The Kingdom of Saudi Arabia is one of the largest economies in the Middle East region and serves as a gateway to regional markets. Establishing foreign company branches in Saudi Arabia helps businesses access a fast-developing economy prompted by Vision 2030, which is a reform program that diversifies the economy and reduces dependency on oil. Let us explore the process and requirements for setting up a foreign branch in Saudi Arabia.
Legal Framework and Regulatory Requirements
Permitted Businesses in the Saudi Kingdom
The most common entities include:
- Branch Office: An extension of the parent company that allows full control over operations in Saudi Arabia.
- Limited Liability Company (LLC): Distinct legal entity providing owners with limited liability protection.
- Joint Venture: Often preferred due to easier market entry and shared risks.
- Joint Stock Company: Formed by shareholders, each owning a certain percentage of company ownership with respect to the number of shares owned.
- Establishment/ Sole Proprietorship: Ownership and managed by a single person.
- Limited Partnership Company: General partners manage the business, whereas limited partners have limited liability on debts without managing the business.
Licensing and Registration Process for setting up a foreign branch in Saudi Arabia
The process for establishing a foreign branch in Saudi Arabia comprises several steps:
- Obtain MISA License: You have to provide extensive details concerning your parent company and investor including the last three years or any other period when determining whether an investor is qualified for entry into Saudi Arabia.
- Establish a Branch Office: This business establishment requires the submission of the necessary documents with focal points for investment in Saudi Arabia, including a valid address, telephone number, fax number and e-mail.
- Obtain Commercial Registration: This involves registering the company with the Ministry of Commerce and Industry (MOCI).
- Obtaining Commercial Registration (CR) from the Ministry of Commerce
- Registration at the Chamber of Commerce (CoC): It is mandatory to register with the Chamber of Commerce for all businesses.
- Acquire Zakat Certificate and Customs Authority (ZATCA): Zakat is a religious duty for companies owned by Saudi but something that foreign firms have to know if they get in deals together.
- Obtain Foreign Business License: This is for the authorization to engage in business activities within the country.
- Registering for employee insurance at the General Organization for Social Insurance (GOSI)
- Employment and Saudization compliance: This law dictates that every industry should have a certain percentage of its employees from among the local citizens.
- Issuance of a company seal: The company seal must include CR number and Company name. Also it must be attested by the Chamber of Commerce, and registered with GOSI.
- Visa issuance for general manager
- Muqeem portal registration
- Absher portal registration
- Qiwa portal registration
- Mudad portal registration
- Open Bank Account: A bank account is necessary for all business transactions. The duration to get the account operational depends on the company’s structure and KYC requirements of the bank.
Documents Required: Foreign branch set up in Saudi Arabia
Several documents are required at different stages of the process of registering a foreign Branch in Saudi Arabia. They are:
- Certificate of Incorporation of parent company
- Memorandum and Articles of Association
- Board Resolution
- Power of Attorney
- Audited Financial Statements
- Legalized and Translated Documents (By Saudi Embassy)
- Passport Copies
Employment and Saudization Requirements
The government has a law that requires industries to include a fixed percentage of their citizens as members, also called Saudization. This percentage is determined by the sector and the size of the organization. Failure to comply with this requirement may lead to penalties as well as restrictions on visa renewals.
Real Estate and Office Setup
Selecting the right office site is critical for foreign corporations because it affects the operation’s productivity and makes a difference when it comes to adhering to rules and regulations. This is particularly true when it comes to leasing commercial real estate.
Conclusion
In short, a clear understanding of the regulatory framework is significant to set up foreign company operations in Saudi Arabia. There are unlimited opportunities for development and expansion in the country. The Helpline Group is an ideal choice for foreign companies that want to setup a foreign branch in the Kingdom because they offer full guidance through regulatory mazes while ensuring compliance with local laws. By benefiting from their vast experience and personalized services, you can smoothly enter into the Saudi market.
