Embarking on the journey of market entry into the Kingdom of Saudi Arabia by establishing a company can be a promising and rewarding endeavor. As the largest economy in the Middle East, Saudi Arabia offers numerous opportunities for business growth and expansion.
However, navigating the process of company formation in the kingdom can be complex and challenging, especially when it comes to optimizing your physical presence. In this blog post, we will provide you with valuable insights and actionable tips while setting up a company in Saudi Arabia.
Located between Europe, Asia and Africa, Saudi Arabia covers approximately four-fifths of the Arabian Peninsula, bordering eight countries and two bodies of water. Saudi Arabia has an oil-based economy with the highest crude oil reserves in the world. This contributes to Saudi being the largest economy in the Middle East.
Vision 2030 is a long-term project led by the Saudi Government and backed by the sovereign wealth fund. Its aim is to reduce the country’s dependence on oil and grow alternative industries in Saudi Arabia.
Saudi Arabia is dedicated to the development of its diverse investment environment with advancement of the business ecosystem and foreign investment initiatives.
FOREIGN INVESTMENT LICENSE
The Ministry of Investment (formerly SAGIA) is the KSA foreign licensing authority for international companies expanding into Saudi Arabia. Companies must obtain a foreign investment license from the Ministry of Investment and meet certain criteria in order to begin the company setup process.
REQUIREMENTS TO APPLY FOR A FOREIGN INVESTMENT LICENSE
- 100% foreign ownership through an existing overseas company. The KSA entity must be incorporated as a branch or subsidiary of an overseas company;
- Provision of the full suite of parent company corporate documents and one year of audited financial statements. Company documents and financial statements must be attested up to the Ministry of Foreign Affairs in KSA.
ADVANTAGES
- 100% foreign ownership without requirement for local shareholder or partner;
- No minimum share capital requirement for services and industrial companies;
- Permission to operate anywhere in Saudi Arabia.
SAUDI ARABIA COMPANY FORMATION
Foreign companies must begin the setup process by obtaining a foreign investment license from the Ministry of Investment in Saudi Arabia.
Upon issuance of their Foreign Investment license, companies must register their company through the Ministry of Commerce. Ministry of Commerce will issue the Memorandum of Association and Certificate of Incorporation.
KSA FOREIGN INVESTMENT LICENSE INCORPORATION PROCESS GUIDELINES
1) Document Preparation
Required Documents for Overseas Parent Company:
- Certificate of Incorporation / Trade License
- Company Memorandum & Articles of Association
- Power of Attorney / Board Resolution
- Audited Financials (Ministry of Commerce Attestation)
- UBO / Director ID documents
Documents must be legalised in the home country up to the KSA Embassy. They must then be legalised in MOFA in Saudi Arabia.
Timeline: 5 working days (dependent on client requirement and courier delays).
2) Ministry Of Commerce Name Approval
Arabic and English Name Approval.
Client must provide 3-5 names for approval.
Online Application.
Timeline: 3 working days.
3) Foreign Investment Licensing
Foreign investment license application with the Ministry of Investment in KSA. Submission of all corporate documents of the parent company and selection of company activity from the ISIC 4 list of activities.
https://www.misa.gov.sa/ar/e-services/
Online application and submission of the original documents.
Approval Timeline: 10 working days.
4) Saudi Company Registration At Ministry Of Commerce
Submission of foreign investment license to the registrar. Drafting and issuance of the Memorandum & Articles of Association.
Online Application.
Approval Timeline: 5 working days.
5) Registration of General Manager With The Chamber of Commerce
General Manager will be the company authorised signatory with the following authorities:
- Labour & Immigration
- GAZT & GOSI
- Bank
- Chamber of Commerce
GM will be required to take a residence permit and visa.
Approval Timeline: 2 working days.
6) Open The Company Labour File (700 File)
Company Labour file is maintained by the Ministry of Labour & Social Development (MSLD).
The file is required for employing staff and issuing labour contracts, visas and residence permits (Iqama).
Approval Timeline: 3-5 working Days.
7) General Manager Visa Processing
General Manager visas/iqama is a mandatory requirement.
Required documents:
- Passport
- Passport photos
- Medical in resident country
- Insurance
Individual will be required to reside in KSA for at least 2 weeks during the Visa and Iqama Issuance.
Timeline: 4-6 weeks.
8) Tax Registration
Registration with the following tax authorities:
- General Authority for Zakat & Tax (GAZT)
- VAT
- General Organisation for Social Insurance (GoSI)
9) KSA Office Registration & Baladiyah Approval
Physical office fit-out and approval from the regional municipality (Baladiyah). Office will require furniture, signboard, cctv, fire alarm/extinguishers and must befit for purpose.
Timeline: Dependent upon client.
10) Company Bank Account Opening
Local account opening with GM as authorised signatory. Working with the following banks:
- ALINMA Bank *
- Saab Bank
- Riiyadh Bank
- Samba Bank
- Saudi National Bank
*Preferred Bank
Timeline: 2-6 weeks (Approximate).
Conclusion:
Market entry into the Kingdom of Saudi Arabia by establishing a company in Saudi Arabia requires careful planning and strategic execution, both in terms of legal compliance and search engine optimization. By following the guidelines outlined in this blog post, you will be well-equipped to navigate the company formation process and optimize your physical presence for improved visibility and success in the Saudi Arabian market.
