Company Formation in Saudi Arabia

Starting a business in any unfamiliar country can be overwhelming.

A recurring challenge with opening a business in Saudi Arabia is lack of local knowledge. Extensive research is required to understand corporate law, compliance, tax, and government entities. Each of KSA’s four regions are governed by a different set of corporate regulations. Our consultants have a deep understanding of the KSA market. So, with ACT, you can expect to set up a company in Saudi Arabia with optimal use of time and capital.

ACT provides a customized plan considering your budget and timeline. We also advice on regulatory compliance linked to your corporation. Your dedicated account manager explains every process and legal formality in detail.

Business Setup in Saudi Arabia

Your firm’s industry, type of business, existing trade agreements, location and country of headquarters must be taken into consideration before beginning the process of company formation.

The Ministry of Investment of Saudi Arabia (MISA) has established four Economic Cities. Each city functions with independent governing laws.

(1) King Abdullah Economic City (KAEC)

(2) Knowledge Economic City (KEC)

(3) Jazan Economic City

(4) Prince Abdulaziz Bin Mosaed Economic City (PABMEC)

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How to register a company in Saudi Arabia

The law recognizes five types of companies in Saudi Arabia.

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.

The actual steps to register a company in Saudi Arabia is unique to every business. The requirements will vary depending on the type of business, industry, number of licenses required and the Economic City.

Some of the common processes are mentioned below:

  • Application of an investment license with MISA
  • Submission of Articles of Association to Ministry of Commerce
  • Registration of a company name
  • Publication in the official gazette
  • Opening a bank account
  • Tax registration

If you would like to receive guidance on the above listed types of companies in Saudi Arabia, please reach out to our company formation consultants at +966 54 039 5188 or email us at

Cost of registering a company in Saudi Arabia

The cost of opening a company in Saudi Arabia is also dependent on factors unique to the business requirements. An ACT consultant will provide insight on the most efficient and cost-effective options, while keeping in mind your business goals.

When you work with the team of consultants at ACT, you can expect a customized set-up plan considering your budget, timeline and most importantly the regulatory compliance linked to your corporation. Your dedicated account manager will keep you well-informed on the legal formalities at every stage.

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