Setting Up a Company in Saudi Arabia as a Foreigner

Saudi Arabia allows foreign investors to set up a wholly owned company in many activities, through a clear process that starts with an investment licence (الترخيص الاستثماري) from the Ministry of Investment (MISA). But the choice of activity, legal form and partners decides the success of the investment from the start. This guide sets out the steps for setting up a company as a non-Saudi in brief, and what to watch out for.

The main steps

1. Choose the activity and confirm it is open to foreign investment: some activities are restricted or have special requirements.
2. Choose the legal form: usually a limited liability company, a branch of an existing foreign company, or another form depending on the plan. Read about company forms under the Companies Law.
3. The investment licence from the Ministry of Investment, once the activity requirements and documents are complete.
4. Reserve the trade name and prepare the articles of association, then register in the Commercial Register through the Saudi Business Center.
5. Follow-on registrations: zakat and tax, social insurance (GOSI), the Chamber of Commerce, activity licences, and opening a bank account.
6. Operations: recruiting staff, and meeting the Saudization (localisation) quotas required for your activity.

Typical documents

• The foreign partner's documents: the parent company's commercial registration, or the passport for an individual.
• The parent company's financial statements in some cases.
• Legalisation and translation of foreign documents as required. Documents are filed in Arabic, so foreign documents need an Arabic translation.
• A power of attorney for whoever handles the procedures in the Kingdom.

Common mistakes

• Choosing an activity that does not match what you will actually do, leading to costly amendments later.
• Entering a "name-only" partnership with a Saudi to get around restrictions. This is concealment (تستر, tasattur), and it exposes both parties to liability.
• Neglecting the shareholder agreement when there is a local partner, so disputes over management and profits arise later.
• Not working out the Saudization requirements and the capital required for the activity in advance.

Fully foreign-owned or a partnership with a Saudi?

Warning: registering a business in a Saudi's name while the real owner is foreign is commercial concealment (tasattur) and exposes both parties to severe penalties. The legal route is the investment licence. Read articles of association and commercial registration.

Frequently asked questions

Can a foreigner own 100% of the company?

In many activities, yes, under the investment licence, though some activities are excluded or subject to conditions.

Does a foreign investor need to live in Saudi Arabia?

It is not a condition for setting up, but running the company on the ground needs a resident manager or agent, and arranging that is part of the planning.

How long does setup take?

It varies with the activity and how complete and properly legalised the documents are. Missing foreign documents are what delays the process most.

A foreign investor looking to enter the Saudi market?

The team at Usus Law Firm, with offices in Riyadh and Tabuk, handles company formation for foreign investors: reviewing the activity, the licence, articles of association and shareholder agreements, as well as legal due diligence before an acquisition or partnership. We advise in English.

This article is general legal information and is not a substitute for advice on your specific case. Court proceedings in Saudi Arabia are in Arabic; the official Arabic text of each law prevails.