Company Incorporation Saudi Arabia
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Establishing a Business in Saudi Arabia with Northman & Sterling
Expanding your business to Saudi Arabia offers exciting opportunities. Northman & Sterling provides options for establishing your business with different legal entity types. Here’s a simplified overview to help you decide:
Why Saudi ?
Saudi Arabia has recently undergone significant economic reforms, resulting in increased opportunities for foreign investment. The country’s rich natural resources, including oil and minerals, make it a prime location for businesses to thrive. In addition, the government’s efforts to open up the economy and attract international investment further enhance the attractiveness of Saudi Arabia as a destination for business ventures.
Northman & Sterling is a company that has been serving the region for over 10 years, offering a range of services to support the establishment of businesses in Saudi Arabia. Our 360 degree service delivery model covers all aspects of the process, from the initial formation of the company to post-launch business support. With a wealth of experience and a comprehensive approach, Northman & Sterling is well-equipped to guide investors through the journey of setting up a business in Saudi Arabia. Whether you are a seasoned investor or new to the market, Northman & Sterling can provide the expert assistance and support you need to succeed in the thriving business environment of Saudi Arabia.
100% Foreign Ownership
Establishing a branch office in Saudi Arabia can be a strategic move for businesses seeking to expand their operations. The Ministry of Investment of Saudi Arabia (MISA) allows for 100% foreign ownership of branch offices without the need for a local sponsor.
While branch offices are not permitted to engage in trading activities, they can support the parent company’s business development in the service industry.
Alternatively, a representative office is a type of branch that is limited to marketing activities on behalf of the parent company, but cannot participate in business development. Both branch offices and representative offices offer opportunities for companies to expand their presence in Saudi Arabia and tap into the country’s growing economy.
FORMS OF ENTITIES IN SAUDI ARABIA
THE MAIN FORMS OF LEGAL ENTITIES IN SAUDI ARABIA ARE:
- Limited Liability Company (LLC)
- Branch of a Foreign Company
- Joint Stock Company
- General partnership
- Technical and scientific services office
- The sole establishment
The shareholding structure and required paid-up capital will change based on the company activity and legal form.
Requirements for Establishing a Saudi Company
1. Limited Liability Company (LLC)
Criteria
Details
Capital Requirements
Determined by MISA based on activity and shareholding
Limited Liability
Yes
Losses Exceeding 50% of Capital
Shareholders meet within 90 days to decide on business continuation
Corporate Taxes on Annual Net Profits
20%
Zakat Rate (GCC Residents Only)
2.5%
Ability to Bid for Government Contracts
Yes, filing an annual tax return is required
File Annual Final Statements
Required
Appoint Auditor
Required
Key Features
- Engage in approved business activities
- Participate in public/private sector contracts
- Sponsor foreign employees for residency
- Obtain a corporate bank account
Recommended Practices
- Seek tax and corporate structuring advice
- Engage Northman & Sterling for compliance guidance
- Appoint an auditor post company formation
2. Branch of a Foreign Company
Criteria
Details
Number of Shareholders
Non-applicable
Capital Requirements
Depends on activity
Limited Liability
No, head office bears full liability
Losses Exceeding 50% of Capital
Shareholders meet within 90 days to decide on business continuation
Corporate Taxes on Annual Net Profits
20%
Zakat Rate (GCC Residents Only)
2.5%
Ability to Bid for Government Contracts
Yes, filing an annual tax return is required
File Annual Final Statements
Required
Appoint Auditor
Required
Key Features
- Activities must match the parent company’s business
- Engage in commercial activities within the license’s scope
- Sponsor foreign employees for residency
- Obtain a corporate bank account
Recommended Practices
- Seek tax and corporate structuring advice
- Appoint an auditor once the branch setup is finalized
3. Joint Stock Company (JSC)
A JSC is suitable for large multinational companies or those listed on other stock exchanges.
Criteria
Details
Number of Shareholders
Normally 2, minimum 1 with SR 5,000,000 capital
Capital Requirements
SR 500,000 or SR 5,000,000 (single shareholder)
Limited Liability
Yes
Losses Exceeding 50% of Capital
Shareholders meet within 45 days to decide on business continuation or increase capital
Corporate Taxes on Annual Net Profits
20%
Zakat Rate (GCC Residents Only)
2.5%
Ability to Bid for Government Contracts
Yes, filing an annual tax return is required
File Annual Final Statements
Required
Appoint Auditor
Required
Key Features
- Engage in approved business activities
- Participate in public/private sector contracts
- Sponsor foreign employees for residency
- Obtain a corporate bank account
Recommended Practices
- Seek tax and corporate structuring advice
- Appoint an auditor once the branch setup is finalized
Process for Establishing a Saudi Company
Step
LLC
JSC
Branch
Register Saudi Company Name
1-2 working days
1-2 working days
1-2 working days
Apply & Receive MISA License
2-4 weeks
2-4 weeks
2-4 weeks
Review & Approve Entity Documents
5 working days
5 working days
5 working days
Notarize Articles of Association
1-2 working days
1-2 working days
1-2 working days
Pay Registration Fees & Receive Commercial Registration
1 working day
1 working day
1 working day
Open Corporate Bank Account
2-3 weeks
2-3 weeks
2-3 weeks
Register Office Address
Required
Required
Required
Commercial Registry
2 working days
2 working days
2 working days
Register Chamber of Commerce
1 working day
1 working day
1 working day
Register with Labour
1 working day
1 working day
1 working day
Register with Social Insurance
2-3 working days
2-3 working days
2-3 working days
Register for Taxes
2-3 working days
2-3 working days
2-3 working days
4. Technical and Scientific Services Office (TSO)
A TSO provides technical support to the parent company’s Saudi agent or distributor, without engaging in sales activities.
5. The Establishment
Similar to a sole proprietorship, available only to Saudi or GCC nationals. The owner is personally liable for business debts.
Key Features
- Engage in approved business activities
- Participate in public/private sector contracts
- Sponsor foreign employees for residency
- Obtain a corporate bank account
Set up Business in KSA
For comprehensive guidance and support in establishing your business in Saudi Arabia, reach out to Northman & Sterling. Our expert consultants will ensure your business meets all current regulations and assist you in navigating the setup process seamlessly.
