the company is responsible for the sales of goods and other operations for foreign investors.
It is best to use this company model to get a business started or to test the response. Investors should focus on registering a legal entity of a company.
Joint Stock Company
To start a joint stock company in the kingdom, a company must have at least 2 shareholders and 3 directors. They can be of any nationality. So, foreigners can set up a joint stock company too. The minimum capital required should be at least $134,000. Also, the process is long and requires the permission of more authorities. A company needs to appoint an auditor for annual reports.
Saudi Arabia GCC Branch Company
A Saudi GCC branch of a company can be started by a GCC company with 100% ownership. However, it is a model for GCC owners and no other foreign nationals. Moreover, the branch must hire a Saudi national representative for taking care of different operations.
Conclusion
Based on your national status and business requirements, you can set up different types of companies in the kingdom. Starting a business in partnership with Saudi nationals or at least GCC residents can make the process simpler. Also, you can leverage third-party companies to start your own business.
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