SharkBX Guide: Setting Up a Commercial Company in Saudi Arabia

SharkBX Guide: Setting Up a Commercial Company in Saudi Arabia

Introduction

Establishing a commercial company in Saudi Arabia presents a valuable opportunity for businesses looking to enter one of the Middle East’s most dynamic markets. This guide provides a comprehensive overview of the requirements, processes, and benefits involved in setting up a commercial entity in Saudi Arabia. By following these steps, you can ensure a smooth and compliant entry into the Saudi market. SharkBX is here to assist you through every stage of the process, ensuring efficiency and compliance.

Why Choose Saudi Arabia for Your Commercial Business?

The commercial sector in Saudi Arabia is a cornerstone of the national economy, driven by robust consumer demand, strategic government initiatives, and a favorable business environment. The Kingdom’s Vision 2030 aims to diversify the economy, reduce dependence on oil revenues, and foster a thriving private sector, making it an ideal time for businesses to establish a presence.

• Booming Commercial Sector: Saudi Arabia’s commercial sector has witnessed significant growth, supported by major projects such as NEOM, the Red Sea Project, and extensive urban development plans. These initiatives are designed to enhance economic diversification and attract international investment.
• Government Support: The Saudi government has implemented various initiatives to support and promote the growth of the commercial sector, creating a favorable environment for businesses.
• Strategic Location: Situated at the crossroads of Asia, Africa, and Europe, Saudi Arabia offers easy access to key markets and trade routes.
• Future Prospects: With ongoing government investments and reforms under Vision 2030, the commercial sector’s future looks promising. Businesses can expect increased demand, new market opportunities, and a supportive business ecosystem.

Steps for Business Registration in Saudi Arabia

Step-by-Step Process

1. Choose a Business Structure: Decide whether you want to establish a limited liability company (LLC) or another suitable legal entity. Each structure has specific requirements and implications.
2. Name Reservation: Select a unique name for your business and reserve it with the Ministry of Commerce. Ensure the name reflects the nature of your commercial activities.
3. Prepare and Submit Documentation: Gather and prepare all necessary documents, including the Articles of Association, business plan, and identification documents for shareholders and directors. These documents must be authenticated by the Saudi Embassy if you are a foreign entity.
4. Submit Application: Submit your application along with the required documentation to MOCI for initial approval.
5. Obtain Licenses and Permits: Depending on your business activities, you may need to obtain additional licenses and permits from relevant government agencies, such as the Saudi Council of Engineers for engineering consultancies.

Types of Commercial Licenses

There are two main types of commercial licenses available for entities interested in conducting wholesale and retail trade in Saudi Arabia:

1. Commercial License with Saudi Shareholder

This license allows foreign entities to engage in wholesale and retail trade activities in Saudi Arabia in partnership with a Saudi shareholder.

Service Description

This service is designed for foreign entities interested in entering the Saudi market through a joint venture with a Saudi partner.

Service Documentations

1. Commercial Registration: A copy of the commercial registration of the shareholding partner, certified by the Saudi Embassy.
2. National Identity: A copy of the national identity, if the partner is a natural person holding GCC nationality (if not registered in the ABSHAR system).
3. Financial Statements: Financial statements of the last financial year of the applicant company, certified by the Saudi Embassy.

Service Rules and Restrictions

1. Saudi Shareholder Requirement: The Saudi shareholder must hold at least 25% of the company.
2. Premium Residence Holders: Holders of Premium Residence are exempt from the above documentation requirements.
3. Existing Licenses: If one of the partners has been previously licensed by the Ministry of Investment, this must be disclosed during the electronic application process.

2. 100% Foreign Commercial License

This license is available for wholly foreign-owned entities that wish to engage in wholesale, retail trade, and e-commerce activities in Saudi Arabia.

Service Description

This service is for 100% foreign entities interested in conducting wholesale, retail trade, and e-commerce in Saudi Arabia.

Service Documentations

1. Commercial Registration: A copy of the commercial register in at least three regional or international markets of the participating entity, authenticated by the Saudi Embassy.
2. Financial Statements: Financial statements of the last financial year of the applicant company, certified by the Saudi Embassy.

Service Rules and Restrictions

1. Market Presence: This service is limited to foreign companies that have a presence in at least three regional or international markets.
2. Capital Required: minimum capital required to practice wholesale and retail trade activity, is (30) million Saudi Riyals.

Compliance to Standards

1. The company shall achieve following standards during the first five years:
   1. Achieve the localization rates as determined by the Ministry of Human Resource and Social Development.
   2. Develop and implement a plan to locate them in senior management posts in the first five years and to ensure their continuation.
   3. Training (30%) of Saudi employees annually.
2. The company shall comply to achieve one of the following options:
   1. Option 1: Investing an amount of no less than (300) million Saudi Riyals (including 30 million Saudi Riyals as the cash capital of the company) over five years starting from the date of obtaining the investment license.
   2. Option 2: Investing an amount of no less than (200) million Saudi Riyals (including 30 million Saudi Riyals as the cash capital of the company) over five years starting from the date of obtaining the investment license, in addition to achieving one or more of the following requirements during the first five years:
      1. Manufacturing: % 30 or more of the company’s products distributed locally shall be manufactured in the Kingdom of Saudi Arabia.
      2. Research and development programs: % 5 or more of total sales shall be allocated to the establishment of a research and development programs in the Kingdom.

• Logistics and distribution: The establishment of a unified center to provide those services, and provide after-sales services

Benefits of Partnering with SharkBX

• Experience: Our team has extensive experience in the construction industry, both locally and internationally. We have completed numerous projects in Saudi Arabia, providing us with valuable insights into market dynamics and regulatory requirements.
• Expertise: From project management to procurement and logistics, our team of experts provides the necessary guidance and support to ensure the smooth operation of your construction business in Saudi Arabia.
• Authority: We have established strong relationships with local authorities, suppliers, and key stakeholders in the construction industry, which can be instrumental in securing permits, approvals, and partnerships for your business.
• Trust: Our reputation for delivering high-quality projects on time and within budget has earned us the trust of our clients and partners. Partnering with SharkBX ensures you are working with a reliable and trusted advisor.

Conclusion

Setting up a commercial company in Saudi Arabia offers significant potential for growth and success. However, the process requires a thorough understanding of local regulations and strategic planning. By following the steps outlined in this guide and leveraging the expertise of SharkBX, you can establish a solid foundation for your commercial company in one of the most dynamic economies in the Middle East.

For more detailed guidance and support, visit our website or contact us for a free consultation. SharkBX is here to help you navigate the complexities and achieve your business goals in Saudi Arabia.