Saudi Arabia Company Formation

Saudi Arabia Company Formation

The main stages of Saudi Arabia company formation are:

Planning and strategy

Incorporation

Bank account opening

Staying compliant

Step 1: Planning and Strategy

As mentioned, the first step is to understand how to open a company in Saudi Arabia. Depending on your business activity, World Company Setup Consultants will advise on the most suitable business entity, paid-up capital, and the requirements for a company license in Saudi Arabia.

During the planning and strategy phase, you need to determine the following elements:

• The name of their business
• The type of commercial entity to be established
• For our international clients, World Company Setup Consultants recommend setting up a Saudi Arabian Limited Liability Company, as it is the most common legal entity in Saudi Arabia and can be registered by a single shareholder.
• Other popular types of commercial entities include the registration of joint-stock companies as well as branches.

The following documents from the parent company must also be prepared in advance to be notarized and legalized in Saudi Arabia:

• Parent's Memorandum and Articles of Association (M&AA)
• Business license
• Certificate of Incorporation
• Board of Directors Resolution
• Power of Attorney

Step 2: Incorporation

Once everyone is in agreement on how to open a company in Saudi Arabia, the company incorporation process is initiated.

Applying for an Investment License

• This type of company license in Saudi Arabia is required for foreign investors who are not members of the Gulf Cooperation Council and is only relevant for conducting business activities other than those specified in the "Negative List" mentioned above.
• To obtain an investment license, an application must be made to the Saudi Arabian General Investment Authority (SAGIA), now known as the Ministry of Investment (MISA), a government agency responsible for licensing 100% foreign-owned companies to operate in Saudi Arabia.
• A detailed report will be submitted, outlining important information such as the nature and size of the investment activity and key financial information regarding the company's operations. The SAGIA application forms will also need to be completed and then submitted to SAGIA.
• SAGIA will then issue a pre-approval certificate, which is an approval that the company can be registered, as well as whether the company can have 100% foreign ownership.

Articles of Association

• For entities proceeding with Saudi Arabia, the preparation of the Articles of Association is required for company incorporation. It will be submitted to the Ministry of Commerce and Investment. Once approved, the document must be signed before a notary so that the CR certificate can be registered. After this, the name and articles of association must be published in the official newspaper.

Registering the company's name

• The company name will need to be reserved at the Unified Center and then approved before other forms can be submitted. These forms include incorporation forms, articles of association, and the memorandum of association.

Registering with MERAS

• Meras is a government program under the Saudi Business Center that aims to facilitate procedures and provide services for conducting business. This is an effort by the Saudi government to increase efficiency and create ease in business setup. This is seen in how clients can register their companies online with the Ministry of Commerce.
• First, clients need to obtain their commercial registration (CR) and tax numbers, where the CR is a business license (Certificate of Registration).
• According to Article 3 of the Commercial Registration Law, company managers must apply to the authorities. The application must be submitted within 30 days from the date the articles of association are registered by the notary.
• The application, in relation to Article 3, must include the following points:
  • The company's type and trade name.
  • The company's activity.
  • The company's capital.
  • The company's incorporation and expiration date.
  • The names of general partners in general or limited partnerships, and the place and date of birth, address, and nationality of each.
  • The names of company managers and individuals who sign on behalf of the company, and the place and date of birth, address, nationality, and signature sample of each, with a statement defining the scope of their management and signature authorities, and specifying any actions they are not authorized to perform (if any).
  • The addresses of the company's head office, branches, and agencies inside and outside the Kingdom.
• Every person registered with the company will submit to the office the Certificate of Membership from the Chamber of Commerce and Industry within 30 days from the date of registration.
• The complete registration application will need to be submitted to the Saudi Arabian Ministry of Commerce and Industry (MOCI). The CR will be issued approximately 6 weeks after submission. At this point, the company can also register for tax.
• Under Meras, clients will also be able to perform municipal registration, and a physical office will need to be established for the company to be registered with the local municipality.
• Additionally, clients will have the ability to notarize the articles of association electronically, register with the Ministry of Labor and Social Development (MLSD), the General Organization for Social Insurance (GOSI), the General Authority of Zakat and Tax (GAZT), and as an automatic registration with Wasel.

Issuance of the SAGIA foreign business license

• To obtain the SAGIA License, all documents such as the CR, tax registration, municipal license, and the bank's share capital deposit letter must be submitted to SAGIA for review and approval. SAGIA will then issue the foreign business investment license, which will allow the company to sign contracts, issue invoices, and hire employees. Securing this type of company license in Saudi Arabia ensures the smooth operation of your business.

Creating the Company Seal

• The seal must be created to include the company name as well as the CR number. The company seal is required for attesting signatories at the Chamber of Commerce, registering with the General Organization for Social Insurance, and for company invoices.
• The seal is also required in the following situations:
  • Contractual agreements
  • Shareholder and Management resolutions
  • Official Letters and Notices
  • Government Documents

Registration with the Chamber of Commerce

• All registered company owners will submit their Certificate of Membership from the Chamber of Commerce and Industry (CCI). This must be completed within 30 days of registering the CR.
• To learn more about how to open a company in Saudi Arabia, contact us. Our team of experts will get back to you within the next 24 hours.

Step 3: Opening a Bank Account in Saudi Arabia

• A local bank account must be opened within 90 days of the issuance of the LLC's commercial certificate. World Company Setup Consultants will help you open a corporate bank account with a bank of your choice. Once the Certificate of Registration is issued, you will be able to activate your bank account and proceed with unfreezing your initial capital deposit.
• The opening of a corporate bank account should be done after the company registration numbers are issued, and foreign employees are required to obtain an Iqama beforehand.
• The registration process requires Saudi Arabian companies to open a capital account to deposit the required paid-up capital. This account will then be converted into an operating account upon the issuance of the company registration number.
• Several banks in Saudi Arabia offer internet banking in English, which simplifies the opening process. When opening an account digitally, this is done by simply filling out the account opening form and authenticating identity through the National IAM Platform, which banks offer access to directly from their websites.
• A share capital deposit certificate can also be obtained.
• The process of opening an account in Saudi Arabia spans longer periods, with the opening of a capital account taking up to 5 weeks and the conversion to an operating bank account taking up to 8 weeks. The issuance of bank account numbers can also take up to 3 months.

Step 4: Staying Compliant

• World Company Setup Consultants will prepare your firm's financial statements, corporate tax returns, and accounting records on your behalf in a timely manner.
• If the company appoints foreign employees as bank signatories to a Saudi Corporate bank, a Saudi Work Visa (Iqama) is required. Notably, Saudi nationals must already be on the company's payroll for the foreign national to be able to apply for an Iqama.
• The required documents typically include a passport-sized photo, an original, valid passport, a visa referral note, a sponsor letter from the Saudi Company, the highest academic qualifications, and an employment contract.