Company Formation in Saudi Arabia: Comprehensive Guide
Company formation in Saudi Arabia has become more streamlined and efficient, thanks to regulatory and digital reforms under Vision 2030, which aims to diversify income sources, create new job opportunities, and make the business environment more attractive and effective. The Kingdom provides the necessary support to encourage innovation and attract local and international investments. Establishing a company is often the first step for investors to create a separate legal entity to achieve their commercial, economic, and financial goals. This article provides a comprehensive overview of the types of companies that can be established, their requirements, legal procedures, and essential documents needed to complete the registration process.
Definition of a Company
A company is a legal entity established under the provisions of the system based on a foundation contract or articles of association, through which two or more individuals agree to contribute capital, labor, or both to a project aimed at generating profit and sharing any resulting gains or losses. Exceptionally, companies may also be founded by a single individual and can be established as non-profit entities.
Types of Companies in Saudi Arabia
According to the Saudi Companies Law, there are several types of companies that investors can establish:
1.General Partnership
A partnership founded by two or more individuals who share joint personal responsibility for the company's debts and liabilities. Partners are involved in management and are considered merchants.
2.Limited Partnership
Consists of two types of partners: general partners, who are personally liable, and limited partners, whose liability is restricted to their share in the capital.
3.Joint Stock Company
Founded by one or more persons, with capital divided into transferable shares. The company itself is responsible for its debts, and shareholder liability is limited to the value of their shares.
4.Simplified Joint Stock Company
Similar to a joint stock company, with flexible organizational structure options for the shareholders as outlined in the articles of association.
5.Limited Liability Company
Formed by one or more individuals with limited liability to the value of their shares. The company’s assets are separate from its owners' personal assets.
6.Professional Company
Established by one or more licensed individuals to practice specific professions and may take on various legal forms, such as partnerships or joint-stock companies.
7.Public Non-Profit Company
Structured as a joint-stock company, where profits are solely directed toward public service.
8.Private Non-Profit Company
Can take on the forms of a limited liability or joint-stock company, with profits directed toward non-profit activities.
9.Holding Company
A joint-stock or limited liability company that holds shares or stocks in subsidiary companies, making them affiliates.
10.Foreign Company
Operates in Saudi Arabia through a branch or representative office according to the Foreign Investment Law.
11.Family Business
Managed by members of the same family, with specific agreements on ownership, governance, and succession.
Articles of Association Requirements
According to Article 12 of the Saudi Companies Law, company documents must include:
Company name and legal structure
Headquarters address
Commercial registration number
Company capital
A "liquidation" label during the liquidation period
Read also: The Judicial documentation services in Saudi Arabia
Steps for company formation in saudi arabia
1.Any founding partner contributing to the capital is deemed a founder.
2.Founders submit the registration request, accompanied by the articles of 3.association and necessary documents, to the Commercial Register.
4.The Commercial Register reviews the application, and if rejected, founders may appeal to the Ministry within 60 days or take legal action if necessary.
Why Choose Khalid Al-Fifi’s Office?
The office of Khalid Al-Fifi provides comprehensive services for company formation and legal consulting in Saudi Arabia:
Company Formation and Registration: Preparation of all legal documents required for company establishment and registration.
Corporate Restructuring: Assistance in restructuring companies to meet operational and strategic changes.
Entity Creation and Dissolution: Consulting on the creation of subsidiaries or the dissolution of entities for business purposes.
Mergers and Acquisitions: Legal support for complex transactions, including negotiation, contract preparation, and compliance checks.
Company Liquidation: Handling the legal aspects of asset liquidation and liability settlement.
Licensing and Commercial Registration: Assistance with necessary licensing and registrations to facilitate quick business initiation.
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