This blog will focus on the process of opening an LLC (Limited Liability Company) formation in Saudi Arabia. Analytix has years of experience with limited liability company formation in Saudi Arabia. We provide here an overview of the vital factors to consider for establishing an LLC in Saudi Arabia.
What is a Limited Liability Company?
A limited liability company (LLC) combines the features of a partnership and corporate company allowing limited liability and also simple management structure. LLCs are the most common type of business structure in Saudi Arabia due to the ease of setting up while providing 100% foreign ownership.
Benefits of setting up an LLC in Saudi Arabia
Opening a limited liability company (LLC) in Saudi Arabia offers several key benefits for foreign investors. The following are the key advantages of LLCs in Saudi Arabia, and why they are the preferred business structure for many investors:
Limited Liability Protection:
LLCs protect investors from business liabilities that exceed the amount of investment, reducing financial risk.
Flexibility in Ownership and Management:
Allows for partnerships between individuals and legal entities, foreigners, and Saudi locals or 100% ownership.
Ease of Doing Business:
The time and cost requirements for setting up an LLC in Saudi Arabia have been considerably reduced over the years.
Access to Government Contracts:
LLCs receive preferences when bidding for government contracts and participating in government projects.
Tax Benefits and Incentives:
The Saudi government offers attractive tax benefits and incentives for LLCs to improve their competitiveness.
Attracting Foreign Investment:
The flexible LLC structure which allows options for foreign ownership is a source of attraction for international investors.
How can an Expert Help You to Register an LLC in Saudi Arabia in 2024?
Involving an expert such as Analytix is critical for making the process of opening an LLC in Saudi Arabia smooth and efficient.
We will help you with obtaining a company name from the Ministry of Commerce and Industry (MOCI), prepare the company’s Articles of Association (AoA) as well as the opening of a corporate bank account.
Having an expert like Analytix by your side can make the entire process cost-effective and worry-free.
Requirements for LLC company formation in Saudi Arabia
Establishing a limited liability company in Saudi is not a very complicated process. But, you must keep in mind that these fundamental conditions must be met when opening your limited liability company in Saudi Arabia.
Minimum investment:
The minimum investment required to establish an LLC in Saudi Arabia is SAR 500,000 (USD 130,000).
For Foreigners:
The minimum investment capital for foreigners opening an LLC in Saudi is SAR 100,000 (USD 26,000).
LLCs in the Industrial Sector:
The required capital amount is SAR 5,000,000 (USD 1,333,000) for LLCs in industrial sectors.
LLCs in the Agricultural Sector:
The required capital for agricultural projects is SAR 25,000,000 (USD 6,666,000).
Number of shareholders:
An LLC company in Saudi Arabia must have a minimum of two and a maximum of fifty shareholders.
Managers:
The LLC must be represented by one or more managers. Managers don’t need to be Saudi nationals.
Auditor:
The LLC must have an auditor for the annual audit of financial records.
Board of Controllers:
The LLC has to establish a Board of Controllers if there are more than twenty shareholders.
Supervisory board:
If the number of shareholders exceeds twenty, a supervisory board comprising at least three members must be formed.
Steps for Establishing an LLC in Saudi Arabia
Limited liability company formation in Saudi Arabia can be completed through a series of systematic steps. These include writing a business plan, registering the trade name, and depositing initial capital. The points listed below mark the important checkpoints:
- Prepare the papers of company incorporation, which should also include a business plan
- Apply for the foreign capital investment license, which is mandatory for non-Saudi and non-GCC investors
- Obtaining the Certificate of Registration
- Opening a company bank account and depositing share capital
- Registration with tax authority and local municipality office
- Applying for the business license depending on the sector of activity
Key Features of Company Law Related to LLCs
The popularity of LLCs in the Saudi Arabian business landscape is due to their attractive features for operating and cost-saving. This segment highlights crucial aspects of Saudi Arabian company law relating to Limited Liability Companies (LLCs):
Distinct Legal Personality:
An LLC possesses a separate legal identity distinct from its shareholders.
Limited Duration:
The new law limits the lifespan of businesses formed as LLCs.
Documentary Requirements:
Various documents are essential for the LLC registration process.
Local Office Mandate:
LLCs must maintain a local office in a Saudi Arabian city.
Foreign Ownership License:
If the business has foreign ownership, a special license is mandatory.
Minimum Requirements:
Basic prerequisites include at least one shareholder and one director.
Looking to Start a Limited Liability Company in Saudi Arabia?
Analytic offers strategic guidance for foreign investors setting up a Limited Liability Company (LLC) in Saudi Arabia. We help you complete the key steps, legal requirements, and benefits to ensure a smooth and successful establishment of your business in the Kingdom.
- FAQs
Frequently Asked Questions
If your question is not addressed here, please feel free to reach out to us. We value your inquiry.
What are the capital requirements for starting an LLC in Saudi Arabia?
The capital requirements for opening an LLC in Saudi Arabia depend on the business activities of the company. Our business consultant can provide you with precise information depending on the business activity you plan to be involved in.
How to determine the share capital of LLCs in Saudi Arabia?
The share capital of LLCs in Saudi Arabia is determined by various factors such as the national status of the investor, type of business activity, etc. Please contact our business consultant for precise and up-to-date information.
What is the minimum capital for an LLC in Saudi Arabia?
The minimum capital requirement for getting up an LLC in Saudi Arabia is different depending on which business activity you are involved in. Our business consultant can help you with precise information.
