Guide to Setting Up a Company in Saudi Arabia

Forming a company in Saudi Arabia: a practical guide

Whether you're a foreign investor or a resident, forming a company in Saudi Arabia follows specific steps overseen mainly by the Ministry of Investment (MISA) and the Ministry of Commerce.

Step one: the investment license (for foreign investors)

A foreign investor needs an investment license from MISA before anything else. Requirements typically include: the activity being on the permitted list (not on the excluded list), an existing legal entity for the investor in their home country, audited financial statements for the last year proving financial solvency, and all documents authenticated by the foreign ministry and Saudi embassy in the country of origin. In most sectors, a foreign investor can own 100% of the company without needing a Saudi partner.

Choosing the legal form

• Limited Liability Company (LLC): the most common choice for small and medium projects, where each partner's liability is limited to their share.
• Closed joint-stock company: suited to larger projects or those planning to expand shareholders later.
• Sole proprietorship: for a single investor wanting a simple activity without partners.
• Branch of a foreign company: for conducting direct commercial activity in the Kingdom under the parent company.

Formation steps in order

1. Reserve the trade name (in Arabic and English) through the Ministry of Commerce
2. Obtain the MISA investment license (for foreign investors)
3. Draft and electronically notarize the Articles of Association through the Ministry of Commerce
4. Obtain the commercial registration (official establishment number)
5. Open a corporate bank account and deposit any required minimum capital
6. Register the establishment with the Ministry of Human Resources (Nitaqat) and Social Insurance (GOSI)
7. Obtain any additional licenses specific to the activity (municipal, health, etc.)

Approximate cost and timeline

MISA typically charges a license issuance fee of around SAR 2,000 per year of the contract term, plus a services subscription fee (around SAR 10,000 in the first year, less in subsequent years): these figures are periodically updated by the ministry. With complete documentation, formation can typically be completed within 2 to 4 weeks.

After formation: ongoing obligations

Getting the commercial registration isn't the end. The company owner must register for tax and zakat with the Zakat, Tax and Customs Authority, comply with labor and Saudization (Nitaqat) rules, and renew licenses periodically.

This information is general and varies by activity type and investor nationality. To review your investment plan in Jeddah, reach out to us on WhatsApp.

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