{"id":11476,"date":"2023-05-11T10:21:14","date_gmt":"2023-05-11T10:21:14","guid":{"rendered":"https:\/\/www.creationbc.com\/?p=11476"},"modified":"2024-09-10T11:17:06","modified_gmt":"2024-09-10T11:17:06","slug":"legal-complexities-of-company-formation-in-saudi-arabia-for-business-success","status":"publish","type":"post","link":"https:\/\/www.creationbc.com\/en-sa\/news\/legal-complexities-of-company-formation-in-saudi-arabia-for-business-success\/","title":{"rendered":"NAVIGATING THE LEGAL COMPLEXITIES OF COMPANY FORMATION IN SAUDI ARABIA FOR BUSINESS SUCCESS"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]This article has been researched and written by the Business Development Team at Creation Business Consultants. AI has not been used in generating this article.<\/em><\/strong><\/p>\n

 <\/p>\n

<\/i>A Saudi Arabian foreign investment license from the Ministry of Investment (MISA) is necessary for international investors, who must then finish the incorporation procedure at the Ministry of Commerce (MOCI) and other government agencies. The Saudi Arabian notary public will notarise the company’s Articles of Association as part of the incorporation process.<\/span><\/p>\n

Every industrial or commercial establishment, both domestic and foreign, is required to register with the commercial registration offices of MOCI, which are in all the major towns of the Kingdom in accordance with the Statute of Commercial Registration System as contained in the Council of Ministers Resolutions No. 54 dated 29 Rabi II 1375 H. (1955) and No. 112 dated 13 Shawwal 1375 H. (1955).<\/span><\/p>\n

Branch offices of foreign corporations, or Saudi agents acting on their behalf, are required to first seek permission from MISA, Ministry of Industry and Electricity, and then register with the MOCI a month before starting operations of setting up a business in Saudi Arabia<\/a>.<\/span>[\/vc_column_text][vc_btn title=”BOOK A FREE CONSULTATION” style=”3d” align=”center” i_align=”right” i_type=”typicons” i_icon_typicons=”typcn typcn-chevron-right” add_icon=”true” link=”url:%2Fen-sa%2Fcontact-us%2F”][vc_column_text]<\/p>\n

WHAT ARE THE LEGAL REQUIREMENTS TO BE CONSIDERED BEFORE COMPANY FORMATION IN SAUDI ARABIA?<\/span><\/h2>\n

 <\/p>\n

1. Minimum Capital Requirement<\/span><\/h3>\n

The legal structure of the firm and the nature of activity determine the size of the share capital. Most of the Limited Liability Companies (LLCs) are not required to have share capital; however, it is advised that they have at least SAR 50,000 worth of shares.<\/span><\/p>\n

Instead of the previous law’s requirement of five shareholders, a Joint Stock Company (JSC) must now have a minimum of two shareholders. A JSC can be formed with just one shareholder if it is established by the government or by government-owned businesses and has a minimum capital of SAR 5 million.<\/span><\/p>\n

The new law reduces the minimum share capital requirement for JSCs from SAR 2,000,000 to SAR 500,000. For LLCs, there is still no set minimum capital requirement (except for a few instances).<\/span><\/p>\n

 <\/p>\n

2. Management Structure<\/span><\/h3>\n

The general manager of the business is its primary representative and management authority. The company’s Articles of Association sets down the general manager’s responsibilities and powers. There are five basic types of companies in Saudi Arabia that are open to both domestic and foreign businesses in terms of their organisational structure. They are:<\/span><\/p>\n