Business Setup Types in Saudi Arabia - Your Guide to Establishing a Successful Business | Altaasis

Business Setup Types in Saudi Arabia

Business Setup Types in Saudi Arabia
  • Branch Office
  • Representative Office
  • Commercial Agency Agreement
  • Temporary Commercial Registration

Foreign investors have many options to incorporate a business in Saudi Arabia. Along with limited liability companies and joint stock companies, foreigners can set up their representative or branch offices, obtain a temporary commercial registration or appoint a commercial agent on behalf of their foreign company.

Technical and Scientific Services Office in Saudi Arabia

Foreign companies that have appointed a Saudi agent to distribute the company’s products in the Kingdom seek to open an office to provide scientific and technical services or assistance to agents, distributors, and consumers of their products. Representative offices can also conduct product research and market surveys for the parent company. Based on the market research, the office can prepare a report for its head office. TSOs can conduct liaison activities to provide technical assistance but are not allowed to engage in commercial activities.

Requirements for Scientific and Technical Office

There are no minimum capital requirements for a Scientific and Technical Office. Its formation process is more straightforward than that of a company and quite like that of a branch. The office must submit an annual summary of its activity in the Kingdom to the Ministry of Investment (MISA).

Temporary Commercial Registration in Saudi Arabia

Temporary Commercial Registration is a temporary license for specific government contracts. With Temporary Commercial Registration, you can not conduct activities in the private sector other than the specific government project.

Requirements for Temporary Commercial Registration

There is no minimum capital requirement to obtain TCR, but its formation process is like a branch office. You can not apply for TCR unless you get a government contract. You can even obtain a Temporary Commercial Registration for consulting projects.

Commercial Agency Agreement in Saudi Arabia

A Commercial Agency Agreement is an option for foreign investors who do not intend to incorporate a legal structure in Saudi Arabia but are willing to trade in Saudi Arabia. Foreign investors can promote or distribute their products and services in the Saudi Market through their appointed Commercial Agent.

Requirements for Commercial Agency Agreement

The Commercial Agent must be a Saudi national, or the Commercial Agency must be owned by a Saudi national. You are required to sign an agreement with Saudi Commercial Agent, and your agreement must be registered with the Ministry of Commerce and Industry. You are not required to obtain a license from the Ministry of Investment Saudi Arabia (MISA).

Branch Office in Saudi Arabia

You can conveniently open a branch office of your company in Saudi Arabia with 100% ownership of the business. The branch office is an extension of your parent company. Your branch office can conduct the commercial activity according to the parent company’s license scope. Your legal representative is responsible for managing your business in the Kingdom. Foreign branches cannot get involved in promotion, marketing or trading activities. Only those activities are allowed, which are mentioned in the MISA (SAGIA) license of the branch. Your branch office is eligible for both public and private sector projects.

Requirements for Setting Up a Branch Office in Saudi Arabia

Opening a branch office is similar to a limited liability company with the exact capital requirement. The difference is that you are not required to submit Articles of Association (AoA). The branch of a foreign company is required to deposit a minimum capital of SAR 500,000. No local sponsor or participant is required to open a branch office in Saudi Arabia. The branch office will obtain its Commercial Registration Certificate. Setting up a branch office might take some time if the manager is not a Saudi national, GCC national or a Saudi resident because a foreigner must have a residence permit as part of the incorporation process.

Why should you open a branch office in Saudi Arabia?

Convenient and Fast Process

Setting up a branch office is more convenient than incorporating other entity structures as no specific requirements or approval of the Articles of Association are required. The Ministry of Commerce and Industry issues the certificate of registration to your business.

Business Growth

Your business expansion helps your brand get visibility to a diverse audience. You can grow your business quickly by opening a branch office in Saudi Arabia. Your company will get recognition in Saudi Market, reducing risk by getting more opportunities and increase profits.

Access to Saudi Market

By setting up a branch office, you are eligible to access the local Saudi Market to sell products and services. Your branch office can help you understand the demands of the local Market, and you must comply with the rules and regulations of the Kingdom.

Documents Required to Open a Branch Office in Saudi Arabia

Our team will guide you regarding the documents’ requirements depending on the business activity of your parent company. Setting up a foreign company or LLC branch typically takes three to six months (Source: Deloitte).

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