Due to the rapid changes brought by the revolutionary Vision 2030, Saudi Arabia has grown as a key destination for global businesses around the world. The economic and legal reforms implemented in the country have made significant changes to the business sphere of the country and have attracted foreign investors even from the United Arab Emirates. Expanding business to Saudi Arabia for an UAE national is very beneficial due to their close proximity and cultural similarities, and this provides UAE businesses a natural advantage in entering the Saudi market. However, business expansion to a new country has its own challenges and as an investor it is essential to clearly understand the legal requirements and processes involved to set up a business in Saudi Arabia from the UAE. Any significant errors or missing any key steps could often lead to delays, complications, or even failure in registering the business and can shatter your dream to start a company in Saudi Arabia from UAE.
Are you a UAE national planning to enter the vibrant market of Saudi Arabia, as part of your business expansion processes beyond borders? If so, we have got all your worries regarding the processes involved with the business setup in Saudi Arabia. Read our latest blog on the legal requirements for UAE companies to enter the Saudi market and explore the legal essentials needed to successfully establish yourselves in the vibrant market of Saudi Arabia.
So let’s get started!
What Are the Legal Requirements to Setup Business in Saudi Arabia
Business expansion to Saudi Arabia offers lucrative opportunities, but efficient exploration of legal procedures are essential to ensure a smooth business setup. Compliance with the legal requirements in Saudi Arabia is a crucial step, and care must be taken during entity selection, documentation, and investment commitments.
As a UAE business planning to establish a presence in Saudi Arabia you must set up a branch, representative office, or subsidiary in the country. This can be done with full ownership or in partnership with a Saudi national. Additionally, this UAE company should have been functional for at least one year and must submit an audited financial statement for the previous fiscal year.
There is a lot of documentation process involved for a UAE company fuir business set up in Saudi Arabia and have to prepare several key documents to establish a branch or subsidiary in Saudi Arabia, including:
- Company Incorporation Documents (e.g., Trade License, Commercial Registry)
- Memorandum of Association
- Financial audit report for the previous fiscal year
- Power of Attorney
The documents to be submitted vary depending upon whether the company is registered in the mainland or free zone. The companies operating in the free zones might submit a Certificate of Incorporation, Share Certificate, Certificate of Incumbency, or a Good Standing Certificate. And all these documents should be certified by the issuing authority (unless electronically issued) and attested by the UAE Ministry of Foreign Affairs (MOFA) and the Saudi Embassy in the UAE before being sent to Saudi Arabia for further processing.
In addition to documentation, there are other requirements in relation to capital, investment, or turnover based on the company’s legal structure and license type. The Saudi Ministry of Investment (MISA) has set specific minimum investment requirements for different licenses which are as follows:
- Commercial license with minimum 25% Saudi partner: SAR 7 million, with the foreign shareholder contributing a minimum of SAR 20 million.
- Commercial license with 100% foreign ownership: SAR 30 million, with a commitment to invest at least SAR 200 million within the first 5 years.
- Service/property investment: Minimum project value of SAR 30 million.
- Service/property financing projects: SAR 200 million with Saudi shareholding of 40%
- Service/Transport (with minimum 30% Saudi partner): SAR 500,000.
- Service/other transport with 100% foreign: SAR 10 million.
- Contracting: SAR 500,000 – but with revenue/asset value requirements.
In addition to all these requirements and documentations, MISA may request further approvals or documentation based on the business activity, shareholding structure, and paid up capital requirements. so collaborating with legal experts in the industry who are familiar with Saudi regulations can streamline this process and prevent delays.
A great understanding and fulfilling of the legal requirements are essential to set up a business in Saudi Arabia especially to enter and thrive in this dynamic market successfully. By being legally compliant, the UAE businesses can reap growth and expand in one of the most dynamic economies in the Middle East.
What is the Process for Registering a Company in Saudi Arabia
Setting up a company in Saudi Arabia from the UAE involves several multi step processes which involves engagement with several government departments. Unlike the business setup process in the UAE, where business registration can be done through one or two agencies, Saudi Arabia has a long process which involves approvals and registrations across multiple governmental bodies. This makes the process more comprehensive, complicated and time consuming but it ensures compliance with the country’s regulatory framework.
Here’s an overview of the six key steps involved in registering a company in Saudi Arabia:
- Get Approval from the Ministry of Investment (MISA)
The first step to Start a company in Saudi Arabia from the UAE is to get approval from the Ministry of Investment (MISA), which oversees foreign investment. This involves submitting detailed business plans and documentation to ensure that the proposed activity aligns with the country’s economic vision. - Register Your Company Commercially with the Ministry of Commerce
After obtaining MISA approval, the next step is to register your business with the Ministry of Commerce. This includes choosing a name for your company, drafting Articles of Association, and completing other formalities to secure a commercial registration. - Get Your Business Registered with Other Authorities
In order to set up a business in Saudi Arabia, your businesses must also register with several other governmental bodies, including the Ministry of Labor, the General Organization for Social Insurance (GOSI), and the Ministry of Interior. These registrations are required to cover labor related compliance, social insurance requirements, and security clearances. - Get an Office Address
An official local mailing address and office space must be procured as part of the business setup in Saudi Arabia. This is to ensure that your company has a legitimate operational base within Saudi Arabia. - Work Permits and Residency for General Manager
To begin your business operations in the Kingdom of Saudi Arabia, the designated General Manager should obtain a work permit and residency visa (Iqama). The General Manager should also secure health insurance as per the Saudi law. - Open a Corporate Bank Account
Finally, the company must open a corporate bank account to oversee the financial transactions and comply with banking regulations in the Kingdom.
Although the process requires navigating through various steps, each is essential for establishing a legally compliant business in Saudi Arabia. With proper planning and guidance, UAE companies can easily adapt to the requirements and tap into the growing opportunities in the Saudi market.
How can Analytics Help You Start Business in Saudi Arabia from UAE?
Expanding your UAE business into the Saudi Arabian market offers numerous opportunities, but it requires navigating the complexities of both countries’ legal and business environments. Without the right guidance and understanding of local regulations, the process can become tiresome, leading to delays, legal issues, or even setbacks in your business registration.
And here comes the role of expert business setup consultants like Analytix. With experience spanning more than 15 years we are experts in cross border business setups, and offer tailored support to UAE companies looking to establish a presence in Saudi Arabia. Our experts provide professional assistance from preparing the essential documentation in the UAE to ensuring compliance with the regulations in KSA, and will help you through each step of business incorporation seamlessly.
At Analytix, our industry experts will first analyse your business needs and will come up with clear, actionable steps for setting up your branch or subsidiary in Saudi Arabia. With the right guidance of our experts, you can avoid potential pitfalls, reduce the risk of legal complications, and speed up your business registration process.
So ring us today and let us guide you every step of the way as you expand into one of the most promising markets in the region.
Hope you are clear with the legal requirements to set up business in Saudi Arabia for UAE companies. You can write to us regarding any doubts in relation to the topic discussed in the blog. You can also comment in the comment section below to let us know your opinion about the blog and how it helped and eased your business setup process in Saudi Arabia.
