Shareholders Agreement in Saudi Arabia | Setting up a joint venture can be a daunting task especially if you are not familiar with the business laws and regulations of a country. These business requirements vary from state to state. If you want to invest in Saudi Arabia, you need to conduct intensive research on the same or seek professional guidance because the legal framework of the country keeps evolving constantly. Professional advisors will guide you through this complicated legal framework of Saudi Arabia. Let’s have a look at some important things about Shareholders Agreement in Saudi Arabia that you should know.
Foreign investment approval
Before you invest or carry out any legal business in Saudi Arabia, the Saudi Arabian General Investment Authority (SAGIA), must approve you if you are a foreigner. Be sure to apply for a foreign investment license from SAGIA. Some of the general grants offered are trading (retail and wholesale), provision of services, and industrial permits.
Licenses have different restrictions and requirements as set by SAGIA. Some considerations include shareholding percentages, demonstratable experience, capital contributions, and audited financial statements.
As a foreign investor, it is advisable that you start preparing relevant documents in advance before you ask for SAGIA application. After you are fully approved, seek the services of an Arabic translator before you sign the Shareholders Agreement. This will help you to make well-informed decisions.
Once you are fully approved by SAGIA, and you have signed the Shareholders Agreement, you are free to use any suitable management structure. Your company can be managed by a general manager or a board of managers. You can as well have both management options.
Ten percent of net profits should be set aside annually. You can share the remainder with other shareholders as long as the 10 percent is set aside.
A Limited Liability Company should employ a given percentage of Saudi Arabian nationals. The percent set by the Ministry of Labor depends on the number of employees required and the type of business activities.
Taking note of these considerations will go a long way in ensuring that you carry out business operations according to the law of Saudi Arabia. You will also make wise decisions that will provide the continued growth of your company without any challenges.
To know more about Agreements and Contracts in Saudi Arabia,
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