The guide to establishing a company for foreigners in Saudi Arabia is one of the most important topics to know for every foreign investor who wants to invest in the Kingdom of Saudi Arabia.
The Ministry of Investment is the guide to investing in the Kingdom.
It shows the procedures for obtaining an investment license.
and clarifies to the investor all information related to his investment.
in addition to the incentives.
guarantees and benefits that will be enjoyed.

Guide for setting up a company for foreigners in Saudi Arabia

For all those wishing to invest in the Kingdom of Saudi Arabia, we present below a guide to establishing a company for foreigners in the Kingdom of Saudi Arabia, and we start with the necessary procedures for incorporation, which are:

1. Investment License

According to our guide to establishing a company for foreigners in Saudi Arabia, the first requirement for establishing a company is an investment license.
The investor has the right to request a license to establish the following companies:

• Limited Liability Company.
• A one-person limited liability company.
• Joint stock company.
• A branch of a foreign company.
• A professional solidarity company.

The investment license is requested through the Ministry of Investment.
To obtain this license, the company must have a commercial register and financial statements for the most recent fiscal year.
provided they are certified by the Saudi Embassy.

The investment license is divided into two types of licenses: a business license with a Saudi partner whose share in the company to be established must not be less than 25%.
The other type of investment license is the foreign business license.
According to what we offer you from the guide to establishing a company for foreigners in Saudi Arabia, the investment license with a Saudi partner is obtained through the e-services portal.
Specific documents must be available to obtain it, which we will explain below.

• A copy of the company’s commercial register, provided it is certified by the Saudi Embassy.
• A copy of the national ID of the Saudi partner or the partner holding any GCC nationality.
• The foreign company’s financial statements for the most recent year.
  provided they are certified by the Saudi Embassy.

As for the foreign business license, as stated in the guide to establishing a company for foreigners in Saudi Arabia, this license is obtained by applying on the e-services portal when establishing a company for a foreign investor in the Kingdom of Saudi Arabia without the presence of a Saudi partner.
The following documents must be available to obtain this license.

Documents needed to obtain a foreign business investment license

• A copy of the company’s commercial records in three regional or global markets.
  provided it is certified by the Embassy of the Kingdom of Saudi Arabia.
  In addition to its financial statements for the most recent year.
  which must also be certified by the Saudi Embassy.
• The company’s founding capital must be at least SAR 30 million.
• The company must have a presence in 3 global or regional markets.
• Saudis will be employed by the company based on the Ministry of Human Resources and Social Development for the first five years.
  and on the condition that they assume permanent leadership positions.
  In addition, the foreign company is required to train 30% of Saudi employees annually.
• According to the guide to establishing a company for foreigners in Saudi Arabia, the foreign company must invest at least 300 million Saudi riyals, and the capital must be calculated from that amount.
  This investment will be over a period of five years, calculated from the beginning of obtaining the investment license.
  Or the foreign company invests at least SAR 200 million and the capital is calculated from that amount.
  This investment shall be over a period of five years from the beginning of the company obtaining the investment license, but one of the following requirements must be met:

– The fee for issuing a license is SAR 2,000 for each year and the maximum number of years is five.

– The financial fee for subscribing to the Ministry of Investment’s Investor Relations Centers is SAR 10,000 for the first year, and SAR 60,000 for each year thereafter.
and SAR 60,000 for each year thereafter.

2. Signing the Articles of Incorporation

Signing the company incorporation contract is the second of the incorporation procedures in the guide to establishing a company for foreigners in Saudi Arabia.
The Ministry of Justice and the Ministry of Commerce and Industry are responsible for signing this contract.
If the foreign investor wishes to open a branch of his company in the Kingdom of Saudi Arabia.
the procedure for signing the memorandum of association is not required, but in order to issue a commercial register for this company, the investor must
The investor must submit a decision to open a branch of the company in the Kingdom.
This decision must be approved by the rest of the branches of the foreign company.

3. Commercial Registry

The commercial register is the third procedure of the guide to establishing a company for foreigners in Saudi Arabia.
The following documents are required for its issuance by the Ministry of Commerce and Industry:

• The parent company’s business register.
• The decision to open the company’s branch in Saudi Arabia.
• If the company to be incorporated in Saudi Arabia is new.
  a notarized articles of incorporation is required.
• In addition to the above documents, the General Manager’s appointment decision and proof of identity are required for him and the owners.

4- Opening company files

This procedure is the fourth procedure of the guide for establishing a company for foreigners in Saudi Arabia and needs to be opened in the following government agencies:

• General Authority for Zakat and Income.
• Ministry of Human Resources and Social Development.
• The General Organization for Social Insurance.

5. Issuance of the General Manager’s Visa

This procedure is the last procedure in the guide to establishing a company for foreigners in Saudi Arabia.
The following documents are required for the issuance of the General Manager visa:

• The decision to appoint the General Manager.
• Proof of identity.

This visa is issued through the Ministry of Human Resources and Social Development.

Challenges of setting up a company for foreigners in Saudi Arabia

According to previous studies of foreign investments in Saudi Arabia.
some of the most important challenges facing foreign investors in Saudi Arabia include the following:

• The length of time to resolve commercial disputes through the judiciary between foreign investors and public or private opponents.
  This is one of the most important obstacles facing foreign investors in the Kingdom.
• Routine procedures in some government agencies within the Kingdom of Saudi Arabia.
  This is in contrast to the ease and speed of procedures at SAGIA.
• Lack of support and infrastructure services such as transportation, shipping, unloading, and unloading.
  packing …..
  etc.
  This weakness negatively affects both the Saudi investor and the foreign investor.
• The difficulty of collecting information and data on the Kingdom’s economic sectors.
  The foreign investor coming from statistically developed countries suffers the most from this difficulty.
  This does not prevent the noticeable improvement in updating economic data and information in the Kingdom.
  but there is a need for further improvements.
• The high cost of marketing for the foreign investor.
  This is due to his reliance on self-marketing because there are no marketing facilities to help him market his products or services and rely on them in the marketing process.
• Inflation and its direct impact on the lack of foreign investment.
  Inflation and investment have an inverse relationship.
  The more inflation increases, the less foreign investment, as investors are reluctant to enter markets with high inflation rates due to higher production costs and thus higher and less competitive products.
  On the other hand, moderate and stable prices encourage investors to invest and increase investment flows.

The role of the Ministry of Investment in supporting foreign investment

The Ministry of Investment is the guide for establishing a company for foreigners in Saudi Arabia.
According to the provisions of Organization of the Ministry of Investment The Ministry is the main competent authority to organize, develop, promote and protect investments.
Encourage and protect them, whether local or foreign investments.
The Ministry’s main competencies include:

• Preparing the Kingdom’s investment strategy.
  Supervise its implementation after approval.
  and submit any suggestions or amendments to it.
• Preparing investment development policies.
• Preparing the investment environment within the Kingdom of Saudi Arabia to enhance its competitiveness.
• Providing suggestions related to investment regulations.
  Reviewing existing regulations and proposing the necessary amendments to them.
• Issuance and regulation of investment licensing procedures.
  The investment license is the first procedure required for incorporation according to the Guide to Establishing a Company for Foreigners in the Kingdom of Saudi Arabia.
• Work on defining indicators for measuring the performance of investments and the mechanism for measuring them within the Kingdom of Saudi Arabia.
• Attracting investments through conferences, seminars.
  internal and external exhibitions and other means of stimulating investment within the Kingdom.
• Creating a database of existing investments in the Kingdom.
  to serve as the main reference for investors.
• Supporting Saudi investments abroad.
  and work to address the challenges facing Saudi investors inside and outside the Kingdom.
• Working on the sustainability of investments in the Kingdom and addressing its challenges and obstacles.

Advantages of foreign investment in Saudi Arabia

According to the Executive Regulations of the Foreign Investment Law a foreign investor enjoys the following benefits:

• The incentives approved by the Unified Industrial Organization System of the Cooperation Council for the Arab States of the Gulf.
• Owning the real estate necessary to practice the investment activity (to the extent needed) in the Kingdom of Saudi Arabia.
  Real estate for the foreign investor’s residence and workers’ housing.
  In accordance with the provisions of the Non-Saudis Ownership and Investment Law.
• Benefits resulting from agreements concluded by the Kingdom of Saudi Arabia, such as agreements to avoid double taxation and agreements to promote and protect investments.
• Not to expropriate any investments without obtaining judicial authorization for such expropriation.
  No expropriation of all or part of investments except in the public interest and in exchange for appropriate compensation.
• The possibility of repatriating the foreign investor’s share of the sale of his stake.
  the profits received or the surplus from the liquidation of the project abroad.
  He is also entitled to transfer the funds necessary to fulfill his contractual obligations related to the project.
• The partners are free to transfer shares among themselves or to others, subject to the prior approval of the Ministry of Investment.
  subject to the prior approval of the Ministry of Investment.
• The sponsorship of the foreign investor and non-Saudi employees is on the company licensed in the Kingdom of Saudi Arabia.
• The investor can benefit from industrial loans provided by the Saudi Industrial Development Fund.
• Carry forward net operating losses incurred during the year to the next tax year, based on the provisions of the Income Tax Law and its executive regulations.
  This is based on the provisions of the Income Tax Law and its executive regulations.
• Foreign investors benefit from the tax incentives stipulated in Cabinet Decision No. 359 of 1429 AH.

Conditions for granting a license according to the guide for setting up a company for foreigners in Saudi Arabia

The guide to establishing a company for foreigners in the Kingdom of Saudi Arabia, which we present to you, describes the conditions for granting a license to establish foreign companies in the Kingdom.
These conditions are stipulated in Article 6 of the Executive Regulations of the Foreign Investment Law:

• The foreign company’s investment activity should not be among the activities excluded from foreign investment, which are activities that have been excluded for security, ideological, health or safety reasons.
  health or security reasons.
  These include:
  Industrial activities related to petroleum exploration and drilling.
  Activities related to the services sector, such as catering services related to the military sector.
  Real estate investments in Mecca and Medina and tourist guidance services related to Hajj and Umrah.
• The product’s technical specifications must meet Saudi Arabian, Gulf or international standards.
  Gulf or international standards.
• No final judgments or decisions have been issued against the license applicant for major violations of the Foreign Investment Law.
• No previous judgments have been issued against the license applicant.
  Whether these judgments were issued inside or outside the Kingdom of Saudi Arabia.
• The license applicant’s compliance with the terms, conditions, controls,
  undertakings and declarations for granting the license found in the investment license application form.
• Granting a license to a foreign investor must meet the investment goals and objectives of the Ministry of Investment.

Investor obligations after obtaining an investment license

According to the guide to establishing a company for foreigners in the Kingdom of Saudi Arabia that we provide to you.
the applicant for an investment license must abide by the following obligations after obtaining the license:

• Complete the procedures subsequent to the issuance of the investment license within a period not exceeding three months from the date of issuing the license.
• Obtaining licenses to practice the activity from the authorities designated for that activity.
• Commitment to work in the licensed investment activity only.
• Implementation of the project on the date specified in the application.
  The project must be carried out at the licensed location or branch.
• Adhere to the official name of the establishment mentioned in the investment license when dealing with government agencies.
  and in any dealings or publications related to the facility.
• Renew the license before its expiration date.
• Cooperate with the Ministry of Investment inspector during his inspection visit.
  and provide all the documents, documents,
  statistics and data he needs.
• Obligation to produce and market only licensed products.
• Respect for intellectual property rights.
• Preserve the environment by taking the necessary measures.
• Adherence to the laws and instructions of ministries and government departments and oblige employees working in the establishment to comply with them.
• Written notification to the Ministry of Investment through the Business Contact Data Update Service of any changes in the correspondence address.
  email address.
  phone or fax numbers within a period not exceeding ten working days from the date of the change.

Other obligations of the investor after obtaining an investment license

• The Ministry of Investment’s entitlement to license fees and IRCC subscription fees for the full duration of the license.
  The investor does not have the right to claim a refund or part of it in case the investment activity stops or the license is canceled before the end of its term.
• Investors are also bound by all the provisions of the Saudi Foreign Investment Law and its executive regulations.
• The investor is solely liable to third parties inside or outside the Kingdom of Saudi Arabia for any unlawful act.
  whether directly or indirectly.
  The Saudi government and the Ministry of Investment have no involvement in these violations or their consequences.
• The right of the Ministry of Investment to revoke the investment license in the event of legal violations or security risks that may threaten Saudi society or put Saudi Arabia in an embarrassing situation internationally due to the exploitation of investment activity for suspicious purposes.
• The Ministry of Investment has the right to withdraw the license
  incorrect information or data to obtain the license to withdraw it without any liability in this regard.
  with the Ministry’s obligation to apply the special regulations in that case.
• The investor pledges that no final judgments have been issued for material violations of the Foreign Investment Law.
  No previous judgments have been issued for financial or commercial violations in Saudi Arabia or abroad.
• Transfer the capital in the application to Saudi Arabia after the license is issued.

Thus, we have finished providing a guide to establishing a company for foreigners in Saudi Arabia.
including the necessary procedures for incorporation.
The most important challenges facing foreign investors in the Kingdom.
The conditions for obtaining a license and the obligations of investors after obtaining it.

In case of any queries or issues related to company formation, you can contact Invest Global, which provides you with an elite group of business legal specialists to ensure you receive exceptional information and solutions.

Sources

• Foreign investment in Saudi Arabia under Saudi Vision 2030 (incentives and challenges).
• The Executive Regulations of the Foreign Investment Law.
• Saudi Arabia’s Ministry of Investment.