Types of Companies in Saudi Arabia

Limited Liability Company, LLC

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Analogue of LLC in Russia

The most common form for small and medium-sized businesses, as well as for foreign companies intending to register a subsidiary in the KSA. It is established by one or more participants whose liability is limited to their shares in the capital.

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Key Features:

• 100% foreign ownership is permitted (except in cases where Saudization is required).
• To register a foreign-owned LLC, you must obtain an investment license from the Ministry of Investment (MISA) before registration.
• Number of participants: from 1 to 50.
• The minimum authorized capital is not established by law, except in cases where the authorized capital is provided for in a specific amount (investment projects in real estate, commercial license with 100% foreign ownership, etc.). The authorized capital must be fully paid at the time of company registration.
• In practice, MISA may require a minimum capital of SAR 500,000 (USD 134,000).

Entrepreneur License

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Special case of LLC

For startups and small businesses that meet the criteria of being innovative or technologically advanced.

Key Features:

• Minimum authorized capital and preferential office rental rates. 
• In practice, SAR 50,000–100,000 is sufficient as authorized capital.
• Fast track registration process: up to 7 business days instead of 2-4 weeks for a regular LLC.
• Grants of up to SAR 500,000 can be applied for through the KAUST and MiSK funds.

Joint Stock Company, JSC

Analogue of JSC in Russia

Intended for large enterprises. Capital is divided into shares owned by shareholders. The liability of shareholders is limited to the extent of their contribution to the capital.   

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Joint-stock companies are divided into public (PJSC), closed and Simplified Joint-Stock Company (SJSC). Public companies require approval from the MoC and CMA (Capital Market Authority).

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Key Features:

• 100% foreign ownership is permitted (except in cases where Saudization is required).
• To register a foreign owned JBC
• Before registration, you must obtain an investment license from MISA.
• Number of participants: from 5 shareholders, no restrictions on the maximum number. 
• Minimum authorized capital: SAR 500,000 (USD 134,000), must be deposited into a Saudi Arabian bank account during the registration process.
• There is no minimum share capital requirement for SJSC.

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General Partnership

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Analogue of a full partnership in Russia

Suitable for small businesses: two or more partners conduct business together. Suitable for small businesses. Provides for full personal liability of all partners for the company's obligations.

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‍Key Features:

• There is no prohibition on 100% foreign ownership (although there is no direct indication of this possibility).
• Number of participants: from 2 partners, individuals or legal entities. 
• The minimum size of the authorized capital is not established by law.

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Limited Partnership

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Analogue of a limited partnership in Russia

Suitable for small businesses: A partnership in which one or more general partners have general liability and the others have limited liability (limited to their capital contribution).

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Key Features:

• There is no prohibition on 100% foreign ownership (although there is no direct indication of this possibility).
• Number of participants: from 2 partners (at least one general and at least one limited).
• The minimum size of the authorized capital is not established by law.

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Sole Proprietorship

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Analogue of IP in Russia

An individual entrepreneur is the most suitable business structure for small businesses and freelancers, as it is easy to set up and manage: one person owns and runs the business. 

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At the same time, the individual entrepreneur bears unlimited personal liability for all business obligations, including debts. This may affect his personal property.

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‍Key Features:‍

• Only citizens of Saudi Arabia or Gulf Cooperation Council (GCC) countries are eligible to register Sole Proprietorship.
• No minimum authorized capital is required.

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Branches and representative offices of foreign companies

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No right to conduct commercial activities in Saudi Arabia. The parent company bears full responsibility.

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Key Features:

• 100% foreign ownership of the company is allowed.
• There is no minimum authorized capital required.

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Professional Company

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Professional companies cannot engage in commercial activities, but may own assets to achieve their goals. Management is carried out by partners, shareholders or authorized persons.

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Key Features:

• 100% foreign ownership of the company is not allowed. At least 25% ownership by a Saudi licensee is required.
• Can be founded by one person in the form of a professional limited liability company.
• In professional companies established by several persons, the number of partners or shareholders is not limited.
• There is no minimum amount of authorized capital.

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Joint Venture

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Joint venture

A partnership that does not have the status of a legal entity is an internal confidential agreement between partners that does not require official publication. 

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This format is especially convenient for implementing temporary projects or working in conditions where a minimum of legal reporting is required.

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Key Features:

• 100% foreign ownership of shares in the project is permitted.
• There is no limit on the number of participants.
• There are no requirements for the minimum authorized capital and the procedure for its payment. Each partner contributes his share under the conditions specified in the agreement. 

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If a partner provides property or funds, he retains ownership of them unless otherwise provided by the agreement.  

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In the event of financial difficulties, such as the bankruptcy of a partner, the rights to assets are protected:

• Specific assets can be recovered from the partner's property after his share of the losses has been paid.
• Monetary or inseparable assets are recovered through the creditor claims mechanism.

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Company with a Variable / Changeable Capital

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Variable capital company

A flexible form of doing business that allows you to increase or decrease the size of the company's capital without complicated procedures. 

• Capital may be increased through additional contributions from current participants or by new partners joining.
• Capital reduction is possible by returning shares to participants. 

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Such a company retains the ability to adapt to changing business needs, which makes this form attractive to international investors, as it allows for flexible management of participation and investments.

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Key Features:

• 100% foreign ownership of the company is allowed.
• The number of participants is not limited by law.
• When establishing a company, its authorized capital must not exceed SAR 50,000 (USD 13,400).

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Cooperative Company

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It is a form of business based on the principles of cooperation. It is aimed at the common benefit of the participants and involves joint efforts to achieve such goals as reducing the cost of products, services or purchases through collective action and improving the quality of products or services provided by the participants or the company itself.

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Cooperative companies may be organized as joint stock companies (JSCs) or limited liability companies (LLCs) and are subject to the requirements for these forms unless they conflict with special provisions for cooperatives. 

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Key Features:

• 100% foreign ownership is permitted (as a general rule).
• The number of participants is not limited by law.
• Minimum authorized capital –
• SAR 500,000 (USD 134,000).