A Step-by-Step Guide to Register an Limited Liability Company (LLC) in KSA

In Saudi Arabia, establishing any business operation necessitates registering a legal entity to ensure compliance with local laws, legitimacy, credibility, and effective management. Various legal entity structures, including companies, joint ventures, and partnerships, are eligible for registration in Saudi Arabia.

The Limited Liability Company (LLC) stands out as the preferred legal structure due to its flexibility and several advantages. These include limited liability protection for shareholders, ease of management, and favourable regulatory conditions. Registering an LLC involves a structured legal process requiring numerous documents, licenses, and other requirements.

This comprehensive guide will cover the detailed steps required to register an LLC Company in Saudi Arabia, what it is, its importance, its benefits and eligibility criteria & requirements for registration.

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

A Limited Liability Company (LLC) in Saudi Arabia is a business entity incorporated under Saudi company law and operates under the article of incorporation with limited liability. 

LLC shields shareholders' personal assets from the company’s debts and obligations. This means that owners are not personally liable for the LLC's debts and liabilities; their liability is limited to the amount of money they have invested in the company. 

Key characteristics of an LLC

• Ownership and Liability: Shareholders' liability is limited to their capital contributions. Transfer, assignment, and sale of interests require existing partners' first right of refusal.
• Capital Requirements: The capital required to form an LLC is nominal. However, certain activities, such as industrial ventures, may necessitate the prescribed capital.
• Foreign Ownership: 100% foreign ownership is possible.
• Saudi National Requirement: No Saudi national is required to be part of the LLC.
• Number of shareholders: Minimum of one shareholder and maximum of fifty shareholders.
• Management and Governance: LLCs have simpler management requirements and provide shareholders with direct control over company decisions.
• 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.

Requirements for LLC Formation in Saudi Arabia

Here are the basic requirements to form a Limited Liability Company in Saudi

Other Conditions

Here's a more readable version of the requirements:

• Applicants must be at least 18 years old. If the applicant is a minor below the age of puberty, a guardianship deed must be provided.
• Partners cannot be government employees.
• If a partner is a corporate entity, the commercial registration must remain active without cancellation, suspension, or termination.
• For companies operating in a professional capacity:
  • Partners must hold valid professional licenses.
  • In mixed companies, at least 25% of the company must be owned by licensed Saudi partners.
  • The total percentage of licensed partners must be at least 70%.

Documents Required for LLC Registration

Here are the essential documents required for LLC registration in Saudi Arabia:

• Valid Passport Copies: Clear copies of passports for all shareholders and representatives, including residence permits (Iqama) if applicable.
• Residence Permit (Iqama) Copies: Necessary for non-Saudi shareholders and representatives.
• Bank Certificate: Verifies initial capital deposit in a Saudi bank account.
• Lease or Rent Agreement: Copy or letter allowing use of rented office space for business.
• Additional Permits and Licenses: Depending on business activities, may require permits from relevant authorities.
• Memorandum of Association (MOA): Defines the company’s name, objectives, shareholder details, and share capital. Must be notarised by a Saudi Arabian notary public.
• Articles of Association (AOA): Specifies internal regulations and management responsibilities. Also requires notarisation.
• Commercial Registration Certificate (CR): Essential proof of the company's existence and activities. Requires submission of MOA and AOA.
• Certificate of Professional Competence (if applicable): Needed for certain business activities to demonstrate professional competence of owners or representatives

Steps to establishing a Limited Liability Company (LLC) in Saudi Arabia

Here are the steps to register an LLC in Saudi

1. Securing the MISA License: Obtain the required industry license to ensure legal business operation.
2. Selecting Your Business Name: Define a formal and distinctive identity that complies with legal requirements and builds a strong brand presence.
3. Legalizing Articles of Association: Ensure official acceptance of your Articles of Association to establish their legitimate status.
4. Completing Commercial Registration: Officially register your business for lawful commercial activities.
5. Enrolment with the Chamber of Commerce: Mandatory filing with the Chamber of Commerce.
6. Filing with the Ministry of Labor: Register your business with the Ministry of Labor to comply with employment laws.
7. Issuing the General Manager’s Visa: Obtain approval for your General Manager's residence permit and visa, managed by the Ministry of Labor and Social Development.
8. Enrolling the National Address for Your Company: Establish an authorized business address for government records.
9. Listing with the Qiwa Portal – Human Resources & Social Development: Use the Qiwa platform to optimise labor sector services and electronic solutions offered by the Ministry of Human Resources & Social Development.
10. Enrollment with Zakat, VAT & Corporate Tax: Register your business for tax compliance with Zakat, VAT, and Corporate Tax.

Conclusion

Limited Liability Companies (LLCs) are the preferred business structure in Saudi Arabia due to their low setup requirements, limited liability, and flexible management. With the allowance of 100% foreign ownership and no requirement for Saudi nationals, LLCs are an excellent choice for foreign investors. 

The entire registration process can be completed online through various government portals, ensuring convenience and efficiency. For a seamless experience, seeking assistance from experts or agencies is highly recommended.