How to register a company in Saudi Arabia
Many people ask questions how to register a company in Saudi Arabia as foreign entrepreneur? Limited Liability Companies are easy to establish in Saudi Arabia. As the liability is limited, it offers protection to each individual partner and their contribution on share capital of the company. If the losses of the company become more than 75% of their stated capital, partners will be jointly and personally liable to pay all the debts of the company according to the company law of Saudi Arabia. JV company registration process is almost same of LLC.
Characteristics of LLCs
LLC is the most common corporate format in Saudi Arabia which is in equivalent with the format of private limited companies. There are some characteristics by how to register a company in Saudi Arabia which are stated in the following:
In Saudi Arabia, minimum number of shareholders should be 1 where maximum 50 shareholders will be granted according to the law. A sole shareholder will get the opportunity to form single shareholder limited liability company and he/she will not be allowed to own another single shareholder limited liability company.
Capital and Reserves:
No minimum capital amount is required investors must pay a minimum amount of capital in the certain categories of SAGIA licensed companies such as 1 million Saudi Arabian Riyal will be required in the time of registration for a SAGIA-licensed industrial limited liability company. In the reservation system, limited liability companies must set a minimum of 10% of net profits to form a statutory reserve in annual basis and each investor should bear in mind that share contributions must be valued independently.when the statutory reserve reaches 30% of the paid-up capital, company can stop this allocation system in Saudi Arabia.
No public subscription:
No public subscription will be allowed on the participation interests or shares for the limited liability company in Saudi Arabia.
Liability of Shareholders:
The LLC will be liquidated by operation of law if the directors do not take any steps to call ashareholder meeting in case of failing to liquidate the limited liability company. The shareholders will be liable for the debts of the company.
A sole director or a board of directors will manage the LLC according to the company law of Saudi Arabia.
Share transfers to the third parties are subject to a statutory pre-emption right where the Ministry of Commerce and Investment (MOCI) will record all the transfers. The reflection of transfers will make an effect on the Articles of Association (AOA) through execution and the shareholders should bear in mind that they must specify a valuation method for their interests in the LLC in the Articles of Association (AOA).
How to register a limited liability company (LLC)
Reserve a company name
The name reservation is the initial task for the investors which have the validity for 2 months. Investors can reserve their company name through the website of the Ministry of Commerce and Industry and no extra charge will be required for the name reservation.
Submit the articles of association
Investors must submit the Articles of Association (AOA) through onlineto the Unified Center/Companies Department ofthe Ministry of Commerce and Industry (MOCI) after completing the name reservation process. All the documents bearing the stamp when that will be approved by the Companies Department of the Ministry of Commerce and Industry. The total process could be taken into few days for reviewing and no extra charge will be required and this is how to register a company in Saudi Arabia.
Notarize the Articles of Association (AOA) with a Notary public
An appointment will be required for scheduling with the notary public because the notary public will review all the documents to make sure the completion and 15 companies are reviewed by the notary public currently in per working day where 5-6 employees are reviewed and certified the companies in notary office in Saudi Arabia. To complete the total process, maximum 3 days will be required and no extra charge will be needed.
Open an “under-formation” bank account
The investors regardless for the foreign or local must apply for opening an “under-formation” company bank account at any bank upon their choice. The investors of the company will go back to the bank to unblock their capital deposit and activate their bank account after getting issued their certificate of registration. Total time of completion the process will be taken 1 day where no extra will be required.
Obtain a Business Location License
The business location must be registered with the municipality of Riyadh and they will provide the investors an identification code number in Saudi Arabia. Besides, the company must register its address with the Post Office at the same time. 1 working day will be needed to complete the process and no extra charge will be required.
Pay the registration fee at the Bank
Investors regardless foreign or local must pay the registration fee which is SAR 500 registration fee + SAR 650 publication of summary articles of association to the bank.