Capital Requirements for Companies in Saudi Arabia by Company Type and Activity
By Motaded Limited Team | June | 10 min read
"How much capital is required to establish a company in Saudi Arabia?" The question seems simple, but the answer is complex. There is no single figure applicable to all cases. Capital requirements depend on two independent factors: the company's legal form (LLC, JSC, branch), and the nature of the activity the company will conduct.
This guide details capital requirements from two main regulatory sources: the Saudi Companies Law (Royal Decree M/132, in effect since 2023), and the Investor Manual from the Ministry of Investment edition 12-03 (May 2025). Every figure mentioned here is from an official government source, not a market estimate.
Capital requirements may change with subsequent regulatory decisions. The figures in this guide are accurate per the latest regulatory update. To verify the latest requirements for a specific activity, specialized consultation is essential before any setup decision.
The Regulatory Framework: Two Sources for Determining Capital
Capital requirements come from two distinct authorities, and each may impose a different minimum:
▸ 1. Saudi Companies Law
Determines the minimum capital based on the company's legal form (LLC, Closed JSC, Public JSC). This minimum applies to all companies regardless of activity or shareholder nationality. Issued via Royal Decree M/132, in effect since January 19, 2023.
▸ 2. MISA Investor Manual
Determines additional capital requirements specific to the foreign investor based on the nature of the activity. These requirements apply on top of Companies Law requirements, meaning the actual minimum for the foreigner is the higher of the two.
**Important conclusion**: The Saudi investor satisfies Companies Law requirements alone. The foreign investor applies Companies Law + additional MISA requirements based on activity.
Capital Requirements by Legal Form (Companies Law M/132)
| Legal Form | Minimum Capital | Paid Portion at Incorporation | Source |
| Limited Liability Company (LLC) | No statutory minimum | — | Article 156 |
| Closed Joint Stock Company | SAR 500,000 | 25% in cash (SAR 125,000 min) | Article 59 |
| Public Joint Stock Company | SAR 10,000,000 | Per executive regulations | Article 53 |
| Simplified Joint Stock | SAR 10,000,000 (same conditions as Public JSC) | — | Article 139 |
| General Partnership | No minimum | — | Articles 17-37 |
| Simple Commandite Partnership | No minimum | — | Articles 38-50 |
| Sole Proprietorship | No minimum | — | Commerce Law |
**Fundamental note**: The new Saudi Companies Law statutorily abolished the minimum capital for an LLC. Previous editions required SAR 500,000 for foreigners, but the current law leaves this to the ministry. Practically, MISA's per-activity requirements compensate for the absence of an LLC minimum for foreign investors.
Limited Liability Company (LLC) — No Minimum
Statutorily, there is no minimum capital for an LLC in the Saudi Companies Law M/132. In the absence of a statutory floor, the company may start with the smallest amount that fits its operating need.
**Practical rule**: You can establish a company with SAR 5,000 — whether the activity is manufacturing, trade, or services — as long as no statutory minimum is imposed by a regulatory body on the specific activity (such as financial, healthcare, education, or telecommunications sectors).
The capital constraint is not the law, but operational reality: is the amount sufficient to buy equipment, pay rent, and operate employees during the early months before revenue generation? This is an assessment for your business plan, not a statutory condition imposed by law.
Closed Joint Stock Company — SAR 500,000
Statutory minimum: SAR 500,000. Plus 25% must be paid in cash at incorporation (at least SAR 125,000) in an 'under-formation' account before the Commercial Registration is issued.
**What does 'in cash' mean?** Actual bank deposit before incorporation. Not counted toward capital:
• Real estate assets or equipment pledged
• Intangible rights (trademark, patents) before valuation
• Receivables or debts due from others
The unpaid capital portion (75%) may be completed later within 5 years of incorporation, in cash or in-kind after formal valuation.
Public Joint Stock Company — SAR 10,000,000
Statutory minimum: SAR 10 million. This type of company requires: audited financial statements, expanded disclosure, board of directors with formal governance, and the possibility of public listing. Not suitable for small or medium projects.
Capital Requirements for Foreign Investors by Activity (MISA Manual)
These requirements apply on top of Companies Law requirements, and vary by activity nature and the percentage owned by the foreigner. Source: the Investor Manual issued by the Ministry of Investment edition 12-03.
| Activity and Foreign Ownership % | Minimum Capital | Additional Requirements |
| Commercial with 25% Saudi partner | SAR 26,666,667 | — |
| 100% foreign commercial | SAR 30,000,000 | Experience in 3 international markets |
| Telecom with 40% Saudi partner | Per license | CITC sector approval |
| 100% foreign engineering | — | Active in 4 countries + 10 years experience |
| Land transport | SAR 10,000,000 | Active in 3 countries + 10 years experience |
| Other activities open to foreigners | Per activity nature | Case-by-case |
**Important note**: The SAR 26,666,667 figure for commercial with Saudi partner is not arbitrary. It is the threshold at which the 25% Saudi share equals SAR 6,666,667 — the minimum the ministry requires for the Saudi partner.
Why Does 100% Foreign Commercial Require SAR 30 Million?
Commercial activity (retail and wholesale) was restricted to Saudis/GCC nationals, then opened to foreigners under conditions to protect the local market. Conditions for 100% foreign:
• Capital of SAR 30 million (commitment to a real investment volume)
• Current activity in 3 different international markets (proof of experience)
• Saudization commitment and training 30% of employees annually
• Five-year investment plan: either SAR 300 million (SAR 30M cash) or SAR 200 million with measurable criteria
These expanded conditions make 100% foreign commercial activity exclusive to large companies. Small and medium companies opt for partnership with a Saudi.
100% Foreign Engineering Activity
Engineering activity (engineering consultancy, engineering offices) is open to foreigners without a minimum capital, but subject to experience requirements:
• Parent company active in 4 different countries
• At least 10 years experience in the sector
This model (proof of experience instead of capital) makes sense for advisory activities whose value lies in team knowledge, not financial assets.
How Is Capital Paid?
▸ Cash Payment
Actual deposit in a bank account in the company's name 'under formation' before CR issuance. The bank certificate is submitted to relevant authorities as proof.
▸ In-Kind Contributions
Assets (real estate, equipment, inventory, trademarks) contributed as capital. Require: valuation from a certified appraiser, documenting ownership transfer to the company, and depositing documents with relevant authorities. Takes longer than cash payment.
▸ Mixed Cash and In-Kind
Permitted. For example: contributing equipment worth SAR 500,000 + SAR 500,000 cash = SAR 1 million capital. Documented valuation of in-kind assets is mandatory.
What If You Cannot Meet the Minimum?
If capital requirements exceed your capacity, regulatory alternatives exist:
▸ 1. Partnership with a Saudi/GCC Investor
A substantive partnership with a Saudi lowers MISA conditions for many activities. For example: commercial activity with a 25% Saudi partner requires SAR 26.6M, less than SAR 30M for 100% foreign. Choosing a partner with sector expertise adds value beyond the threshold reduction.
▸ 2. Changing the Legal Form
If you planned a Closed JSC but the SAR 500,000 threshold is difficult: start with an LLC, then convert later when capital becomes available. Conversion between legal forms is possible by law.
▸ 3. Choosing a Different Activity
Some activities require less capital. For example: management consulting, IT, digital marketing — these are activities with lower capital floors than traditional commercial activity. Reviewing the unified economic activities list to choose the activity suitable for your capacity.
▸ 4. Leveraging Premium Residency Programs
Premium Residency holders benefit from simplified MISA requirements and may invest closer to a Saudi investor's path. This is a path for investors planning continuous Saudi presence.
▸ 5. Regional Headquarters (RHQ) as a Coordinating Alternative
If your goal is regional presence rather than direct operational activity, the Regional Headquarters (RHQ) imposes no capital minimum (employment commitment instead).
Capital Requirements for Regulated Sectors
Some activities have special capital thresholds from sector regulators, regardless of Companies Law and MISA:
▸ Financial Sector
Banks, insurance, finance companies, investment activities — all subject to very high capital requirements from the Saudi Central Bank (SAMA) and the Capital Market Authority (CMA). They vary by activity type, set independently by each authority. These thresholds are typically higher than Companies Law thresholds.
▸ Healthcare Sector
Health facilities are subject to requirements from the Saudi Food and Drug Authority (SFDA) and the Ministry of Health. Capital requirements vary by facility type (pharmacy, clinic, hospital).
▸ Education Sector
Private educational institutions (schools, universities, training centers) are subject to Ministry of Education requirements. Capital requirements are sector-specific by institution type.
▸ Telecommunications Sector
Telecommunications activity is subject to the Communications, Space and Technology Commission (CITC). Capital requirements are set for each license type.
For sector-regulated activities, the actual capital floor is the highest among: Companies Law + MISA + the sector authority.
Get an Accurate Assessment of Your Capital Requirements
Capital requirements for your case depend on several factors not apparent in articles: the precise activity within the economic activities list, founders' nationalities, sector approvals, operating plan. Motaded Limited offers a free consultation that determines: the actual minimum capital for your activity, the best legal form, and whether a Saudi partnership serves your situation.
Book your free consultation, or review setup packages for the administrative costs separate from capital.
Q1: Must capital be fully deposited before CR issuance?
Depends on company type. LLC: no advance cash deposit is statutorily required, since the new law abolished the minimum. Closed JSC: 25% must be deposited in cash before incorporation (at least SAR 125,000 for those meeting SAR 500,000). Sector-regulated activities may require depositing a specific percentage by activity type.
Q2: Can capital be withdrawn after incorporation?
Capital can be used in company operations (purchasing equipment, paying salaries, operations) — this is normal use. What is not allowed: withdrawing it as profits before formal distribution after financial inventory and audit. Disposing of capital through irregular means is a violation.
Q3: Must the declared capital remain in the bank account permanently?
No. After incorporation, capital enters the company's normal cycle. The bank account balance may change daily based on operations. What remains 'recorded' is the capital in the Commercial Registration and the AOA, not the actual bank balance.
Q4: How is capital set for an investor without prior international activity?
For a foreign investor starting their first project: options are either partnership with a Saudi (lowering international experience conditions), or choosing an activity that doesn't require international experience (consulting, technology, certain services), or relying on Premium Residency which simplifies conditions.
Q5: Can capital be reduced after incorporation?
Yes, statutorily possible but with specific procedures: a resolution from the shareholders' general assembly (for JSCs), or partner agreement (for LLCs), creditor notification, objection period, AOA amendment, registration of the amendment with relevant authorities. These are lengthy procedures, not taken lightly.
Q6: Must SAR 30 million for 100% foreign commercial be deposited in cash on incorporation day?
Not necessarily fully in cash on incorporation day. Per the Companies Law, capital may be paid in cash or in-kind (with valuation). Part is paid at incorporation per company type, and the remainder over a specified period. Details vary by legal form, but the ultimate commitment to SAR 30 million is required to meet license conditions.
Q7: What is the difference between declared capital and paid-up capital?
Declared (authorized) capital: the value recorded in the AOA and Commercial Registration — for example, SAR 1,000,000. Paid-up capital: what has actually been paid from the declared capital. For Closed JSC, paid-up is 25% at incorporation (SAR 250,000 of the million), and the remainder within 5 years. For LLC: usually all declared is paid at incorporation.
Q8: Can the foreign investor complete capital from outside the Kingdom?
Yes. Transfer from the foreign investor's account to the Saudi company account follows known banking procedures. Saudi banks accept international transfers as contributions to Saudi company capital with proof of purpose (AOA, CR). Compliance with anti-money laundering rules is essential.
Q9: What is the alternative for an investor unable to provide high thresholds?
Options: 1) partnership with a Saudi investor substantively reducing the threshold, 2) choosing an activity with a lower minimum (consulting, technology, professional services), 3) opening a branch of your foreign company instead of establishing a new entity, 4) Regional Headquarters if your goal is coordinative, 5) leveraging Premium Residency programs.
