Business
Types of companies in Saudi Arabia
Corporate law in Saudi Arabia allows for the creation of legal entities in various organizational-legal forms and under special regimes.
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Overview
Each type of company has specific features that must be considered before starting the registration process.
Limited Liability Company (LLC)
Equivalent to LLC in other jurisdictions. The most common form for small and medium-sized businesses, as well as for foreign companies planning to register a subsidiary in the Kingdom of Saudi Arabia (KSA). Founded by one or more participants whose liability is limited to their share in the capital.
Key Features:
- 100% foreign ownership permitted (except where Saudization is required).
- For an LLC with foreign ownership, an investment license from the Ministry of Investment (MISA) is required prior to registration.
- Number of participants: from 1 to 50.
- No statutory minimum capital requirement unless otherwise specified (e.g., real estate investment projects, commercial license with 100% foreign ownership). Capital must be fully paid before registration.
- In practice, MISA may require minimum capital of SAR 500,000 (USD 134,000).
Entrepreneur License
A special case of LLC. Designed for startups and small enterprises meeting innovation or technology criteria.
Key Features:
- Reduced capital requirements and discounted office rent.
- In practice, SAR 50,000–100,000 capital is sufficient.
- Accelerated registration: up to 7 working days instead of 2–4 weeks for standard LLCs.
- Eligibility for grants up to SAR 500,000 from KAUST and MiSK funds.
Joint Stock Company (JSC)
Equivalent to JSC in other jurisdictions. Intended for large enterprises. Capital is divided into shares owned by shareholders. Liability is limited to each shareholder’s contribution.
Key Features:
- 100% foreign ownership permitted (except where Saudization is required).
- For foreign ownership, an investment license from MISA is required prior to registration.
- Minimum 5 shareholders, no maximum limit.
- Minimum capital: SAR 500,000 (USD 134,000), deposited in a Saudi bank during registration.
- No minimum capital requirement for Simplified Joint Stock Company (SJSC).
General Partnership
Equivalent to General Partnership in other jurisdictions.Suitable for small businesses: two or more partners jointly conduct business, with unlimited personal liability for all partners.
Key Features:
- No explicit prohibition on 100% foreign ownership (but no direct confirmation either).
- Minimum 2 partners (individuals or legal entities).
- No statutory minimum capital requirement.
Limited Partnership
Equivalent to Limited Partnership in other jurisdictions. Suitable for small businesses: partnership with at least one general partner (unlimited liability) and one limited partner (liability limited to capital contribution).
Key Features:
- No explicit prohibition on 100% foreign ownership (but no direct confirmation either).
- At least one general partner and one limited partner required.
- No statutory minimum capital requirement.
Sole Proprietorship
Equivalent to Sole Proprietorship or Sole Trader. Ideal for small businesses and freelancers due to simple setup and management: one person owns and operates the business.
Key Features:
- Only citizens of Saudi Arabia or GCC countries can register a Sole Proprietorship.
- No minimum capital requirement.
Branches and Representative Offices of Foreign Companies
Cannot conduct commercial activities in Saudi Arabia. Full liability rests with the parent company.
Key Features:
- 100% foreign ownership allowed.
- No minimum capital requirement.
Professional Company
Cannot conduct commercial activities but may own assets to achieve professional objectives. Managed by partners, shareholders, or authorized persons.
Key Features:
- 100% foreign ownership not allowed; at least 25% must be owned by a Saudi license holder.
- May be established by one person as a professional LLC.
- No limit on the number of partners/shareholders for multi-partner structures.
- No statutory minimum capital requirement.
Joint Venture
Non-legal-entity partnership. A private agreement between partners for joint projects without forming a separate legal entity. Useful for temporary projects with minimal reporting obligations.
Key Features:
- 100% foreign ownership permitted.
- No limit on the number of participants.
- No statutory minimum capital requirement; contributions as per agreement terms.Asset ownership rights protected in case of partner insolvency: specific assets can be reclaimed after covering losses, financial/non-separable assets returned via creditor claims process.
Company with Variable/Changeable Capital
A flexible form allowing capital increases/decreases without complex procedures.
Key Features:
- Capital may be increased via new contributions or new partners.
- Capital may be decreased by returning contributions to participants.
- 100% foreign ownership permitted.
- No limit on the number of participants.
- Initial capital must not exceed SAR 50,000 (USD 13,400).
Cooperative Company
Based on cooperation principles, aimed at mutual benefit through collective activities like reducing costs and improving product/service quality.
Key Features:
- 100% foreign ownership permitted (as a general rule).
- No participant number limit.
- Minimum capital: SAR 500,000 (USD 134,000).
The complete roadmap for starting and running a business in Saudi Arabia is in our guide 'How to Do Business in Saudi Arabia?'
In the guide, you’ll find not only basic information but also expert recommendations based on real cases and in-depth knowledge of the jurisdiction:
- What the Nitaqat system is and how to meet Saudization quotas
- Key taxes in Saudi Arabia
- What to do after registering a company in Saudi Arabia
Ready to discuss your project?
Submit a request and we will:
- Help select the right business structure and jurisdiction
- Outline all company setup steps
- Define clear timelines and project budget
