A holding company under the Saudi Companies Law is a company whose main purpose is owning and controlling other (subsidiary) companies.
What is it?
A joint stock or limited liability company that controls one or more subsidiaries by owning more than half of their capital or controlling the formation of their boards; its name must include "Holding". Check the current official text.
When it helps
| Goal | How a holding helps |
|---|---|
| Separating risk | Each business in its own subsidiary, so one business's debts do not reach another as a rule |
| Family businesses | One vehicle for family ownership, with a family charter and governance |
| Growth | Partnerships and acquisitions without changing ownership of existing businesses |
Setup steps
- Choose the form: LLC or joint stock (including simplified joint stock).
- Draft the articles of association with the holding purpose and management powers.
- Register in the commercial register. Read commercial registration.
- Transfer shares in existing companies to the holding.
- Adopt governance rules: powers over subsidiaries, reporting, conflicts of interest.
Common mistakes
- Mixing holding and subsidiary funds without records, which weakens limited liability.
- Transferring shares without valuation or other partners' consent.
- No shareholders' agreement on exit and deadlock.
Managers and directors remain liable for mismanagement. Read directors liability.
Frequently asked questions
Does a holding company trade directly?
Its main purpose is to own and manage companies, and its purpose may include other activities the law allows and its articles set out.
Can a foreigner set up a holding company?
Yes, under the investment rules and with a licence from the competent authority.
Restructuring your business?
Usus Law Firm handles company formation and governance, in Riyadh and Tabuk, and advises 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.
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