Compulsory Registration Requirements in Saudi Arabia

After deciding on the?business form?that will represent the?company?operating in this country, the investors setting up a company in Saudi Arabia are required to?register the company’s trading name?with the?Ministry of Commerce and Industry. The procedure can also be completed on the institution’s website and the respective reservation is available for two months. The following step will be completed with the same institution, by submitting the?company’s statutory documents.?

More specifically, the documents?are to be filed with the?Companies Department?working under the?Ministry of Commerce and Industry. Further on, the investors will need to personally collect the?company’s documents,?and sign them in front of a?public notary in Saudi Arabia.?

Another requirement is to publish the?company’s trading name?and a summary of the?company’s statutory documents?in the?official gazette in Saudi Arabia, after the payment of a specific fee.?

The trading name reservation

After choosing the most appropriate business form, the trading name reservation is the first step to registering a company in Saudi Arabia. The selected name must be unique and to ensure this requirement is met, one can propose three names for reservation (the desired one must be the first name on the list). Also, for enhanced protection, after obtaining the reservation, the name can be registered as a trademark.

Documents to prepare to start a company in Saudi Arabia

The papers that need to be submitted when?setting up a business in Saudi Arabia?are represented by the Articles of Association which are the documents proving the decision to open the company. These must be filed alongside the details of the shareholders and directors, but also the proof of depositing the share capital. A bank statement indicating the amount of money required for the respective type of entity.

After registering a business you will also need accounting support. By managing all of your accounts and records. This results in more timely and accurate financial reporting, as well as complete compliance with all the accounting and auditing regulations imposed by the Saudi tax authorities.

Share capital requirements for Saudi businesses

Compared to other jurisdictions,?registering a company in Saudi Arabia?has strict rules about the share capital requirements for each type of entity as follows:

• The minimum amount required for a limited liability company is 100,000 SAR,
• In the case of a public company, at least 10 million SAR is required,
• In the case of a private company, the minimum share capital is set at 2 million SAR,
• For a general partnership company, at least 500,000 SAR is imposed on the 2 partners,
• For a partnership limited by shares, a minimum capital of 2 million SAR is required.

The only business form that does not require a minimum share capital is the sole proprietorship.

Opening a corporate bank account in Saudi Arabia?

The?Saudi Arabian company formation?stipulates that a?newly formed legal entity?has to set up a corporate bank account (under-formation bank account) for depositing the minimum share capital. Once the local authorities issue the?certificate of registration, the?bank account?will be activated.?

The?legal entity?should also be registered with the?Chamber of Commerce,?Ministry of Finance, and?Ministry of Labor.?

Why start a business in Saudi Arabia

Doing business is Saudi Arabia is similar to operating in Western countries which is why it presents many benefits to foreign entrepreneurs. Moreover, from an economic:

• Saudi Arabia was ranked 62nd?in terms of ease of doing business in the World Bank’s 2020 report,
• in 2020 it also entered the top 10 global business climate improvers,
• the creation of a company can be completed in around 11 days,
• the cost of registering a company is only 5.4% of the per capita income of an entrepreneur.

The?industries in Saudi Arabia?have greatly developed in the last four decades. The operating unit numbers in this country?have grown from 206 in 1974 to 7,741 in 2016. At the same time, the invested capital rose from almost SR 4.3 billion in 1974 to more than SR 1.1 trillion in 2016. Also, the number of employees has grown from approximately 10,000 in 1974 to more than 1 million in 2016.

The non-metallic mineral industry in the Kingdom is the most developed one when it comes to industrial unit numbers, with 1,623 factories. This represents 21% of the entire operating plants. Plastic manufacturing, chemicals, and chemical products are also extremely developed here, registering around SR 532 billion in total finances, which is 50% of the entire finances of the local operating plants. The manufacturing of Coke and refined petroleum products industries, with SR 123 billion, represent 12% of the entire investment of the local operating facilities, as well.