The businessman’s guide to investing into Saudi Arabia

Understandably, you will first need to apply for a Saudi visa before investing into the country. Having obtained your Saudi visa, you can now start looking at what opportunities are ready at hand.

Foreign investors are enthusiastically encouraged by the government of Saudi Arabia to engage their financial resources and efforts in the Kingdom’s rapidly expanding sectors of energy, life sciences, communications, information technology, health, education and transport. That is more so for the six specific cities that are principally marked out for broad-based development as well as widespread economic expansion. Hence, the process for obtaining a Saudi visa has been made accordingly simpler.

To become commercially operation in the Kingdom, the following perspectives must be taken into account by prospective foreign investors.

General considerations include:

• Stability of its political system
• Prominent role played by Islam in the lives of its citizens
• Cultivation of strong business ties is fundamental in entering into any business dealings with local Saudis, as that is considered your key to success in transacting business in the Kingdom
• Secure and safe environment for your entire family
• Well-organised infrastructure, founded on established business principles

Business considerations include:

• Well-founded banking sector
• 100% ownership of business and property by foreign investors
• No limits on commitment of minimum financial needs
• Unrestricted capital repatriation allowed
• Foreign investors allowed sponsoring any number of foreign employees or workforce

Formation of companies and setting up of commercial operations in the Kingdom are governed under the Companies Law, a Saudi Royal Decree issued in 1965, and as subsequently amended during 1967, 1982 and again in 1985 under ensuing Royal Decrees issued.

To establish the structure of any business entity in Saudi Arabia, foreign investors need to first apply for and obtain a prescribed Investment Licence, which is issued by SAGIA under Foreign Investment Regulations that currently prevail. For certain types of business enterprises, foreign investors must obtain an approval from MOC or the Saudi Ministry of Commerce, prior to being able to apply for the said Investment Licence from SAGIA.

In general, the Company Law in Saudi Arabia permits eight different forms of structures for business entities which essentially include:

1. General partnerships
2. Joint ventures
3. Limited partnerships
4. Corporations
5. Limited liability partnerships (LLCs)
6. Partnerships limited by shares
7. Variable capital companies
8. Joint Stock or Co-operative companies

Business structures through which foreign investors are permitted to operate a company in the Kingdom include:

a)      Limited liability companies

b)      Foreign office branch

c)      Joint stock companies (JSC)

d)     Technical and scientific offices (representative offices)

Some of the more common types of business enterprises preferred by foreign investors investing their capital in Saudi Arabia generally comprise the JSC, or joint stock companies, and the LLC, or limited liability companies; while the other forms of business enterprises may be less popular. Foreign investors are also allowed to operate their respective business through local agencies and representative offices established in Saudi Arabia.