10 steps to incorporating in Saudi Arabia
- Prior to business setup, our Client i) settles Healy Consultants’ company formation fees, ii) signs and returns our Client company formation engagement letter and iii) provide us all the required due diligence documents;
- Healy Consultants drafts a detailed company setup engagement project, mapping out by week each step to business setup engagement completion, optimising transparency, and setting Client expectations for Saudi Arabia incorporation;
- Healy Consultants reserves company name with the Unified Center and prepares company deeds of establishment and articles of association. The exact Saudi Arabia corporate structure is agreed with our Client;
- Our Client supplies Healy Consultants with a lease agreement for their office premises following Saudi Arabia business incorporation. If this is not possible, Healy Consultants will supply virtual office services for 6 months until our Client finds their preferred business address after Saudi Arabia business incorporation is completed;
- Healy Consultants assists our Client open a corporate bank account with a Saudi bank. Our Client deposits the paid up share capital of US$26,665 and supplies Healy Consultants with a certificate of deposit and bank statement;
- To support Saudi Arabia incorporation, Healy Consultants then i) pays the Chamber of Commerce fee ii) notarizes all company documents and iii) registers our Client for social security insurance with the General Organization of Social Insurance (GOSI) iv) registers with the Department of Zakat for an annual religious wealth tax;
- The license application is submitted to the Investors Service Center in SAGIA. The latter is required to evaluate the investment request and give its decision within 30 days;
- Subsequently, Healy Consultants assists our Client register the Saudi Arabia LLC with the Company Registry Office and receive a Company Registration Certificate from the Ministry of Commerce. Thereafter, we submit an announcement in the Official Gazette;
- To support company formation, Healy Consultants will obtain work visas from the General Department of Passports, Ministry of Interior and the Ministry of Labor following company registration;
- Following company incorporation engagement completion, Healy Consultants couriers a full company kit to our Client, including original Saudi Arabia corporate documents, unopened bank correspondence and a Client feedback survey.
SAGIA Foreign Business License procedures
Foreigners interested in undertaking a business activity not included in the Saudi negative list (see below) are allowed to do so after being granted a foreign investment license by the Saudi Arabian General Investment Authority (SAGIA).
The negative list: Business activities closed to foreigners
Service sector Industrial sector Catering to military sectors. Oil exploration, drilling and production. Except certain services related to mining sector listed at CPC 5115 and CPC 883. Security and detective services. Manufacturing of military equipment, devices and uniforms. Real estate investment in Makkah and Madina. Manufacturing of civilian explosives. Tourist orientation and guidance services related to Hajj and Umrah. Recruitment and employment services including local recruitment offices. Real estate brokerage. Commission agents internationally classified at CPC 621. Audiovisual and media services. Land transportation services, excluding the intra-city passenger transport by trains. Services provided by midwives, nurses, physical therapy services and quasi-doctoral services internationally classified at CPC 93191. Fisheries.
Before a company registration application is submitted to SAGIA, our Client should assess to what extend their investment project meets all three criteria below:
- Benefits and advantages of the proposed business activities to the Saudi economy;
- Size of the business and the number of local jobs the company will create;
- The economic and social impact towards the development of Saudi Arabia.
The more our Client contributes to the Saudi economy, the higher the chances of a foreign business license approval.
Steps to secure a foreign business license
The new Company Law and New Companies Regulations (the “NCR”) set procedures for the establishment and management of companies by foreigners in the Kingdom. In spite of simplification efforts, it is still challenging to secure SAGIA approval: approval can take up to one year to be granted, after provision of multiple supporting documents and information.
For certain companies (see below), a fast track procedure is available. For these companies, company registration can be completed within 4 months.
The general steps are as follows:
- Healy Consultants and our Client prepare a complete detailed business plan that will specify i) the nature and size of the investment activity, ii) financial data such as projected income, capital requirements or expected assets iii) economic feasibility for the next 10 years iv) manpower projections and v) market entry strategy;
- Our Firm submits the above document to SAGIA, together with the necessary application forms;
- Upon SAGIA pre-approval, discuss and negotiate with SAGIA low levels of paid up share capital requirements and 100% foreign ownership. The Government has the ultimate decision and often requests the appointment of a local joint venture partner;
- Assuming our Client is able to meet the criteria imposed by SAGIA, our Client attests and signs the required documentation and Healy Consultants Group PLC submits a formal application to the Saudi Authorities;
- Healy Consultants Group PLC liaises with the different Saudi authorities throughout the application on behalf of our Client, without their presence in Saudi;
- Complete company registration and thereafter corporate bank account opening. During this process, our Client deposits the paid up share capital imposed by SAGIA, which ranges from US$25,000 to US$200,000.
A fast track service is supplied by SAGIA to the following companies:
- Global multinational corporations;
- Companies listed in the stock exchange of their countries or other countries;
- Certain companies manufacturing a globally classified product through a technically approved production line;
- Small and medium size enterprises which will operate in the area of intellectual property rights registered in their names, or which are classified as innovative enterprises;
- Global companies setting up regional offices in the Kingdom;
- Construction companies classified as first class contractors in their countries, or which have completed a project with a value of not less than SR 500 million and have manpower of at least two thousand (2,000) persons and total assets of not less than SR 50 million;
- Companies planning to partner with other companies qualified by a government agency or by an agency which is fully or partially owned by the government, or with a company listed in the Saudi Stock Market.
Frequently asked questions
Can foreign companies incorporate a Saudi Arabian subsidiary?Yes. However it is rather challenging for companies outside the GCC to incorporate in Saudi Arabia. Contact Healy Consultants to learn about the incorporation process in Saudi Arabia.
Can foreigners incorporate a Saudi company in any industry?No. Foreigners are not permitted to invest in several industries in the “negative list” such as i) oil exploration and production ii) real estate iii) tourism iv) recruitment and employment services v) printing and publishing.