Can you own 100% company in Saudi?

The Kingdom of Saudi Arabia is radically reshaping its business market in the Gulf Cooperation Council (GCC). A pivotal element fueling this progress is they way they streamlined the process of starting a business, making its economy more accessible to foreign investors. Historically foreign investors faced many critical hurdles with strict limitation on ownership in KSA, many industries were even closed for foreign investments and some were restricted to partial ownership. However, the vision 2030 came as a huge shift in economic policies, which offered a detailed plan to diversify its economy while minimizing the dependance on oil revenue. This also promoted a more investor friendly environment and welcomed global enterprises to expand their footprint locally.

This leads to an important consideration: Is complete foreign ownership permitted in Saudi Arabia? The answer relies on certain factors including the type of business activity, the nationality of the investor, and the sector-specific regulations governing foreign ownership.  In this blogpost we will comprehensively discus these crucial elements to help you grasp the process more clearly.

Foreign Investment Laws in Saudi Arabia

To support the adoption of these reforms The Saudi Arabian General Investment Authority (SAGIA), now part of the Ministry of Investment (MISA) plays a fundamental role. It serves as all-in-one resource to ease the process of foreign investments in the region. To encourage foreign direct investment (FDI), along with allowing full foreign ownership in many sectors, SAGIA simplifies the regulatory procedures, promotes transparency and opens the door of emerging options for foreign investors.  In order to realize the objectives of Vision 2030 by drawing in more FDI, SAGIA declared in an ‘Edict’ on 6 September 2015 that foreign individuals would be allowed to own a company completely. Some of the industries that allows establishing a 100% foreign-owned company include,

• Manufacturing
• IT and Telecommunications
• Healthcare
• Education
• Consulting and Professional Services
• Retail and Wholesale Trade

Despite that, many companies would still need local partnerships or special approvals from governments, particularly in sectors like energy, media and security.

Guide to Full Foreign Ownership Business Setup in KSA

Setting up a business with full ownership can be demanding therefore require a thorough planning, some of the legal steps included in the process are,

1.     Getting a MISA License

Since MISA is the backbone of establishing any business in KSA, you need to get your hands on MISA license. This license gives you an authority to legally operate in the Kingdom. You will need various documents to obtain MISA license such as,

• An in-depth business plan with clear objectives and operations of your business
• Memorandum and Articles of Association showing your business structure
• Certificate of Incorporation from your home country.
• Data and Documentation related to shareholding and capital structure of the company.
• Complete details of your manager or executive director with a residency proof.
• Financial Statements, passports of shareholders and other identification documents.

This process usually takes 30 working days so the businesses need to plan accordingly.

2.     Picking the Right Business Structure

Picking the most suited business structure is mandatory to assure compliance and avoid any legal complexities. The three main options are,

• Limited Liability Company (LLC): It is the most commonly picked structure which offers flexibility and limited liability with complete foreign ownership
• Branch Office: It is preferred for companies looking to expand in KSA without forming separate legal entity. This branch operates under the parent company legally.
• Joint Venture: Businesses that require local partners specifically in the sectors where 100% foreign ownership is restricted.

3.     Registering with Ministry of Commerce

After picking the right business structure now is the time to get Commercial Registration (CR) through the Ministry of Commerce and also register with chamber of commerce. This is an essential part of Articles of Association which gives a clear overview of a company’s operations and objectives. These documents are not just important for transparency and regulatory compliance but also for adherence to foreign ownership guidelines, particularly in sectors where restrictions apply.

4.     Opening a Corporate Bank Account

Opening a corporate bank account is obligatory for financial operations like payroll management and business expenses. You will need a valid MISA license, Commercial Registration (CR), Shareholder details and identification documents to open a corporate account. Bank may also demand extra paperwork for certain reasons. This process is important to make certain that financial transactions are done smoothly while ensuring compliance.

5.     Understanding the Legal Laws

To operate in KSA you need to fully comply with the legal framework, some of the most vital laws are,

• Corporate tax which a fixed rate of 20% of corporate income.
• A Value Added Tax of 15% is applied on most of the goods and services
• Companies must follow the Labor laws which includes benefits, extra working hours salary and other certain restrictions.
• As per Saudisation (Nitaqat) foreign business must provide job offers to a specific percentage of Saudi nationals as per their company size and industry.

By following these steps and planning ahead, foreign investors can lay the foundations of an efficient and fruitful business in the Kingdom.

Key Considerations for Foreign Investors in Saudi Arabia

The Saudi Market offers growth driven possibilities, yet having a clear understanding of some of these essential factors prior to establishing a 100% foreign-owned company boosts the chances of success. Here are some mandatory aspects to consider,

• Pick out the best location that offers competitive edge tailored to sector requirements, Riyadh, Jeddah and Dammam are some of the most rewarding business hubs.
• Get additional work permits and legal approvals for certain sectors such as health care, construction and education.
• Prioritize the legal obligations, thoroughly understand or hire finance function advisory service providers to look after the legal matter to protect any capital damage or reputational loss.

Advantages of Establishing a 100% foreign-owned company

Establishing a 100% foreign-owned company comes with a lot of benefits for the investors, including:

• Having an absolute authority on your decision making without the requirement of a local partner.
• Foreign investors get an entry to the largest economy in the Middle East, providing vast opportunities for business growth.
• Relatively low tax rates and friendly compliance policies removes complications in observing legal requirements.
• Several government incentives, support programs and funding possibilities ease the process of business setup in KSA.
• Massive developments and shift towards innovation makes it an attractive location for thriving business options.

Potential Challenges and How to Overcome Them

With many positive aspects comes some challenges that can be intricate for many foreign investors while establishing a foreign-owned company in Saudi Arabia, such as:

• For some companies licensing requirements can still be difficult to understand and comply with.
• For new investors the cultural framework can be hard to fully adopt.
• The government mandates Saudization process which demands hiring a certain percentage of Saudi Nationals
• The highly rising foreign competitiveness has made it hard for many startups to thrive in the Saudi Market.

Foreign investors should carry out a comprehensive analysis with regulatory awareness and operational requirements. They should consider getting trainings or hire local finance function advisory experts to streamline the process. With proper planning, running a fully foreign-owned enterprise in Saudi Arabia can be both financially rewarding and strategically beneficial.

Bringing Your Business Goals to Life with SS&CO

With deep expertise in the Saudi Arabian market and strong ties to key government entities like MISA and the Ministry of Commerce, SS&CO KSA is your trusted partner for establishing a fully foreign-owned business in the Kingdom. We accelerate the entire setup process, managing everything from obtaining your MISA license to securing industry-specific permits, tax registration, and labor approvals. Partner with us, and let’s make your business journey in Saudi Arabia seamless and successful.