Guide to Incorporate a Limited Liability Company (LLC) in Saudi Arabia

As with any other country, establishing a new business in Saudi Arabia also demands legal compliance from the start to the end. It established legitimacy, credibility, and smooth operation of businesses. 

Many business structures, such as joint ventures and partnerships, are eligible for legal registration in Saudi Arabia. Among these legal structures, LLC (Limited Liability Company) stands out as the most preferred due to its flexibility and many other unique benefits. 

This guide provides a simple breakdown of the LLC in Saudi Arabia, including its meaning, how it works, its benefits, and key characteristics. It will also provide a step-by-step process on how to incorporate a limited liability company in Saudi Arabia and the requirements to be fulfilled. 

What is a Limited Liability Company (LLC) in Saudi Arabia?

A Limited Liability Company in Saudi Arabia is a type of legal business structure incorporated under Saudi company law under the articles of incorporation with limited liability. One of the attractive characteristics of an LLC is that it shields the personal assets of shareholders from the company’s debts and liabilities. 

This means that in an LLC, owners do not have to sell their personal properties to settle debts. Their liabilities are limited only to the amount of money they have invested in the company. 

With Saudi Arabia’s Vision 2030 accelerating economic diversification and opening new avenues for private sector growth, the country has become an increasingly attractive destination for entrepreneurs and foreign investors. As more opportunities emerge across key industries, the Limited Liability Company (LLC) has quickly become one of the most preferred business structures.

What Are the Key Characteristics of an LLC?

• Ownership and Liability

Each shareholder in an LLC is responsible for the company’s obligations and debts only up to the amount they have invested in the company. If a shareholder wants to transfer, sell, or assign their ownership, it has to be first offered to the existing shareholders, i.e., they have the first right to buy. They can be offered to anyone outside the company only after the first right of refusal of existing partners.

• Foreign Ownership

100% foreign ownership is possible.

• Saudi National Requirement

 No requirement for a Saudi national to be part of the LLC.

• Profit and Loss Flexibility

Owners have the flexibility to distribute profits and losses according to the terms outlined in the company's operating agreement.

• Raising Capital

LLCs can raise funds through debt instruments, but cannot issue convertible debentures or various types of shares, like redeemable or preferred shares.

Essential Requirements for Registering an LLC in Saudi Arabia

• Capital Requirements

The capital required from an LLC is nominal. Only certain activities, such as industrial ventures, may require a prescribed capital. Here is a small breakdown: 

• Minimum Investment: SAR 500,000 (USD 130,000)

• Foreign Participation: SAR 100,000 (USD 26,000) under the Foreign Investment Law

• Industrial Ventures: SAR 5,000,000 (USD 1,333,000)

• Agricultural Projects: SAR 25,000,000 (USD 6,666,000)

• Number of Shareholders

 Minimum of one shareholder and a maximum of fifty shareholders.

• Management and Governance

LLCs have simpler management requirements and provide shareholders with direct control over company decisions.

• Must Have An Auditor 

Every LLC in Saudi Arabia should have an appointed external auditor. They are the legal professionals responsible for reviewing the company’s financial statements, ensuring accuracy, and compliance with the Saudi accounting standards and regulations set by the Ministry of Commerce. 

• Board of Controllers 

If an LLC in Saudi Arabia has more than 20 shareholders, it must have a board of controllers. This board is responsible for overseeing the performance of the company management, its operations, and ensuring the rights of shareholders are protected. In short, the board of controllers acts as an internal supervisory body that reports to the shareholders of the company. 

• Supervisory Board 

An LLC required a supervisory board on two conditions : (1) if the LLC’s Articles of Association specify it, or (2) when the company’s structure and size demand enhanced oversight. This board is mainly responsible for supervising the company’s management process and compliance with government frameworks. They also review the decisions affecting the LLC’s direction, growth, and profitability. 

Other Conditions for LLC Company Formation 

Here are some other common requirements to register an LLC in Saudi Arabia: 

• Applicants must be at least 18 years old. If the applicant is below 18 years, they should have a guardian provided. 

• Partners in an LLC cannot be government employees.

• If a partner in an LLC is a corporate entity, the commercial registration must remain active and not be canceled, terminated, or suspended. 

• For companies operating in a professional capacity, they should fulfil three criteria: 

1. Partners must hold valid professional licenses.

2. In mixed companies, at least 25% of the company must be owned by licensed Saudi partners.

3. The total percentage of licensed partners must be at least 70%.

7 Steps to Incorporate a Limited Liability Company in Saudi Arabia 

1. Choose a Unique Company Name

The first step to forming a limited liability company is to decide on a company name. Make sure the company complies with the Trade Name Law of Saudi Arabia. 

2. Prepare the Necessary Documents

Next, prepare all necessary documentation for the registration process. These typically include: 

• Articles of Association (AoA)

• Shareholders’ resolution approving the AoA

• Copy of the shareholders’ identification documents

• Proof of business address

• Business plan (if required)

3. Obtain Licenses and Approvals

Depending on business activities and the type of industry, you will need to obtain the required license and approval from relevant government authorities. This generally includes: 

• Foreign Investment License from the Saudi Arabian General Investment Authority (SAGIA)

• Commercial Registration Certificate from the Ministry of Commerce and Investment

• Industry-specific licenses or permits (e.g., for healthcare, education, or manufacturing)

4. Open a Corporate Bank Account

Once the required approval and licenses are obtained, open a corporate bank account. This account is essential for depositing the company’s share capital and conducting business transactions. 

5. Register with Relevant Authorities

In the next step, an LLC business setup in Saudi Arabia will have to register with relevant government authorities such as the Ministry of Human Resources and Social Development, the General Organisation for Social Insurance (GOSI), Zakat, Tax, and Customs Authority, and the Local Chamber of Commerce.

6. Obtain Additional Licenses and Permits (if required)

Besides the above licenses and approvals, certain business activities may require additional permits from some regulatory bodies. Example sectors include retail and hospitality. 

7. Commence Operations

Once the registration process is completed and the licenses and permits are received, businesses can officially commence operations as a limited liability company in Saudi Arabia.

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For more details, call us at +966 11 500 6600 or get in touch with us for guided support in choosing the best option. 

Key Takeaways 

• LLCs remain one of the most popular business structures in Saudi Arabia, offering flexibility and strong liability protection.

• Vision 2030 is driving major growth opportunities, making LLC formation an attractive option for new investors.

• LLCs provide simple management, adaptable ownership, and solid legal safeguards for shareholders.

• Incorporation requires meeting key regulatory steps, including trade name approval, licensing, and compliance with governance rules.

• Additional approvals may apply depending on the business activity, so due diligence is essential.

• Serviced offices and national address solutions can help new LLCs establish a professional, compliant presence in the Kingdom.