Company Formation in Saudi Arabia: Step-by-Step Guide

Starting a company in Saudi Arabia requires following specific legal and administrative procedures. In this article, we provide a comprehensive overview of the essential steps, license types, and available company structures to help you establish your business successfully.

Step-by-Step Process to Start a Company in Saudi Arabia

1. Choose the Type of Company
Decide on the legal form of your company—Limited Liability Company (LLC), Sole Proprietorship, or Joint Stock Company.

2. Select a Company Name
Choose a unique and appropriate name that is not already registered by another entity.

3. Prepare Legal Documents
Draft the articles of association, define the capital and responsibilities, and prepare all required documents.

4. Sign the Documents
Sign all incorporation documents in the presence of a licensed attorney at the Ministry of Commerce.

5. Submit the Incorporation Application
Apply for company registration with the Ministry of Commerce and Investment, including all required documents and shareholder details.

6. Register with the Commercial Registry
Once documents are approved, the company is officially registered, and a commercial license is issued.

7. Obtain Necessary Licenses
Secure all operational licenses such as activity-specific permits and municipal licenses.

8. Open a Corporate Bank Account
Open a business account in a Saudi bank in the company’s name.

9. Register for Tax & Zakat
Register with the Zakat, Tax and Customs Authority and comply with all related financial obligations.

Types of Business Licenses in Saudi Arabia

1. Commercial Activity License
Requires:

• Business license form
  
  

• Articles of association
  
  

• Commercial registration
  
  

• ID copies of owner and GM
  
  

• Payment of required fees
  
  

2. 100% Foreign Ownership License
Requires:

• Incorporation documents from the foreign country
  
  

• Certificate from relevant authority
  
  

• Passport of company rep
  
  

• Foreign commercial registration
  
  

• Technical activity report
  
  

3. Service Sector License
Covers:

• Contracting
  
  

• Management consulting
  
  

• IT services
  
  

• Tourism and hospitality
  
  

• Training and education
  
  

• Health services
  
  

• Insurance
  
  

• Advertising
  
  

• Logistics and shipping
  
  

• Exhibition organization
  
  

• Food and catering
  
  

• Financial services
  
  

• Aviation and handling
  
  

4. Industrial Activities License
Covers:

• Oil, gas, and petrochemicals
  
  

• Steel, aluminum, copper
  
  

• Food production
  
  

• Chemicals manufacturing
  
  

• Furniture production
  
  

• Electronics manufacturing
  
  

• Apparel and textiles
  
  

• Automotive industry
  
  

• Electrical appliances
  
  

Company Types in Saudi Arabia

1. Limited Liability Company (LLC): Partners' liability is limited to their shares.
   
   

2. Joint Stock Company: Public can buy shares in the company.
   
   

3. Sole Proprietorship: Owned and operated by one individual.
   
   

4. Private Limited Company: Liability is limited, and partners aren’t personally responsible for debts.
   
   

5. Public Company: Owned by the government.
   
   

6. Foreign Company: Operates under special licenses in Saudi Arabia.
   
   

7. Real Estate Company: Engaged in property development.
   
   

8. Industrial Company: Operates in various industrial sectors.
   
   

9. Commercial Company: Focuses on trade and distribution.
   
   

10. Service Company: Provides consulting, finance, education, logistics, and other services.
    
    

Partner with Sidrahub Experts

At Sidra Hub, we simplify the company formation process. Get your company established in Saudi Arabia within just 7 days (upon submitting complete documentation).
Contact our experts today for a free consultation