Saudi Arabia, in tune with its Middle Eastern neighbor countries, is on a mission to diversify its economy. This mission spearheaded by its ‘Vision 2030’, makes it an attractive destination for investors from around the world. Here, healthcare, technology, and tourism along with its oil and gas industry take center stage.
When this mission is combined with a rapidly growing economy and the strategic location of Saudi Arabia, the country becomes a conducive space for local and international businesses. With this context, a company formation in Saudi Arabia becomes a sought-after option.
However, company formation is not as easy as putting it into words. The process involves several steps such as selecting a business structure, registering with the Ministry of Commerce, obtaining necessary licenses, and complying with other regulations in place. Company formation consultants in Saudi Arabia can be consulted for deeper insights. For a broader picture, the following sections will help.
Step 1: Planning and Strategy
- Choosing the Name: Begin with determining the name of the company. This requires a careful consideration of cultural, legal, and branding aspects relevant in Saudi. To make it compliant with the Saudi Ministry of Commerce’s regulations, ensure that it is unique, non-offensive, and reflective of the business’s nature.
- Choosing the Right Business Structure: The options include a Limited Liability Company (LLC), a Joint Stock Company (JSC), and branches of foreign companies.
The choice between these options depends on factors such as ownership, liability, and capital requirements.
Once the above two choices have been made, it is time to collect necessary documents such as board resolution and power of attorneys. Then you are also set to dive into the business incorporation stage.
Step 2: Incorporation Process
In the incorporation stage, the following steps could be done almost simultaneously
- Apply for an Investment License
There is a key governmental body named Saudi Arabian General Investment Authority (SAGIA). It attracts and regulates foreign investment in Saudi Arabia. Business setup companies in Saudi Arabia highlights that every non-GCC foreign investor has to apply at this body.
The application requires:
- Nature and size of investment activities.
- Key financial information on the company’s operation
- Duly filled SAGIA application form
Upon processing the application SAGIA will issue a pre-approved certification confirming the company’s registration. This certification also projects the eligibility of the company for 100% ownership.
- Articles of Association
The Articles of Association is a legal documents that reflect the governance framework and operational guidelines of a company. Company formation consultants in Saudi Arabia highlight this as a critical document including details such as the company’s purpose, capital structure, share distribution, and decision-making process among others.
This document has to get approval from the Ministry of Commerce and Investment. Then it has to be signed in front of the notary public. This is to register for Commercial Registration Certification and Tax Number.
This is also followed by its publication in a newspaper along with the company name.
- Registration of Company Name
Here, the company name is reserved with the Unified Centre. This has to get approval before any forms such as Articles of Association and incorporation forms can be submitted.
- Apply for the SAGIA Foreign Business Investment License
Here, the applicant has to submit documents such as Commercial Registration (CR), tax registration, and bank’s share capital deposit letter at SAGIA. Once the required documents are all submitted SAGIA issues a foreign business investment license.
This is essential for a company to sign contracts, issue invoices and hire employees. Since such functions are fundamental to the operations of a company, company formation consultants in Saudi Arabia see this as a significant step.
- Registering at MERAS
MERAS is an online platform developed by the Saudi Administration to facilitate and streamline the procedures involved in starting and managing businesses. This platform which functions under the control of the Saudi Business Centre in short is designed to speed up the business setting process.
The primary task to be done with MERAS is the Commercial Registration (CR). The following are the points to consider at this juncture:
- While dealing with Articles of Association we saw that it has to be signed in front of the notary public. The law in place in Saudi puts that the managers of a company must apply for the CR within 30 days from the date on which the AOA is recorded by the Notary public.
- The CR application has to include a range of details including the type of company, its trade name, its activity, and capital. Consult with any business setup companies in Saudi Arabia for a detailed list.
- The complete application for such registration has to be submitted to the Saudi Arabia Ministry of Commerce and Industry (MOCI). The CR can be availed within 6 weeks of this submission.
Other than this primary task companies can pursue the following activities with MERAS:
- Online Notarizing of Articles of Association.
- Registration with the Ministry of Labor and Social Development (MLSD)
- Registration with the General Organization for Social Insurance (GOSI)
- Registration with the General Authority of Zakat & Tax (GAZT) including automatic registration with Wasel.
- Company Seal Creation
The company seal is required for contractual agreements, official letters, and management resolutions and to attest the signatories at the chamber of commerce, among others. Ensure that the seal bears the CR number and company name.
- Registration with the Chamber of Commerce
Persons registered with the company have 30 days from the registration of CR, to submit a certificate of membership from the Chamber of Commerce and Industries.
Step 3: Bank Account Opening and Compliance Measures
This is another step highlighted by company formation consultants in Saudi Arabia. The condition here is that the local bank account needs to be opened within 90 days of issuance of a commercial certificate.
Another point worth mentioning here is that the registration process requires companies in Saudi to open a capital account to deposit a paid-up share capital. Once the company registration number is issued such an account can be converted into an operating business account.
The process of company formation doesn’t stop here. The companies have to continuously showcase compliance in operations and finances to continue their existence in Saudi Arabia.
Thus a broader picture of company formation in Saudi Arabia has been provided. Now it is time to work with reputed company formation consultants in Saudi Arabia to make this procedure favorable to your company. In this direction, Helpxpat will be a prudent choice. Reach out to us for a customized route map to set up your company in Saudi Arabia.
