Requirement for Obtaining a Business License in Saudi Arabia

The business formation requirements in Saudi Arabia may depend on the nature of the company, but the following documents are best to prepare and must be submitted in Arabic.

Parent Company’s Memorandum & Articles of Association
Attested Financial Statement for the Last Full Year
Business License/Trade License
Certificate of Incorporation
Board Resolution
Power of Attorney

The initial steps involved in setting up a business in

Saudi Arabia

What are the initial steps involved in setting up a business in Saudi Arabia?

To set up a business in Saudi Arabia, there can be varying requirements depending on the entity type. The process is generally similar, from registration, licensing to set up. Companies must complete the following steps in order to begin the process of setting up a business in Saudi Arabia:

  1. Register with the Ministry of Commerce and Industry (MOCI).
  2. Foreign owned companies must register with the Ministry of Investment (MISA) – formerly known as ‘SAGIA’.
  3. Open a local Saudi Arabia bank account.
  4. Register Wasel – the mandatory provision of a local address to the government. LLCs will require a physical local office lease and address as a virtual office is not sufficient.
  5. Register with the Ministry of Labour and Social Development (MLSD) visa issuing authority to permit labour in-country.
  6. Register with the General Organisation of Social Insurance (GOSI) - a mandatory social insurance for processing salaries monthly and maintains government records for the Saudisation quota system.

Necessary documents to begin the procedure

The Commercial Registration (CR) or business license – Issued by MOCI, the CR certificate outlines and enables the company to conduct business activities in Saudi Arabia, and allows the same rights as given to a citizen.

The Memorandum of Association (MoA) or Articles of Association (AoA) – Approved by MOCI and signed in the presence of a notary

For Foreign companies

Setting up in Saudi Arabia, they require an audited financial statement for the last financial year

A passport copy of the assigned General Manager of the Saudi Arabian entity

A Certificate of Incumbency.

For certain activity types, the company would require specific licensing from the relevant government departments, for example, a pharmaceutical company would require a Saudi Food and Drug Association licence.

Requirements for establishing a saudi company

Particulars LLC JSC Branch
number of shareholders 1 to maximum of 50 shareholders Normally 2 shareholders1 shareholder is permitted minimum capital SR 5,000,000. Non applicable
CAPITAL REQUIREMENTS Determined by the Ministry of Investment of Saudi Arabia (MISA) (depending on activity shareholding) SR 500,000 orSR 5,000,000 (in case of single shareholder) Normally SR 500,000 (may be lower or higher depending on activity)
LIMITED LIABILITY Yes Yes No
LOSSES EXCEED 50% OF CAPITAL Should losses exceed 50% of capital, the shareholders are not personally liable for LLC debts. Shareholders to meet within 90 days & agree to dissolve or continue business & publish the decision. Should losses exceed 50% of capital, the shareholders are not personally liable for JSC debts. Shareholders to meet within 45 days via general meeting & agree to dissolve or increase the JSC share capital. The head offices liability will not be restricted to the amount of branch’s capital. Should losses exceed 50% of capital, the shareholders to meet within 90 days & agree to dissolve or continue business.
CORPORATE TAXES ON ANNUAL NET PROFITS 20% 20% 20%
ZAKAT RATE PAYABLE BY GCC RESIDENTS ONLY 2.5% 2.5% 2.5%
APPOINT AUDITOR Yes Required Yes Required Yes Required
ABILITY TO BID FOR GOVERNMENT CONTRACTS FILE ANNUAL TAX RETURN Required Required Required
FILE ANNUAL FINAL STATEMENTS Required Required Required

Requirements for establishing a saudi company

Particulars LLC JSC Branch
REGISTER SAUDI COMPANY NAME 1-2 working days 1-2 working days 1-2 working days
apply & receive ministry of investment of Saudi Arabia(misa) license 2-4 weeks depending on business activity 2-4 weeks depending on business activity 2-4 weeks depending on business activity
REVIEW & APPROVE ENTITY DOCUMENTS 5 working days 5 working days 5 working days to complete
NOTARISE ARTICLES OF ASSOCIATION 1-2 working days 1-2 working days Not applicable
pay registration fee & receive commercial registration 1 working day 1 working day 1 working day
register office address Required Required Required
commercial registary 2 working days 2 working days 2 working days
register chamber of commerce 1 working day 1 working day 1 working day
register with labour 1 working day 1 working day 1 working day
register with social insurance 2-3 working days 2-3 working days 2-3 working day
register for taxes 2-3 working day 2-3 working day 2-3 working day