Starting a business in Saudi or expanding one into the country can be tricky if not frustrating for those startups or SMEs who have little experience with Saudi laws and regulations.
Paul Arnold, Managing Director Sovereign PPG Saudi Arabia offers the below step-by-step procedures to get your business up and running.
1- How does one start setting up a business in KSA?
To set up a business in Saudi Arabia there can be varying requirements depending on the entity type. However, generally, all follow a similar process from registration and licensing to set up. To begin the process of setting up a business in the KSA, companies must:
- Register with the Ministry of Commerce and Industry (MOCI).
- Register with the Ministry of Investment (MISA) – for foreign-owned companies
- Open a local KSA bank account.
- Register Wasel – mandatory provision of local address to the government. LLCs require a local physical office lease and address – a virtual office is not sufficient.
- Register with the Ministry of Labour and Social Development (MLSD) – The visa-issuing authority to labor in-country.
- Register with the General Organisation of Social Insurance (GOSI) – A mandatory social insurance for processing salaries monthly and maintaining government records for the Saudization quota system.
2- What are the necessary documents to begin the procedure?
The documents that are required to begin the procedure of setting up and registering a company in the KSA are:
- The Commercial Registration or business license (CR) – The CR certificate is issued by MOCI to outline and enable the company to conduct business activities in the KSA, allowing the same rights given to a citizen.
- Articles of Association (AoA) or Memorandum of Association– approved by MOCI and signed in presence of a notary.
- Certificate of Incumbency.
- Audited financial statement for the last financial year (for foreign companies setting up in Saudi)
- Passport copy of the assigned General Manager of the Saudi entity.
Additionally, certain types of activity require specific licensing from relevant government departments – e.g. pharmaceutical companies require a Saudi Food and Drug Association license.
3- How long would it take to set up a business in KSA?· Would the ownership be divided?
Once all these documents have been submitted to MISA, along with payment, the formal application will be activated and, once approved, will generate the MISA license. This process is mainly influenced by the entity type and the range of activities to be registered, but assuming the correct legalized documents are readily in place in a timely manner, it can be expected to take up to several months until the business is completely set up.
It is possible to achieve 100% foreign ownership in the Kingdom of Saudi Arabia through MISA, this would be to set up a subsidiary of a foreign-owned company. Ownership can be divided between shareholders and it is possible for the company to take on a local partner / Saudi company shareholders as well if desired.
4- What type of licenses are required to start a business in Saudi Arabia?
- The Commercial Registration or business license (CR) – The CR certificate is issued by MOCI to outline and enable the company to conduct business activities in the KSA, allowing the same rights given to a citizen.
- Register with the Ministry of Investment (MISA). The documents listed above are used to obtain the MISA license.
Additionally, certain types of activity require specific licensing from relevant government departments – e.g. restaurant or food trading company will require a Saudi Food Authority license.
5- Are trademarks/patents necessary? If yes, what is the process?
To set up a business in the KSA, a trademark or patent isn’t generally necessary and would be dependent on the intellectual properties of the business. However, trademarking options are available in the KSA in a multitude of forms. The process of trademarking is achieved by registering the trademark with the Ministry of Commerce and Investment of Saudi Arabia (MOCI). It’s not required to have a trademark to register a business in Saudi Arabia, but registering your trademark in KSA is beneficial for companies to protect their name and products.
6- How can a start-up expand to the KSA market?
A company may expand into the KSA market using a number of foreign-owned entity types including:
- Limited Liability Company (LLC), which is permitted to be 100% foreign-owned through MISA.
- Limited Liability One-Person Company
- Joint Stock Company
- Foreign Company Branch
- Solidarity Professional Company (Sole Establishment)
7- What are the regulations to consider before forming a technology business or start-up in KSA?
When considering starting a technology company in the KSA, regulations, and requirements are much the same or similar to other industry set-ups. Part of Saudi Arabia’s 2030 Vision is to make investments in the technology sector, with aims to have 40% of the workforce trained in basic data and artificial intelligence (AI). Therefore, the ability to form a technology business in Saudi is enabled through this demand.
