Introduction
Saudi Arabia has introduced significant reforms under the Vision 2030 initiative, transforming the business environment and attracting foreign investors. A key concern for expatriates looking to start a business in the Kingdom is whether they can have 100% ownership of their company. This article explores Saudi Arabia's foreign ownership laws, the industries that allow full expat ownership, and the steps expats must take to register and set up a fully-owned business in KSA.
Understanding Foreign Ownership Laws in Saudi Arabia: Is 100% Ownership Allowed?
In the past, Saudi Arabia's business ownership laws mandated that expatriates could not own more than 49% of a company, with a Saudi national required to hold the majority stake. This restriction created hurdles for foreign investors who wanted complete control of their enterprises. However, under Vision 2030, this has changed significantly, particularly for industries critical to the nation's diversification strategy.
Today, it is possible for expats to own 100% of a company in Saudi Arabia, but this is subject to several conditions and sector limitations. The Saudi Arabian General Investment Authority (SAGIA), now known as the Ministry of Investment (MISA), plays a pivotal role in granting licenses that allow full foreign Ownership. Certain vital sectors, such as technology, manufacturing, healthcare, education, and tourism, have been opened up for full foreign Ownership.
However, some sectors, particularly those linked to national security or strategic industries, still do not allow 100% foreign ownership. In such sectors, joint ventures with Saudi nationals are still required. Before starting the business setup process, expats should confirm if their intended business activity falls under the approved categories for full foreign Ownership.
Steps to Achieve 100% Ownership of a Company in Saudi Arabia
If you're an expat planning to set up a business and achieve 100% ownership in Saudi Arabia, the process can be straightforward if you follow the proper steps:
Choose Your Business Activity and Sector: The first step is determining whether your business activity falls under the sectors that allow 100% foreign ownership. IT, e-commerce, healthcare, and consultancy services are popular choices for expat-owned companies.
Obtain an Investment License: To proceed with the setup, you must apply for an investment license through MISA. This license allows you to register your business and obtain full Ownership, provided your business activity is approved.
Company Registration: After securing your investment license, you must register your business with the Ministry of Commerce. You must submit the required documentation for the registration process, such as your business plan, company bylaws, and proof of identity. You will also need to choose your company structure, such as a limited liability company (LLC), which is common for expats.
Open a Bank Account and Secure Capital: You'll need to open a corporate bank account in Saudi Arabia to deposit the minimum capital required for your business type. The minimum capital varies depending on the business sector but can range from SAR 500,000 to SAR 2 million for wholly foreign-owned companies.
Obtain a Commercial Registration (CR): The Commercial Registration (CR) is your company's official license to operate in Saudi Arabia. This is one of the final steps in the registration process and allows you to conduct business legally in the Kingdom.
Register for Tax and Other Obligations: Saudi Arabia has introduced VAT recently, and all businesses, including expat-owned ones, must register for VAT if they exceed the annual revenue threshold. Additionally, you may need to comply with other regulations depending on your industry, such as obtaining specific permits or hiring Saudi nationals as part of the Nitaqat Saudization program.
Hire Employees and Launch: Once all registration steps are completed, you can begin hiring employees, setting up your office, and launching your business in the Saudi market.
Conclusion
Owning 100% of a company as an expat in Saudi Arabia is possible, thanks to the country's progressive reforms under Vision 2030. With sectors like technology, healthcare, and manufacturing now open for full foreign Ownership, expats can play a significant role in Saudi Arabia's economic transformation. However, it is essential to thoroughly understand the legal framework, register your business correctly, and follow the required procedures to ensure compliance.
For expert assistance in setting up a business in Saudi Arabia and achieving full Ownership, rely on Saudi Helpline Group, your trusted business partner with 25 years of experience. Their dedicated team can guide you through every step, from acquiring investment licenses to ensuring full compliance with local regulations.
