The opening of a company in Saudi Arabia

How to Open a Company in Saudi Arabia: A Comprehensive Guide

by Shivaanjan 09, May 2024

A business-friendly environment, access to top-notch infrastructure and being strategically located makes setting up a business in Saudi Arabia lucrative. Are you looking to open a company in Saudi Arabia? There are several compelling reasons for you to consider it.

However, understanding the country's business environment and the legalities around it is extremely important. In this article, we provide insights into the legal requirements, regulatory frameworks, and success strategies to help you open a company in Saudi Arabia.

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Understanding Business Structures in Saudi Arabia

You have the option of choosing between different business structures when forming a company in Saudi Arabia. Let us look at them to help you choose one that aligns with the business objectives and goals.

Limited Liability Company (LLC)

LLC in Saudi Arabia is a lucrative option for MSME entrepreneurs as it offers certain benefits like limited liability in case the business fails. The business structure requires a minimum of 2 and a maximum of 5 shareholders. Depending on the business activity, you may be able to qualify for full foreign ownership when setting up a mainland company in Saudi Arabia.

Joint Stock Company (JSC)

This business structure is suitable for larger enterprises that plan to go public and raise capital by issuing shares. The number of shareholders required is five and is subjected to stricter regulations.

Branch Office in Saudi Arabia

Branch offices are an extension of the parent company used primarily to establish a presence in a foreign country. The parent company is completely liable for the branch's obligations.

Representative Office 

This business structure is ideal for foreign companies wanting to establish themselves while exploring the local markets. It allows them to engage in commercial activities.

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Steps to Open a Company in Saudi Arabia

Let us explore the step-by-step process for your business setup in Saudi Arabia

  1. Market Study

You need to conduct thorough market research to understand what the market offers and capitalise on the opportunity by opening a company in Saudi Arabia.

  1. Business Activity

After conducting research, you must choose a business activity that solves the pain points of your target audience. You must make sure that it is feasible and aligns with the regulations laid down by the Saudi authorities.

  1. Select Business Structure

Next, you must choose an appropriate business structure considering the nature, size, liability and capital requirements of the business. It is important as it affects taxation, legal liability and other necessary paperwork.

  1. Reserve Trade Name

Choose a unique name for the business that complies with Saudi regulations and existing trademarks. You need to register the name through the Ministry of Commerce (MOC).

  1. Memorandum of Association (MoA)

Draft the MoA which outlines details such as the business objectives, share capital, shareholder details, etc and get it notarized by a Saudi notary or other competent authority.

  1. Commercial Registration and Tax Card

Apply for the commercial registration certificate and tax card from the MOC by submitting the necessary documents.

  1. Obtain License and Approval

Obtain licenses and permits relevant to your business activity from the concerned regulatory body. Third-party approvals from relevant authorities might also be needed depending on the business activity you carry out in the country.

  1. Corporate Bank Account

The final step is to open a bank account to streamline your finances and transactions. Hire a professional accountant who complies with Saudi accounting standards and regulations to ensure that everything is in order.

Note: The steps might differ a little depending on the business structure chosen. However, this blog includes most of the essential steps for all business structures.

Now that you are aware of the steps on how to open a company in Saudi Arabia, you can look to fulfil your business dreams. If you need more information or help regarding business set-up, you can contact the experts at Commitbiz.

They are well-equipped to guide you in opening a company in Saudi Arabia and offering personalised business services to ensure a smooth business setup experience.

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