Establishing a Company in Saudi Arabia

Establishing a company in Saudi Arabia offers immense business opportunities, driven by the country’s ambitious economic transformation under Saudi Vision 2030. This initiative aims to diversify the economy beyond oil, opening up sectors such as technology, healthcare, infrastructure, and tourism to foreign investors. With its strategic location, growing infrastructure, and government-backed incentives, Saudi Arabia is becoming a global business hub. However, understanding the local business landscape, regulations, and licensing requirements is crucial for success in this rapidly evolving market. By setting up a business in Saudi Arabia, companies can tap into the region’s dynamic growth and play a part in its bold future vision.

Establishing a Company in Saudi arabia: A Step-by-Step Guide

When forming a business in Saudi Arabia, it’s essential to follow a few key steps, from obtaining the necessary licences to officially incorporating the company. This process can be complicated, especially for those unfamiliar with the Saudi market. Even local businesspeople sometimes struggle with the details, and one mistake can be costly. That’s why we recommend working with a knowledgeable lawyer or setup partner to guide you through the process. Below, we break down the key steps foreign investors need to take to successfully set up a business in Saudi Arabia.

Part 1: The Investment Licence (MISA Licence)

What is the Investment/MISA Licence?

The first and most crucial step for any foreign investor looking to start a business in Saudi Arabia is obtaining an investment licence, commonly known as the MISA licence. This licence is mandatory for any business where the shareholders are non-GCC nationals. However, if all owners of the company are GCC nationals, this step is not required.

Once you have your investment licence, you are officially allowed to conduct business in Saudi Arabia. Keep in mind, however, that there are different types of investment licences depending on the nature of your business. It’s vital to understand which licence applies to your specific industry.

What are Business Activities?

As part of the company formation process, you’ll need to select your business activities. Saudi Arabia follows the International Standard Industrial Classification (ISIC 4) for business activities, which is a global standard. It’s important to ensure that your selected activities align with your chosen licence type. You can search the full list of business activities here.

Be aware that not all business activities are allowed for foreign investors. Some industries, such as healthcare and FinTech, require special licences. These licences may come with additional costs and bureaucratic steps, so it’s advisable to consult a lawyer to navigate the complexities. For further details, visit the MISA website.

Part 2: Choosing a Trade Name

What is a Trade Name?

A trade name is the official legal name of your company. It’s important to differentiate between a trade name and a trademark. While the trade name is used for legal identification, the trademark is how your business is recognized commercially.

Guidelines for Saudi Trade Names

When selecting a trade name, you must follow certain guidelines:

1. Shariah Compliance: Your trade name must adhere to Islamic principles.
2. Appropriateness: Inappropriate or offensive names are prohibited.
3. Uniqueness: The name cannot be identical to any existing business. For instance, names like “Aramco” or “NEOM” would be rejected.
4. Language: You may use either Arabic or English, and you can retain your company’s original name if it is in English.

Banned Trade Names

It’s also crucial to be aware that certain words are banned from use in trade names. These include religious terms like “Quran” or “Allah,” historical landmarks such as “Hira,” and city names like “Riyadh” or “Jeddah.” 

Part 3: Establishing a Company in Saudi arabia and General Manager Authorities

Once your investment licence and trade name have been approved, you can move on to the actual company incorporation process. While most of the process is done online, you or your lawyer will need to visit a Saudi authority once to verify the identities of the business owners. This physical visit ensures that all submitted documents are legitimate.

What is the Articles of Association (AoA)?

To legally operate your business, you need to submit your company’s Articles of Association (AoA). This document outlines the key structures and governance of your business. The AoA contains information such as:

• Company owners’ names and details
• Passport information
• Stakeholder percentages
• Capital amount (as predefined in your MISA licence)
• Headquarters location
• Customised articles based on specific authorities

Authorities of the General Manager (GM)

One of the most important parts of the AoA is defining the authorities of your General Manager (GM). This section outlines the GM’s roles and responsibilities, including governance, representation, and decision-making powers. There are more than 300 GM authorities to choose from, ranging from assigning shareholders to signing contracts on behalf of the company. 

Final Thoughts on Establishing a Company in Saudi Arabia

Successfully navigating the process of starting a business in Saudi Arabia requires careful attention to detail. From obtaining the right licenses, selecting the appropriate business activities, and choosing a compliant trade name, to completing the incorporation process, each step is critical to your company’s success. To avoid costly mistakes, partnering with experienced professionals is key.

At Injaz Company, we specialize in helping businesses establish themselves in Saudi Arabia. With our comprehensive company formation services, we guide you through each step of the process—ensuring smooth, hassle-free entry into the Saudi market. Whether it’s handling complex regulatory requirements or providing expert advice on local business practices, Injaz is here to make your expansion a success. Let us help you unlock the full potential of Saudi Arabia’s growing economy.