Requirements of Registration of a Foreign Company in Saudi Arabia

Compliance with specific regulatory processes is an obligatory requirement for these foreign companies that intend to expand their business in Saudi Arabia in order to create a company in the Kingdom.

Under the umbrella of the law, the foreign investors conduct the lawful business and other economic activities, provided that they comply with some regulatory, documentary and operational requirements and conditions.

This article highlights the legal and administrative steps required to register a foreign Company in Saudi Arabia and provides the business plan for those businessmen who wish to conduct business in KSA.

The basic conditions of the registration  

The investors who intend to register a foreign company or enterprise in Saudi Arabia shall prepare the following documents:

1. Commercial Registration Certificate

To register his company or enterprise in KSA, the foreign investor must submit a copy of a valid commercial registration certificate attested by the Saudi Embassy in the country where his company or enterprise was established. 

2. Articles of Association/ Corporate Charter 

Submission of a copy of the Company's Articles of Association/ Corporate Charter and any decision regarding appointment of the directors or expansion of the business abroad are basic condition to register a company in KSA. 

3. Financial Statements

The foreign investor shall also submit the audited financial statements of the latest fiscal year, and the Saudi Embassy must attest to these financial statements.

4. Identification Documents for Individual shareholders from GCC Countries

Copy of national ID of the company's shareholders, who are citizens of GCC country must be submitted (provided that their details are not already entered in Saudi national systems).

5. Power of Attorney

It is necessary to submit a documented legal power of attorney issued by the authorized representative of the foreign company or enterprise in Saudi Arabia.

Activity categorization

When the foreign company intends to conduct business in Saudi Arabia, it must determine clearly the type of business it wants to perform in KSA, provided that this business is legally allowable in KSA. While some activities are completely eligible for the entire foreign ownership, while other activities may require a partnership with a Saudi Partner

The business activities are ranked according to globally accepted criteria, and proper categorization is crucial to meet legal requirements and ensure a smooth registration process.

Post-License Legal Requirements

 Immediately after the issue of the license, the foreign investor must take the following official procedures:

1. Commercial Registration, which gives the investor the right to obtain Saudi company number.

2. Address and Communication Latest Changes – inclusive of the authorized representative, location  and partners' details.

3. Appointment of the Representative, who must be entrusted to receive the legal correspondences on behalf of the Company.

4. Data conservation, which keeps information of the company and partners accurate.

The company's compliance

After registration of the foreign company, it must adhere to:

·  update its incorporation and registration data every year;  

·  renew its investment license in due course;

·  meet any Saudization requirements according to its field of specialization and

·  register and comply with laws of Zakat, VAT, and Income Tax (as needed).

The matters, which should be considered before the registration

It is necessary to evaluate:

·  Whether your selected activity is eligible for the foreign ownership.

·  Whether the other regulatory entities must obtain any prior consents.

·  Whether the company fulfills the capital, experience and documentation criteria for the concerned activity.

Seeking advice during the initial planning phase helps to avoid regulatory delays and guarantees that the application fulfills all licensing requirements.

Legal risks to be avoided:

·  Presenting documents, which are ambiguous or improperly translated.

·  Selecting incorrect classification for the business activity

·  Failure to register labour files or obtain visa 

·  Believing that having only a Commercial Registration (CR) provides full operating rights.

Why is it essential to hire a law firm to assist you in the process?

There are multiple phases in registering a foreign company in Saudi Arabia. When you seek legal advice from a law firm, this ensures:

·  Correct preparation of the documents and certification.

·  Identifying an activity that achieves your business goals.

·  Reducing the risks in the structured sectors.

·  Obtaining the approvals more quickly and reducing the rejections.

Contact Sadany& Partners Law Firm now to register your company in Saudi Arabia and start your business immediately.