How to start a commercial Licensing with a Saudi Shareholder?

**Exploring Commercial Licensing with a Saudi Shareholder: A Step-by-Step Guide**

As Saudi Arabia continues to open its doors to international business, foreign entities are increasingly seeking opportunities in the Kingdom’s thriving wholesale and retail trade sectors. If you’re considering expanding your business into Saudi Arabia with a Saudi shareholder, obtaining a commercial license is a crucial step. This comprehensive guide will walk you through the entire process, from understanding the requirements to finalizing your application.

### **Step 1: Understand the Service Description**

The commercial license with a Saudi shareholder is designed for foreign entities interested in engaging in wholesale and retail trade within Saudi Arabia. This service is crucial for any international company that wishes to establish a legal presence in the Kingdom while partnering with a local Saudi shareholder.

### **Step 2: Gather the Required Documentation**

Before you can proceed with the application, ensure you have all the necessary documents. These include:

1. **Commercial Registration of the Shareholding Partner:**

- Obtain a copy of the commercial registration of the Saudi shareholder, certified by the Saudi Embassy.

- If the shareholder is a natural person from one of the GCC countries, also provide a copy of their national identity. If their data is not registered in the ABSHAR system, this step is crucial.

2. **Financial Statements of the Applicant Company:**

- Prepare the financial statements from the last financial year of the foreign entity.

- These statements must be certified by the Saudi Embassy to ensure their validity and compliance with local regulations.

### **Step 3: Comply with Service Rules and Restrictions**

When applying for a commercial license, several rules and restrictions must be adhered to:

1. **Saudi Shareholder Requirement:**

- The Saudi shareholder must own at least 25% of the company. This equity stake is a mandatory condition for the issuance of the commercial license.

2. **Exemption for Premium Residence Holders:**

- If any of the partners hold a Premium Residence in Saudi Arabia, they are exempt from the requirement to provide the above documents.

3. **Clarification of Previous Licensing:**

- If one of the partners was previously licensed by the Ministry of Investment, this must be clearly stated in the electronic application. Transparency in disclosing past licenses is critical to ensuring compliance.

4. **Data Entry Requirements:**

- During the electronic application process, you must enter the data of the Saudi national identity, Premium residence, or residence if one of the partners holds any of these.

- Additionally, you must provide the commercial registration data for any participating Saudi companies.

### **Step 4: Understand the Service Fees**

There are specific fees associated with obtaining a commercial license in Saudi Arabia:

1. **License Fee:**

- A license fee of 2,000 Saudi Riyals per year is required, payable for a maximum of five years.

2. **Subscription Fee:**

- An initial subscription fee is required for the first year. This fee grants access to services provided by the Ministry of Investment’s investor relations centers.

- For subsequent years, the subscription fee is 60,000 Saudi Riyals.

3. **Payment Deadlines:**

- All service fees must be paid within 60 days of the bill’s issuance. Failure to make the payment within this period will result in the cancellation of the service, and the applicant will need to reapply.

### **Step 5: Submit the Application**

Once you have all the required documentation and understand the rules, you can submit your application electronically through the Ministry of Investment’s online portal. During this process:

- Ensure that all data entered is accurate and up to date.

- Clarify any previous licenses held by partners, as required.

- Confirm that the Saudi shareholder’s stake meets the 25% minimum requirement.

### **Step 6: Await Approval and Next Steps**

After submitting your application, it will be reviewed by the Ministry of Investment. If your application is approved, you will receive your commercial license, allowing you to legally operate in the wholesale and retail trade sectors in Saudi Arabia. Remember, the license must be renewed annually, and fees must be paid on time to maintain your business’s legal status.

### **Final Thoughts**

Obtaining a commercial license with a Saudi shareholder is a strategic move for foreign businesses looking to tap into Saudi Arabia’s robust market. By following this step-by-step process, you can ensure a smooth application experience and position your company for success in the Kingdom’s thriving economy.

If you’re ready to begin this journey, make sure you have all the necessary documents in order, understand the financial commitments, and are prepared to comply with local regulations. With the right approach, Saudi Arabia’s market can offer significant growth opportunities for your business.

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