Establishment (sole proprietorship)

To open an establishment in Saudi Arabia (also referred to as a sole proprietorship), there is no minimum capital required. A national of Saudi Arabia or other GCC countries can register an establishment with the Ministry of Commerce. This type of corporation is bound by commercial registry law, and not corporate law. An establishment has just one shareholder, and the liability of the individual owner is not limited, meaning they are solely responsible for all assets and debts of their firm. The flexibility and ease of set-up makes it ideal for SMEs.

Limited Liability Company (LLC)

An LLC company formation in Saudi Arabia is one of the most employed types of incorporations and can be opened with at least one shareholder and one director. The main appeal of an LLC is that any debts incurred are a shared liability of all shareholders, not one individual, and only to the extent of the amount of capital they invested. The KSA Company Act provides two options for this legal entity – a private limited liability company and a public limited liability company. According to your corporate structure and business goals, our team of specialists at ACT Corporate Services will provide advice on the legalities of each set-up and tailor the most effective plan for you.

Joint Stock Company (JSC)

To open a Joint Stock Company in Saudi Arabia, a minimum of two shareholders and three directors are required as well as an appointed auditor to present financial reports. A minimum of SAR 500,000 is necessary as capital. The new Corporate Governance Regulations (CGRs) regulates shareholders rights, potential conflicts of interests and committees. A JSC is a more complicated type of business set-up in Saudi Arabia and requires intensive research and knowledge of local laws.

Limited Partnership Company

A limited partnership company comprises of one director and two teams of partners, of which one partner is active and one is dormant. One team of partners is liable for the company’s debts and is fully involved in management decisions. The dormant partner is only liable for his share of the capital and is limited in his participation in business decisions unless mentioned otherwise in the partnership contract.

Branch of a foreign company

If you’re looking to expand your existing business, establishing a branch office in Saudi Arabia is the ideal option. The Ministry of Investment of Saudi Arabia (MISA) authorizes 100% foreign ownership without the requirement of a local sponsor. Branch offices are not permitted to undertake trading activities; however, they can develop the business for the parent company in the service industry. A representative office is another type of branch, that can only engage in marketing activities for the parent company but cannot participate in business development.