With years of experience in LLC formation within the Kingdom, motaded offers a comprehensive overview of the key considerations involved in how to start llc in Saudi.
What is a Limited Liability Company?
A Limited Liability Company (LLC) is a business structure that blends elements of both partnerships and corporations, offering limited liability protection to its owners along with a straightforward management system. In Saudi Arabia, LLCs are the most popular business entity type, favored for their ease of establishment and allowance of 100% foreign ownership and we will know how to start llc in Saudi.
Benefits of how to start llc in Saudi
Setting up a limited liability company (LLC) in Saudi Arabia presents a range of advantages for foreign and local investors. Here’s why LLCs are often the preferred business structure:
1. Limited Liability Protection
An LLC shields investors from liabilities beyond their initial investment, thereby reducing financial risk.
2. Flexibility in Ownership and Management
This structure allows for partnerships between individuals and legal entities, both local and foreign. LLCs can be fully foreign-owned or include Saudi partners.
3. Streamlined Setup Process
In recent years, the time and cost of establishing an LLC in Saudi Arabia have decreased significantly, making it easier for businesses to get started.
4. Access to Government Contracts
LLCs often receive preferential treatment when bidding for government contracts and participating in state-led projects.
5. Tax Incentives
Saudi Arabia offers a range of tax benefits and incentives to LLCs to boost their competitiveness.
6. Appeal to Foreign Investors
The LLC’s flexibility—especially regarding foreign ownership—makes it an attractive option for international investors looking to enter the Saudi market and know how to start llc in saudi.
Why Set Up an LLC in Saudi Arabia?
At the start of the year, estimates projected a 1.5% real GDP growth (Gross Domestic Product) in 2024. If oil production reaches 9.5 million barrels per day, the real oil GDP might decline by 2%. However, with looser monetary policies and successful structural reforms—such as an increase in foreign direct investment and a surge in tourism—the non-oil sector could grow by 3% to 4%. This growth would be significant, even if Vision 2030 falls short of its most ambitious non-oil sector targets, as a 3% to 4% increase would still be a positive development, especially with the ongoing reduction in unemployment.
Additional incorporation requirements include how to start llc in saudi and registering with the Ministry of Labor and the tax authorities in Saudi Arabia. Foreign annd local investors can contact our team of consultants at Motaded for help with LLC formation. Our immigration lawyers are also ready to assist with any relocation needs.
Capital Requirements for LLCs in Saudi Arabia
The capital requirements for business entities in Saudi Arabia vary depending on the legal form and the company’s intended activities, as stipulated by local regulations. Although there is generally no minimum share capital required to know how to start llc in saudi, specific activities may trigger additional requirements. For instance, in 2024, the Saudi Arabian General Investment Authority (SAGIA) requires LLCs engaged in industrial activities to have a minimum share capital of SAR 1 million. Additionally, LLCs in Saudi Arabia must allocate 10% of their net annual profits to a statutory reserve. Our team of company registration experts in Saudi Arabia can guide you on how to start llc in saudi.
An LLC is an attractive option for foreign entrepreneurs considering a move to Saudi Arabia and know how to start llc in saudi.
Read About: Step-by-Step Process of how to set up business in saudi
Determining the Share Capital of an LLC in Saudi Arabia
Deciding on the appropriate share capital is a crucial step of how to start llc in Saudi. Here’s what to keep in mind:
Under the Foreign Investment Act, foreign investors must contribute a minimum share capital of SAR 100,000 (approximately USD 26,000).
For LLCs involved in industrial or agricultural sectors, the minimum share capital requirement rises to USD 5 million (approximately SAR 1,333,000).
LLCs that require an SAGIA license must have a minimum share capital of SAR 500,000 (approximately USD 10,000).
Our company formation specialists are ready to provide detailed information and guidance on share capital requirements for how to start llc in saudi.
Steps for how to start llc in saudi
Setting up a limited liability company (LLC) in Saudi Arabia involves a series of systematic steps. These steps include drafting a business plan, registering the trade name, and depositing the initial capital. Below are the key stages to follow how to start llc in saudi:
Prepare the incorporation documents, which should include a detailed business plan.
Apply for a foreign capital investment license, a requirement for non-Saudi and non-GCC investors.
Obtain the Certificate of Registration.
Open a corporate bank account and deposit the required share capital.
Register with the tax authority and the local municipality office.
Apply for the relevant business license based on the company’s sector of operation.
Key Features of how to start llc in saudi Regulations
LLCs are popular in Saudi Arabia due to their operational flexibility and cost-efficiency. Here are the key legal aspects of how to start llc in Saudi:
Separate Legal Entity: An LLC is recognized as a legal entity independent of its shareholders.
Limited Duration: Recent legislation has placed time limits on the duration of LLCs.
Documentation Requirements: Several documents are required during the registration process.
Local Office Requirement: An LLC must maintain a registered office within Saudi Arabia.
Foreign Ownership Licensing: A specific license is required for businesses with foreign ownership.
Minimum Requirements: At least one shareholder and one director are necessary to establish an LLC.
Requirements of how to start llc in saudi
Setting up a limited liability company (LLC) in Saudi Arabia is a relatively straightforward process. However, there are a few essential requirements you must be aware of how to start llc in saudi by:
- Shareholders: An LLC must have at least two shareholders and can have up to fifty.
- Managers: The company must be represented by one or more managers, who do not need to be Saudi nationals.
- Auditor: An auditor is required to conduct the annual financial audit.
- Board of Controllers: If there are more than twenty shareholders, the LLC must establish a Board of Directors.
- Supervisory Board: In cases where the number of shareholders exceeds twenty, a supervisory board of at least three members must be formed.
Registering an LLC in Saudi Arabia in 2025
One of the initial steps for setting up an LLC in Saudi Arabia in 2025 is securing a company name, a process handled through the Ministry of Commerce and Industry.
It is also essential to open a corporate bank account. Note that this account can only be activated once the company has received its certificate of registration, at which point the share capital can be deposited and know how to start llc in saudi.
How to start llc in saudi is an excellent way to establish a business presence with flexible management, limited liability, and full foreign ownership. The straightforward online registration process and investor-friendly environment make it an attractive destination for entrepreneurs.
Ready to get started? Learn more about how to start an LLC in Saudi Arabia and set your business on the path to success. Contact our team of experts at Motaded today for step-by-step guidance and support.
FAQS
What’s the Minimum Capital Needed to Start an LLC in Saudi Arabia?
The minimum capital requirement for how to start llc in saudi Arabia varies depending on the business type and ownership. For a foreign-owned LLC, you’ll generally need at least SAR 100,000 (approximately USD 26,000). However, this amount may differ based on the specific nature of your business, so it’s wise to confirm the exact requirement for your sector.
Can Foreigners Open an LLC in Saudi Arabia?
Yes, foreigners can establish an LLC in Saudi Arabia. However, before getting started, they must obtain a Foreign Investment License from the Saudi Arabian General Investment Authority (SAGIA and know how to start llc in saudi.
What Documents Do I Need to how to start llc in saudi?
To register an LLC in Saudi Arabia, you’ll need to prepare several key documents:
Articles of Association
Identification documents for all shareholders
Proof of your business address
A business plan (if required)
Foreign Investment License (for foreign investors)
How Long Does It how to start llc in saudi?
The timeline can vary based on the completeness of your documents and the nature of your business. Typically, it takes a few weeks to a couple of months to complete the entire registration process and know how to start llc in saudi.