A guide to setting up a business in Saudi Arabia (page 3 of 5)

There is a central registry under the Ministry of Justice and the Ministry of Municipalities and Rural Affairs where all real property rights are recorded. A long-awaited mortgage law was approved in July and should become effective in the near future.
A non-GCC investor in possession of a foreign investment licence from Sagia may own real property in the kingdom, provided the property is necessary for the investment project. This includes real estate used to house the project's employees.

Requirements for setting up a company
Commercial activity in Saudi Arabia has been broken down into eight categories:
Industrial
Commercial
Agricultural
Contracting
Real estate
Specialised services
Non-specialised services
Consultancy

To operate in any of these activities, a firm must fulfil specific requirements before it is licensed by Sagia.

Industrial activity
1 The company must inform the Saudi Arabian Standards Organisation and Sagia whether it will be using Saudi, American or European specifications for its products and methods of manufacturing. It must then ensure the specifications of the product it wishes to manufacture are met and make sure the techniques of production adhere to the kingdom's rules. If Saudi certification is not available, certification from the US or EU can be used.
2 The company's capital must be at least SR1m.
3 It must provide a schedule for completing each stage of its project.
4 The investor must produce paperwork from the Saudi Industrial Property Authority (Modon) to show it is leasing or buying industrial land for the purpose of its investment activity.
5 If the company's capital is more than SR5m, each partner must submit a bank certificate for 25 per cent of its share of the capital. If the capital is less than SR5m, a bank guarantee for the whole sum must be submitted to Sagia. This must be done through a bank licensed in Saudi Arabia after the firm shows its investment licence and submits the deposit certificate. Sagia's commercial registration department will not issue a licence until this has been done.

Commercial activity
1 The company must submit to Sagia a commitment that up to 75 per cent of its management and technical employees will be Saudis.
2 A Saudi partner must own at least 25 per cent of the firm. Foreign partners may not own more than 75 per cent of the capital, but their share must exceed SR20m.
3 The business must submit a commitment to train more than 15 per cent of its Saudi employees each year to Sagia.
4 The company must submit a bank certificate showing each foreign investor has access to a percentage of SR20m proportionate to its shares in the firm. This must be ratified by the Saudi embassy in that investor's home country.

Agricultural activity
1 The minimum investment must be SR25m.
2 A company's activities are subject to approval by the Ministry of Agriculture.
3 The firm must submit to Sagia a bank certificate indicating each foreign investor has access to at least 25 per cent of its shares in the company. This must be ratified by the Saudi embassy.
4 The business must submit to Sagia a schedule for completing each stage of the project.

5 A company must commit to deposit its capital in a bank licensed in Saudi Arabia after Sagia has issued an investment licence. It must submit the investment and deposit certificates to the commercial registration department of the Ministry of Commerce & Industry.