How to Set Up Your Business in Saudi Arabia: A Guide |

How to Set Up Your Business in Saudi Arabia: A Guide

The Kingdom of Saudi Arabia (KSA), the biggest economy in the Gulf region, in the recent years has taken far-reaching steps to expand its private sector by making it easier for both domestic as well as overseas businesses to operate in the kingdom. As part of its ‘Vision 2030,’ that aims to turn the kingdom into a more diversified economy, the Saudi Government has made several positive regulatory changes.
Measures like permission to foreign nationals to have 100% ownership of a Saudi-registered company, ease in the processing of business licenses and online renewal of investment licenses are the key drivers of foreign entities setting up a business in KSA.

Following are the steps to set up your business in the Kingdom of Saudi Arabia:

Do your due diligence

The business environment in KSA has significantly changed in the past days. Speak to local lawyers, local companies as well as foreign firms operating in KSA, research the characteristics of different industries, get a clear idea of your target segments and ensure that you know all the actions required to comply with commercial regulations.

Get Investment License (SAGIA License)

To open your maiden company in Saudi Arabia, you need to get your investment license first. The Government body that provides licenses to foreign entities is the Saudi Arabian General Investment Authority (SAGIA), which allows you to operate independently. These basic procedures, enable you to get your account in Saudi banks and sponsor shareholders to kick-start your business legally in KSA.

Sign Articles of Association

After you receive your investment license, you would definitely need a Commercial Registration (CR) to start your business. The Saudi Ministry of Commerce & Industry issues the CR allowing you to operate in the kingdom. Along with the CR, for certain activities, you need licenses and certificates from the Chamber of Commerce.

Find an office space

After incorporating your business, find a suitable space for your office. This is not only necessary for starting functions but also required for registering your address, which aids you in completing the registration process of your company

Set up your office

Once you are done with finding a good office space, set up your office in the building. After setting up the office, you will need to get the attestation done at the Notary. The Municipality license, Labor Office File, General Authority of Zakat and Tax File (GAZT) and General Organisation for Social Insurance File (GOSI) are some of the mandatory Govt registrations need to be done to ensure your company’s formation in KSA.

Start recruiting

Now, you are done with all the formalities; you can start hiring staff to get your business up and running. It will take weeks to obtain visas from the Ministry of Labour and your company must be cognizant of the country’s Saudization policy, which aims to reduce the unemployment rate among Saudi nationals from 12% to 7%. You can get all the information regarding staffing in KAS on the official website of the Labour Ministry.

Certain Specific Provision for setting up a Company in KSA

The minimum capital investment required for establishing an LLC is SAR 500,000 (equivalent to around USD 130,000).
The minimum capital investment required for an LLC with foreign participation is SAR 100,000 (equivalent to around USD 26,000).
For agricultural projects, the minimum investment requirement is SAR 25,000,000 (equivalent to USD 6,666,000).
A Limited Liability Company (LLC) must appoint at least one Director.
It is mandatory that an LLC must have at least two shareholders and not more than 50 shareholders in total.
It is not necessary that the GM of the company needs to be a citizen of Saudi Arabia.
There should be an auditor in an LLC and where there are above 20 shareholders, it is mandatory to establish a Board of Controllers.
An LLC have to hold a minimum of one annual meeting within 4 months of the end of a financial year.
The renewal of the SAGIA License and CR upon their expiry is necessary and compulsory.
If an LLC wish to have more than 50 shareholders, which is not allowed, the company will have to be incorporated into a joint-stock company.
An LLC must take an office locally. Virtual office for LLCs is not allowed in Saudi Arabia.

The Kingdom of Saudi Arabia is a great place to set up your business. Keeping in view the current scenario in the Kingdom, many foreign entrepreneurs are willing to set up their business in KSA and explore new markets there.

The above mentioned points are just to guide you if are new to the Saudi market and planning to start your business there. However, it is advisable to visit the official website (https://mlsd.gov.sa/en) of the Labour Ministry of the KSA government to keep yourself updated with the latest policies.