Foreign Investment Law in Saudi Arabia Allowed Business Entity Structures

by | Mar 18, 2019 | Foreign Investments | 0 comments

March 18, 2019

When starting a business, one should choose a business structure first. A business structure helps you give the right balance of legal benefits and protections. It influences your day-to-day operations. A business structure will let you know

• Your ability to raise money,

• How much tax you need to pay,

• The type of paperwork you need to file,

• How to protect your assets, and

• Your business liability.

Before registering your company with the state, you are required to choose a business structure. Choose your business structure carefully. Consult with a legal attorney, business counselors, and accountants to avoid any complications in the future.

Foreign Investment Law in Saudi Arabia

The Kingdom of Saudi Arabia is known to be the world’s largest oil exporter country. It also has the second largest hydrocarbon reserves. Saudi Arabia is also the only Arab country to be part of G-20 major economies. The Saudi Arabian government has recently established “SAGIA.” The Saudi Arabian Investment Authority aims to ease the procedures of setting up business entities in KSA for foreign investors. The new foreign investment law in Saudi Arabia is established to make the whole procedure of obtaining a license, labor visa & conducting other business affairs under one roof.

For foreign investors to establish any business entity in KSA, an Investment license from SAGIA is required. Before receiving the license from SAGIA, foreign investors may also need a pre-approval for certain forms of business from the concerned Ministries.

Forms of Business Entities Structures in Saudi Arabia

The foreign investment law in Saudi Arabia generally allows these eight forms of business entity structures:

• General Partnerships

• Limited partnerships

• Joint Ventures

• Corporations

• Partnerships Limited by Shares

• Limited Liability Partnerships (LLCs)

• Variable Capital Companies

• Cooperative Companies (Joint Stock Company)

The foreign investors can operate through commercial agencies, LLC, JSC, foreign office branches, representative offices in KSA. The most common forms are LLC and foreign office branch for the foreign investors.

The latest foreign investment law in Saudi Arabia makes it easier for foreign investors to start a company or business in KSA. The critical factor to keep in mind is that any business activity in KSA can be limited “in the absence of a formal presentation.” To avoid the violation of “Anti-Fronting Law,” it is recommended to appoint any local agent or legal attorney to guide you.

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