Saudi market access: a description of the core thresholds for the establishment of foreign companies

To set up a company in Saudi Arabia, investors need to comprehensively consider the threshold of company type, capital, registered address, shareholder directors, industry access, license acquisition and tax finance. Only with full preparation and careful planning can we successfully take root in Saudi Arabia, a land full of opportunities, and open a new chapter in profitability and development.

Saudi company registration threshold

1, the type of company and shareholder requirements.

Company type: Common types of companies are limited liability companies (LLC) and joint stock limited companies (JSC). Limited liability companies are more flexible and suitable for small and medium-sized enterprises, with foreign ownership up to 100 per cent, while joint-stock companies are more suitable for large-scale enterprises or companies with listing plans, with a higher minimum registered capital requirement of 2 million Saudi riyal.

Shareholder requirements: a limited liability company has at least one shareholder, with no limit on the number of shareholders; a company limited by shares requires at least five shareholders. Shareholders may be foreign companies or foreign natural persons, but certain industries may require Saudi citizens or Saudi entities to participate in shareholding, such as the real estate investment industry, where local Saudi shareholders hold at least 25% of the shares.

2. Requirements for registered capital

in general, there is no statutory minimum registered capital requirement for the establishment of a limited liability company, but the Saudi Ministry of Investment usually requires a capital of at least 500000 riyals for foreign limited liability companies. The minimum capital for service/manufacturing companies is also SAR 500000, which is not required to be paid-up.

Special industries have higher minimum registered capital requirements. For example, the real estate investment industry is 30 million riyals and needs to be paid in; the minimum registered capital of trading companies is 30 million riyals and needs to be paid in capital verification.

3. Registered Address Requirements

the company must provide the address of the actual office in Saudi Arabia. "Shell address" is not accepted. The address must meet the requirements of commercial use, for receiving official documents, etc. The registered address shall ensure smooth information contact, and documents such as lease contract or property right certificate shall be provided.

4. Industry access requirements

certain industries such as finance, healthcare, education, energy, banking, defense, etc. are highly regulated and require additional industry licenses to operate. For example, to engage in financial services requires a license from the Saudi Monetary Authority (SAMA); to establish a medical institution or provide medical services requires a practicing certificate issued by the Ministry of Health.

5. Articles of Association Requirements

it is necessary to formulate articles of association that comply with Saudi law and regulatory requirements, detailing the company's organizational form, scope of business, shareholders' rights and obligations, registered capital, profit distribution methods, board composition and rules of procedure and other core provisions. The articles of association shall be signed by all shareholders and certified by the notary office.

Saudi company registration risk avoidance and recommendations

1. Flexible choice of cooperation mode

nominal joint venture: in industries where sole proprietorship is allowed, balance resources and compliance needs through "foreign ownership + local strategic cooperation.

SEZ entry: priority is given to King Abdullah Economic City, Jizan Special Economic Zone, etc., to enjoy tax relief, tariff exemption and other policies.

2. Professional support

agency: entrust professional institutions to deal with document translation, notarization, bank account opening and other complex links.

Legal counsel: to ensure that the company's articles of association and contracts comply with Saudi law and avoid legal risks.

3. Cultural adaptation

respect religious customs: avoid using religious sensitive elements in business activities and arrange working hours reasonably.

Build local relationships: Integrate into local business networks through membership in chambers of commerce, participation in industry events, etc.

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