Limited Liability Company (LLC)

Limited Liability Company (LLC) in Saudi Arabia

A Limited Liability Company in Saudi Arabia is the most common business structure chosen by foreign investors entering the Saudi market. A Limited Liability Company has a separate legal personality and therefore offers limited liability protection to shareholders, whose exposure is restricted to their share capital contribution. The structure is well regarded for its flexibility, straightforward governance and recognition under Saudi companies law.

The Ministry of Investment of Saudi Arabia (MISA) allows 100% foreign ownership of a Saudi Limited Liability Company without a local partner for the majority of the business activities, subject to approval and licensing requirements. This framework provides foreign investors with direct access to the Kingdom’s fast-growing economy and its expanding opportunities under Saudi Vision 2030.

LLC Share Capital Requirements

There is no statutory minimum share capital requirement but, in practice, MISA generally requires foreign LLCs to have a capital of at least SAR500,000 (c. USD130,000) and some sectors have restrictions or higher capital thresholds. In most cases, the share capital does not have to be deposited immediately in a Saudi company bank account. Provided that it appears on the company’s balance sheet, it can be used as working capital.

Certain activities are subject to higher capital thresholds:

01

Property investment projects – SAR30 million (c. USD8 million).

02

Contracting – SAR500,000 (with additional asset or revenue requirements).

03

Commercial (with minimum 25% Saudi partner): a minimum contribution from the foreign shareholder of SAR20 million and a pro-rata contribution from the Saudi shareholder.

04

Commercial (100% foreign ownership): SAR30 million and a commitment to invest at least SAR200 million – SAR300 million (subject to certain criteria) over the first 5 years.

MISA periodically reviews and updates its list of restricted activities that require a Saudi partner or are reserved for Saudi nationals. Sovereign can advise on the most recent requirements and capital thresholds relevant to specific sectors.

A Limited Liability Company in Saudi Arabia must allocate a minimum of 10% of annual net profits to a statutory reserve until this reserve reaches 30% of the company’s original capital.

Documents required to establish an LLC

Setting up a Limited Liability Company in Saudi Arabia involves multiple government authorities, including MISA, the Ministry of Commerce (MoC) and the Chamber of Commerce. The nature of the business activity will impact licensing requirements, capital thresholds and the potential need for a local partner.

Foreign investors must register with the Ministry of Investment of Saudi Arabia (MISA) before engaging in any investment activities within KSA but are no longer required to obtain a MISA licence, although specific licenses may be required for certain business activities. They must then complete the incorporation process at MOC and other government departments, fulfil all legal procedures and pay all relevant licensing fees.

Sovereign can assist clients with the main documentation requirements and registrations for a Limited Liability Company, as follows:

01

Submission to the Ministry of Investment (MISA) for initial company approval and licence issuance. To qualify, the business must align with the strategic priorities of the Kingdom.

02

Register company name and support trademark pre-qualification.

03

Prepare, review and translate the company’s Articles of Association and other constitutional documents. These must also be notarised by a public notary in Saudi Arabia.

04

Submit documents to the Ministry of Commerce (MoC) for the issue of Commercial Registration (Trade Licence).

05

Complete Chamber of Commerce (CoC) registration and issue the company seal.

06

Register the National Address and assist with office space registration for the Municipality Licence, if required.

07

Register the LLC with the Ministry of Labour (MoL), General Organisation for Social Insurance (GOSI) and Zakat, Tax and Customs Authority (ZATCA), including VAT registration.

08

Facilitate General Manager visa, medical, biometrics, residence permit (Iqama) and registration on the Ministry of Interior's Absher digital platform.

09

Activate accounts with CoC, MoL and GOSI.

10

Register on the MUQEEM platform for residency and visa management for foreign employees.

11

Register the MUDAD payroll platform under the Wage Protection System.

12

Register on the QIWA platform for employment management.

13

Provide post-incorporation support to secure any necessary external or regulatory approvals.

14

Assist with opening a company corporate bank account.

LLCs must renew their MISA licence, Commercial Registration and Chamber of Commerce membership annually.

Tax requirements for LLCs in Saudi Arabia

Tax compliance in Saudi Arabia is administered by the Zakat, Tax and Customs Authority (ZATCA). The main obligations for a Limited Liability Company include:

Registration with ZATCA and submission of audited financial statements.
Corporate income tax at 20% (applies to foreign shareholders).
Withholding tax between 5% and 20%, based on business activity and depending on the nature of the payment.
Zakat charged at 2.5% of the company’s Zakat base (applies to Saudi and GCC nationals only).
Standard VAT at 15% on goods and services.
Annual tax return filing within 120 days of the end of the financial year (1 January to 31 December).

Late submissions may result in penalties of 1% of revenue, or between 5% and 25% depending on the delay.

Other obligations and company requirements

Establishing an LLC in Saudi Arabia can take several months from application to final approval. Key regulatory and operational requirements include:

01

Holding at least one annual general meeting (AGM) within four months of the end of the financial year. During this meeting, managers must present financial statements, operational reports and profit appropriation proposals.

02

Submission of AGM documentation to the MOC within one month of preparation.

03

No requirement to have a Board of Directors – the LLC can be managed by a General Manager (GM) or a Board at the company’s discretion.

04

If a GM is appointed, they must be a Saudi resident and hold an Iqama. Sovereign can provide resident GM services to meet this requirement.

05

No nationality restrictions on directors or managers, subject to the company’s approved activities.

06

No obligation to disclose the identity of shareholders or directors publicly.

07

Minimum of one shareholder and maximum of 50 shareholders. If the number exceeds 50, the company must convert to a joint stock company.

08

LLCs are not required to appoint a local corporate secretary or legal representative beyond their managers or directors.

09

An LLC may operate as a holding company, provided its subsidiaries do not hold shares in the parent entity.

10

The company name must end with 'limited liability' and be approved by the MOC.

11

An LLC in Saudi Arabia can sponsor employees for residency and work permits.

How Sovereign can assist

Establishing and operating a company in Saudi Arabia requires familiarity with local procedures, documentation, and compliance obligations. Sovereign provides comprehensive support to foreign investors throughout the entire process, from initial structuring and licence application to post-incorporation administration.

Our team in Riyadh assists with document preparation, attestation, tax registration and visa processing, to ensure a smooth incorporation process and make certain that all requirements are met efficiently and in full compliance with Saudi regulations. An initial consultation with Sovereign will outline the incorporation timeline, cost expectations and operational considerations to help you make informed decisions when setting up in the Kingdom.