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Paul Arnold is Managing Director of Sovereign PPG Saudi Arabia, a corporate and trust services provider.
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What is the first step in setting up a business in Saudi Arabia?
Setting up a business in Saudi Arabia may require different requirements depending on the type of business entity. The process for registration, licensing, and setup is generally similar. Companies must complete the following steps to begin the process of establishing a business in Saudi Arabia:
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Registered with the Ministry of Commerce and Industry (MOCI).
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Foreign companies must register with the Ministry of Investment (MISA) – formerly known as “SAGIA”.
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Open a local bank account in Saudi Arabia.
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register Wasel – Mandatory provision of local address to government. LLCs require a physical local office lease and address as a virtual office is not enough.
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Register with the Ministry of Labor and Social Development (MLSD) A visa issuing agency that allows people to work in the country.
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Registered with the Social Insurance Corporation (GOSI) – Social insurance mandatory for monthly payroll processing and maintains government records regarding the Saudi Station Quota System.
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What documents are required for the procedure?
To begin the process of establishing and registering a company in Saudi Arabia, you will need the following documents:
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Commercial Registration (CR) or Business License – A CR certificate issued by MOCI outlines and enables a company to carry out business activities in Saudi Arabia and grants the same rights as those granted to nationals.
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Memorandum of Association (MoA) or Articles of Association (AoA) – Approved by MOCI and signed in the presence of a notary public.
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Certificate of incumbency.
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For foreign companies setting up in Saudi Arabia, audited financial statements for the previous financial year are required
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A copy of the passport of the responsible general manager of the Saudi Arabian entity.
For certain types of activities, companies require specific licenses from the relevant government departments. For example, pharmaceutical companies require a license from the Saudi Food and Drug Association.
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What should companies do next to establish themselves in this region?
After carrying out and submitting the aforementioned processes and documents, the company will need to wait for MOCI and MISA approvals, after which it will be successfully incorporated as a company in Saudi Arabia.
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How can companies prepare for potential expansion?
When preparing to expand into the Saudi market, companies need to secure sufficient capital to support the requirements for establishing a business entity in Saudi Arabia.
Companies may enter the Saudi market using different types of foreign companies, including:
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A limited liability company (LLC) that is recognized as 100% foreign owned through MISA.
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One person limited liability company.
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Co., Ltd.
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branches of foreign companies, and;
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The only facility.
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What regulations apply during the relocation/expansion process?
When expanding into Saudi Arabia, there are standard regulations regarding the processes and documents required to ensure successful company formation through MOCI. One of the key regulatory requirements after Saudi establishment is the requirement to allocate Saudi stations. This requires companies to employ a certain percentage of their workforce locally. This is subject to change and varies by industry and employee job title.
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Do I need a trademark or patent? If yes, what is the process to establish a trademark before expanding?
Setting up a business in Saudi Arabia typically does not require trademarks or patents and relies on the intellectual property of the business. However, trademark registration is possible in Saudi Arabia. The process of trademark registration is done by registering the trademark with the Saudi Arabian Ministry of Commerce and Investment (MOCI). Although it is not necessary to obtain a trademark to register a company in Saudi Arabia, registering a trademark in Saudi Arabia is beneficial for companies to protect their name and products.
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Is it possible for small and medium-sized businesses? If so, how?
Like any other business, small and medium-sized businesses can expand into Saudi Arabia if they meet the specific requirements for their business activities, such as capital and properly processed application documents. The main things to consider are primary and secondary registration, general manager residence (Iqama), employment authorization, and local bank account.
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