Establishing Companies in Saudi Arabia: A Guide to Terms, Laws, and Types of Companies 2025

Establishing companies in Saudi Arabia, with its thriving economy, and establishing your business in the Kingdom, Al-Saadani & Partners offers the ideal assistance to facilitate access to this large market. We outline the basic steps for expanding your business through our organization into a part of your project in the Kingdom of Saudi Arabia.

Establishing Businesses in Saudi Arabia for Foreigners: Why is it an Investment Opportunity?
Saudi Arabia is an attractive destination for investors, offering increasingly promising new and comprehensive opportunities in the healthcare sector. The Kingdom has launched wide-ranging and diverse investment programs and implemented modern investment regulations and laws to encourage new businesses in the Kingdom, including diversified foreign companies.

In addition, Saudi Arabia requires advanced facilities such as licensing and the ability to renew them online, and is officially committed to neutrality and competition among investors in both the public and private sectors. Among the distinctive attractions that make the Kingdom a preferred destination for businesses are:

Quick and easy process
100% foreign ownership
Attractive financial incentives and facilities
Extensive diversity
Infrastructure for individual, high-quality decor
Global financial center
Permanent management
Encouraging investment climate
Thanks to this factor, Saudi Arabia continues to consolidate its position as a major investment hub. Therefore, we need to clarify how to open a company in Saudi Arabia for foreigners.

How to open a company in Saudi Arabia for foreigners in several steps?
We at Al-Saadani & Partners, in solidarity with companies in Saudi Arabia, are always working to provide assistance to facilitate the steps for foreigners to open a company in Saudi Arabia.

Here are the steps

Determining the type of company
Determining the type of company is the first step to establishing it, as this determination entails many future issues that must be taken into account, such as legal liability and the company's future expansion potential.

To determine the appropriate type of company, the size of the capital, the number of companies and activities, and the quality of assistance must be appropriate for future goals.

Choosing and Reserving a Company Name
A company's name reflects its identity, so a trade name must be chosen that reflects its activities. It must be easy to remember, maintain a good reputation with customers, comply with Saudi laws and regulations, and be available for withdrawal.

You can request a company name electronically for a 60-day membership period until it is registered in the commercial register through the Ministry of Commerce website via the "Do you want a trade name" service, or through the Saudi Professional Center platform via the "Do you want a trade name" service.

Read also: How to Register Your Trademark in Egypt

Preparing the Articles of Association
The articles of association of companies in Saudi Arabia are the legal basis for their establishment. They are used to make decisions, regulate relationships between partners, and protect their rights. The articles of association must include basic information such as the company's identity, activity, capital, headquarters, the rights and obligations of partners, and other basic information related to the company.

Electronic Contract Authentication
The Ministries of Commerce and Justice have provided an electronic authentication service to facilitate the procedures for establishing companies in Saudi Arabia. Previously, authenticating contracts required partners to visit a notary public to complete the authentication procedures.

This service can be accessed through the notary services available on the Ministry of Justice's Najiz portal, which provides notarization services without the need to visit a notary public. The service requires an active account on the National Unified Access and a valid power of attorney if the applicant is an agent.

Opening a Tax File
To ensure compliance with Saudi tax and zakat regulations and to regulate a company's financial transactions, a tax and zakat file must be opened with the Zakat, Tax, and Customs Authority. The documents required to open a file are: the commercial register, the articles of association, the identity of the owner or partners, and any other documents required by the Authority based on the company's activity.

Registering a Company with the Social Insurance System
Registering a company with the Social Insurance System is a prerequisite for a company to conduct its business legally in Saudi Arabia. This protects employees' insurance rights, such as medical treatment and compensation in the event of an accident. Failure to register a company with this system exposes it to financial and legal penalties.

Opening a Commercial Bank Account
Establishing a company in Saudi Arabia requires opening a commercial bank account to manage the company's incoming and outgoing funds, protect company funds, obtain detailed account reports, and save time and effort through banking services available at all times and locations. A bank account is also required to carry out certain government procedures.

Below, learn about the best types of companies you can establish in the Kingdom of Saudi Arabia through Al-Saadani & Partners Law Firm, with the best international lawyers in Egypt and Saudi Arabia.

Types of Companies in the Saudi System:
The diversity of legal entities for companies in Saudi Arabia is a reflection of the economic development we are witnessing today. This diversity attracts investors and allows them to choose the legal entity appropriate to the company's size and activity. The following lines outline the main types of companies in Saudi Arabia and provide a simplified explanation of each.

General Partnership
A general partnership is a company based on the personal considerations of partners who share a relationship or prior acquaintance. The partners are jointly and severally liable for the company's debts. It is established by two or more natural persons (individuals) or legal entities (institutions) who acquire the status of traders. This is what the Saudi regulator clarifies in Article 35 of the Companies Law.

Limited Partnership
According to the first paragraph of Article 51 of the Companies Law, a limited partnership is a company composed of two parties of partners. The first party includes at least one natural partner (individual) or legal partner (institution), who is personally liable for all of his assets and jointly liable for the company's debts and obligations. The second party includes at least one natural partner (individual) or legal partner (institution). This partner is a limited partner, who is not liable for the company's debts or obligations except to the extent of his share in the capital. This limited partner does not acquire the status of a merchant.

Read more: How to Establish a Limited Partnership in Saudi Arabia

Limited Liability Company (LLC)
A limited liability company is a company in which the liability of each partner is limited to the value of his capital contribution. This means that each partner is obligated to pay the company's debts from his share in the capital only, not from his personal assets. Therefore, it is a suitable and attractive option for many local and foreign investors.

Read more: How to Establish a Limited Liability Company in Saudi Arabia

Joint-Stock Companies (JSC)
A joint-stock company is a company established by one or more persons, whether natural (individual) or legal (institution). Its capital consists of tradable shares. The company is fully liable for its debts and obligations arising from its activities. Shareholders' liability is limited only to the value of their subscribed shares, as stipulated by the Saudi legislator in Article 58 of the Companies Law.

Read more: How to Establish a Simplified Joint-Stock Company in Saudi Arabia

Foreign Companies and Branches
The political and economic stability of the Kingdom of Saudi Arabia is the foundation of a safe investment environment that attracts investors to establish companies or branches in Saudi Arabia.

Establishing a branch of a foreign company requires obtaining a license from the Saudi Ministry of Investment, specifying the company's activity and ensuring it does not violate Saudi regulations, registering the branch in the commercial register, and legally representing the foreign company through its local agent residing in the Kingdom.

Sole Proprietorships
Sole proprietorships are among the most common establishments in the Kingdom of Saudi Arabia, due to their ease of establishment and quick start-up. They are owned by a single individual who bears full responsibility for them. Establishing a sole proprietorship requires a commercial registration, a business license, and a tax registration.

What are the costs of establishing a company in Saudi Arabia?
The fees and capital required for establishing a company in Saudi Arabia for non-Saudi investors, both Arab and foreign, are determined by several factors. The main factors include:

Business Size and Scale
Through Al-Saadani & Associates, you can assess the size and scope of your business operations and benefit from knowing which types of companies are easier to establish and finance in the Saudi market, such as limited liability companies. While you can establish larger projects, you may find that the capital required by the Joint Services Committee (JSC) is higher.

Personal Liability Protection
Determining the level of personal liability protection you need is a key factor in determining the capital required to establish a company in Saudi Arabia, protecting personal assets from commercial debt.

Corporate Management Structure
You should consider how you will manage your business. Especially in local projects and joint ventures, you should consider establishing flexible management structures to facilitate profit distribution.

Regulatory Requirements
You should be aware of the regulatory requirements and compliance obligations associated with each type of company, as JSCs, for example, are subject to strict regulations from the Capital Market Authority.

Sector-Specific Requirements
You should pay attention to sector-specific search systems to ensure compliance with legal regulations. There may be specific requirements or restrictions for certain industries. Learn about the requirements for establishing companies in Saudi Arabia with Al-Saadani & Partners, the best law firm in the Kingdom.

What is the minimum capital required to start a company in Saudi Arabia?
The minimum capital required to establish a company in Saudi Arabia varies depending on the type of company. For example, higher capital is required for joint-stock companies compared to limited liability companies.

What are the most important laws for establishing companies in Saudi Arabia for foreign investment?
The Saudi Foreign Investment Law specifies, through its articles, the most important laws that must be adhered to by anyone wishing to establish a foreign company within the Kingdom of Saudi Arabia. Some of the most important laws of this law, as defined by the Supreme Economic Council and the Board of Directors of the General Investment Authority, include:

Article Two:

Without prejudice to the provisions of regulations and agreements, a license shall be issued by the Authority for the investment of foreign capital in any investment activity in the Kingdom, whether permanently or temporarily.

The Authority must decide on the investment application within thirty days from the date of completion of the documents required by the regulations. If the specified period elapses without the Authority deciding on the application, it must issue the required license to the investor.

If the Authority rejects the application within the aforementioned period, this decision must be justified, and the person against whom the rejection decision was issued may appeal it in accordance with the regulations.

Article Six:

A project licensed under this law shall enjoy all the benefits, incentives, and guarantees enjoyed by a national project, according to the regulations and instructions.

Article Seven:

A foreign investor has the right to retransfer his share from the sale of his stake, or from the liquidation surplus or profits realized by the entity abroad, or to dispose of them by any other lawful means. He also has the right to transfer the necessary amounts to fulfill any contractual obligations related to the project.

Article Eight:

A foreign entity licensed under this law may own the necessary real estate to the extent necessary to carry out the licensed activity or for the purpose of housing all or some of its employees, in accordance with the provisions governing non-Saudi ownership of real estate.

Article Ten:

The Authority provides those wishing to invest with all necessary information, clarifications, and statistics, and provides them with all services and procedures to facilitate and complete all transactions related to investments.

Read also: Corporate Governance Controls in the New Saudi Law

Below, learn about the most important documents we can help you complete from a legal perspective with a group of the best international lawyers at Al-Saadani & Partners.

Documents Required to Establish Your Company in the Kingdom of Saudi Arabia
Among the most important documents we issue for our clients wishing to establish companies in Saudi Arabia are:

Investment License Application Form
Resolution of the Notarization Board with the names of partners and the capital share of each partner
Audited financial statements for the past three years
Articles of Association
Copies of shareholders' passports
Proof of identity and address of directors and shareholders
Approval from the Ministry of the Kingdom of Saudi Arabia to commence business activity
A certified copy of the power of attorney
Are you looking for a company formation lawyer in Saudi Arabia?
When you plan to establish a company in Saudi Arabia with a high level of transparency and compliance with the international laws and regulations adopted by the Kingdom of Saudi Arabia for foreign investors, you need a lawyer specializing in company formation in Saudi Arabia. The lawyers at Al-Saadani & Partners Consulting are the best choice, thanks to their extensive experience in establishing companies locally and internationally, in addition to providing a wide range of other legal services. Our main company formation services include:

Legal Consulting Services: Providing the legal advice you need on the most appropriate company structure (joint-stock company, limited liability company, branch of a foreign company, etc.) and the legal details related to each type.
Company Incorporation and Registration: Preparing and submitting all necessary documents to register your company with relevant government agencies, such as the Ministry of Commerce and Investment.
Drafting Contracts and Agreements: Preparing basic contracts and commercial agreements for your company, such as partnership contracts, employment contracts, and shareholders' agreements.
Licensing and Permits: Assisting you in obtaining all necessary licenses and permits to legally conduct business, such as municipal licenses and special activity licenses.
Negotiation and Negotiation: Negotiating with partners, suppliers, and investors on your behalf.
Intellectual Protection: Registering trademarks, patents, and copyrights to ensure your company's intellectual property is protected.
Tax Compliance: Providing advice on local and international taxes and helping you comply with tax requirements.
Regulatory Compliance: Ensuring your company complies with all local and international rules and regulations.
Articles of Association Preparation: Drafting and documenting the company's articles of association in accordance with the Kingdom's laws.
Residency Procedures: Assisting you as a foreign investor in Saudi Arabia in obtaining the necessary residency and visas for you and your family.
Arbitration and Dispute Resolution Services: Providing arbitration and dispute resolution services to ensure the effective handling of any disputes that may arise.
Start your company in Saudi Arabia with a legal team that guarantees full compliance and accurate procedures. Al-Saadani & Associates' experts are ready to provide comprehensive legal support to meet your business needs.

Contact us now to secure a strong and professional start for your project through:

Phone: 01069460940
Email: info@sadanykhalifa.com

Most Frequently Asked Questions:
Can a foreigner open a company in Saudi Arabia?
Yes, a foreigner can open a company in Saudi Arabia, but this is subject to certain conditions and regulations aimed at regulating foreign investment. One of the most important of these conditions is obtaining a foreign investment license.

What are the types of companies in the Saudi system?
There are several types of companies in the Saudi system, the most important of which are:

Limited Liability Company: This is the most common company, where shareholders' liability is limited to the value of their shares.
Joint Stock Company: This company has capital divided into shares, tradable on the market.
Sole Proprietorship: This company can be established by one person.