KSA’s most popular corporate structure for conducting business is a limited liability company. Having an investor and a governor is all that is required to form an LLC. One of the key benefits of an LLC in Saudi Arabia is that its owners are only responsible for the obligations created by the firm to their contribution to its equity.
Due to its quick and straightforward registration process with the Saudi Corporate Office, the private limited liability firm is the most common type of business structure in the country of Arabia.
The following are this legal form’s primary attributes:
- Its investors do not share its constitutional status;
- The lifespan of a firm established using this structure is restricted by the new law;
- When establishing an LLC, paperwork must be submitted;
- a local branch in a Saudi Arabian city is a need for the company;
- If the company has overseas investment, a specific license must be sought;
- It must have at least one investor and one supervisor, which are the primary prerequisites.
Requirement for LLC in KSA
Capital requirement
The state ordinances in Saudi Arabia impose various funding needs on various corporate formats. There are many divisions for the minimum deposit that must be met according to the state business formation criteria for an LLC. For LLCs established as commercial organization, the “Saudi Arabian General Investment Authority (SAGIA)” has the power to apply a minimum share capital requirement of SAR 1 million.
A Saudi limited liability corporation is obliged to set aside 10% of its operating earnings for legal reserves at all times.
If the partners are international investors, the International Trade Law sets the baseline amount necessary at 100,000 SAR, or roughly 26,000 USD. If The sum rises if the business becomes an economic or agricultural firm and earns USD 5 million business license
The General Investment Administration requires international investors who wish to launch various businesses in Saudi Arabia to get a license.
This step must be finished before the LLC’s actual registration because it is a requirement of the Saudi Arabian business formation process. The following documents must be submitted to get the company license:
- A detailed business plan;
- Request application;
- Certificate of incorporation;
- Financial details and proof of corporate bank account.
Shareholders
A minimum of one investor, who may be an individual or the other entity, and a minimum of one supervisor are required for a limited liability corporation. Nevertheless, the executive board must be chosen if there are more than 20 investors chosen. Additionally, the LLC must establish a Governing Board to monitor the director’s activity if the required minimum is 3. Additionally, there can be a limit of 50 members in this corporate body.
It should be acknowledged that, as of 2018, the stockholders are no longer responsible for the company’s liabilities if it suffers damage of at least 50% of its shareholding. This is due to recent changes in the law.
Registration of an LLC in KSA
The Department of Trade and Commerce must be approached to finalize the process of obtaining a brand name, which is one of the first steps in the establishment of an LLC firm in Saudi Arabia.
Additionally, a business bank account must be opened. This account must wait until the legal organization has its registration credential before it can be used. The capital of the business must be deposited in the bank account.
The firm’s articles of organization must be submitted to the Sector of Trade and Industry for verification. The process can be finished digitally, and the paperwork needs to be certified by a local notary when the Ministry has approved the company’s memorandum of incorporation. Other registration procedures include filing with the Saudi Arabian tax office or the Ministry of Manpower
