Establishing a business in Saudi Arabia requires registering a legal entity in compliance with local regulations. This not only ensures legitimacy but also enhances the business’s credibility and operational effectiveness.
Entrepreneurs in Saudi Arabia can choose from various legal structures, including partnerships, joint ventures, and companies.
Among these, the Limited Liability Company (LLC) is the most popular due to its flexibility, limited liability protection, and investor-friendly regulations.
However, forming an LLC in Saudi Arabia involves a clearly defined legal process, which includes submitting required documents, securing licenses, and meeting regulatory criteria.
This comprehensive guide walks you through what an LLC is, its advantages, eligibility requirements, and the step-by-step procedure to register an LLC in the Kingdom of Saudi Arabia (KSA).
What is an LLC in Saudi Arabia?
A Limited Liability Company (LLC) in Saudi Arabia is a legal business entity governed by the Saudi Companies Law. It allows shareholders to limit their personal liability to the capital they invest in the company. In other words, shareholders are not personally responsible for the company’s debts or obligations beyond their initial contribution.
Key Features of a Saudi LLC
- Limited Liability: Shareholders are only liable up to the amount of capital they have invested.
- Ownership Structure: The LLC can have between 1 to 50 shareholders.
- Capital Flexibility: Minimal capital required for most businesses, though specific sectors like industrial or agricultural projects may require higher investments.
- Foreign Ownership: 100% foreign ownership is allowed under the Foreign Investment Law.
- No Saudi Partner Required: Foreigners can form an LLC without a local partner.
- Management: Managed by one or more managers who need not be Saudi nationals.
- Profit Distribution: Profits and losses can be distributed flexibly as per the operating agreement.
- Fundraising Limitations: LLCs cannot issue convertible debentures or multiple classes of shares.
LLC Formation Requirements in Saudi Arabia
Here’s a breakdown of the primary requirements:
| Requirement | Details |
| Minimum Capital | SAR 50,000 SAR 50,000 for foreign investment |
| Number of Shareholders | Minimum 1, maximum 50 |
| Management | Can be one or more managers (not necessarily Saudi nationals) |
| Auditor Requirement | Mandatory |
| Board of Controllers | Required if more than 20 shareholders |
| Supervisory Board | Applicable under specific conditions |
Additional Eligibility Criteria
- All applicants must be at least 18 years old. Minors must be represented by a legal guardian.
- Government employees are not allowed to be shareholders.
- If a partner is a company, it must have an active commercial registration.
- For professional companies:
- Partners must hold valid professional licenses.
- At least 25% must be owned by licensed Saudi partners in mixed ownership structures.
- Total licensed ownership must be at least 70%.
- Partners must hold valid professional licenses.
Required Documents for LLC Registration
You’ll need the following documents to begin the registration process:
- Passport Copies: For all shareholders and company representatives.
- Iqama Copies: For non-Saudi residents involved in the company.
- Relevant Licenses and Permits: Depending on the business activity, additional approvals may be needed.
- Memorandum of Association (MOA): Outlining company objectives, shareholder information, and capital. Must be notarised in Saudi Arabia.
- Articles of Association (AOA): Details internal company rules and management structure. Also requires notarisation.
- Commercial Registration (CR): Official certificate confirming business registration.
- Certificate of Professional Competence (if applicable): Required for businesses operating in specific professional sectors.
Step-by-Step Process to Register an LLC in KSA
- Obtain MISA License
Apply for a license from the Ministry of Investment of Saudi Arabia (MISA) relevant to your business activity. - Choose a Company Name
Select a unique business name that adheres to naming regulations in KSA. - Legalise Articles of Association
Submit your Articles of Association through the Ministry of Commerce.
to give your business legal standing. - Register for Commercial Activities
Apply for the Commercial Registration Certificate (CR) through the Ministry of Commerce. - Register with the Chamber of Commerce
Mandatory step for all business entities operating in the Kingdom. - Register with the Ministry of Labour
Ensure compliance with employment regulations and obtain a labour file. - Apply for a General Manager’s Visa
Secure a visa and a residence permit for the appointed General Manager. - Register the Business Address (National Address)
Enrol the company’s address with the Saudi Post for government records. - List on the Qiwa Portal
Register with Qiwa, the Ministry of Human Resources and Social Development’s portal, to manage workforce data and services. - Tax Registration
Enrol the company with the Zakat, VAT, and Income Tax authorities to comply with Saudi tax laws.
Conclusion
Forming an LLC in Saudi Arabia is a streamlined process, especially for foreign investors. With no local sponsor requirements and 100% ownership permitted, the LLC structure is a smart and secure way to do business in the Kingdom.
If you’re looking to start your business in Saudi Arabia and want expert help navigating each step, from licensing to registration and compliance, look no further.
Let DuVolks guide you through your LLC setup in Saudi Arabia.
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