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Establishing new company

  • 4 Feb, 2024

The variety of forms of companies available for establishment in the system of the Kingdom of Saudi
Arabia, each of which has characteristics and conditions, which requires assigning a law firm
characterized by professional competence to adhere to the laws related to the establishment of
companies in the Kingdom of Saudi Arabia.
The concept of the company according to the Saudi system:
The Saudi Ministry of Commerce explained the concept of a company as a contract under which two
or more people commit themselves, each of them contributing to the project a share of money or
work, or both together, and sharing the resulting profit or loss.
Establishing companies is a multifaceted process that requires a number of steps, including
preparing its legal form, completing procedures for the relevant government agencies, and
preparing contracts.
And regulations, their formulation, etc. until the company becomes an entity registered with the
relevant government agencies and has its legal status, and can begin practicing its commercial

Necessary steps before establishing the company:
The first step :
Determine the type of company you wish to establish, whether it is a joint-stock company, a holding
company, a joint liability company…etc
The second step:
Determine the company's business activity
The third step :
Determine its trade name
The fourth step:
Preparing all the papers and documents required to establish the company

Types of companies according to the Saudi system:
Joint companies:

It consists of two or more partners, and the name of the company consists of the name of one
partner combined with the word “and partners.” The company may have a trade name without
mentioning the names of the partners. In this company, it is not permissible to sell the share of any
partner except with the approval and knowledge of the rest of the partners. It also expires with the
death of one of the partners. Or his bankruptcy, withdrawal from the company, or quarantine,
unless the contract stipulates that the company will continue in the presence of the aforementioned
Limited partnership company:
It is a company that consists of two types of partners: joint partners, who are jointly responsible for
all their obligations with their own funds, and silent partners, who contribute to the company’s
capital without being responsible for the company’s financial obligations except to the extent of
their share.
Joint venture company:
It is a commercial company that is concluded between two or more people, in which the profits and
losses from the commercial work carried out by one of the partners are shared in his own name, and
in which the joint partner is not considered a merchant unless he carries out the commercial activity
himself, and each partner remains the owner of his share that he provided unless the contract
stipulates the company is different
Joint stock company:
It is a commercial company that is owned by all its investors, where each investor owns a certain
share of shares, which represents the ownership percentage of each individual in the company. This
type of company is divided into public joint-stock companies and private joint-stock companies.
Limited Liability Companies:
These companies consist of two or more people, not more than fifty partners, and the partner in
them is responsible for his financial obligations and losses to the extent of his share in the
company’s capital, and the partner’s share can be transferred to his heirs in the event of his death.

Each type of company has its own conditions and documents to complete its establishment
procedures legally, so we at Abdulaziz Al-Shanwani Law Firm and Legal Consultations provide you
with the legal framework to start investment businesses in the Kingdom of Saudi Arabia in record
time and at appropriate prices.

The most important papers and documents required for establishing companies in Saudi Arabia:
The documents required for establishing companies in Saudi Arabia vary based on the type of
company. In general, the partners’ personal identification cards must be presented, provided that
they are valid, and the company form that will be established must be filled out.
There are some types of companies that require a bank deposit certificate proving the presence of a
certain percentage of capital, such as a limited liability company. The establishment of some medical
companies also requires submitting proof that you have obtained an academic degree in this field.
As for the establishment fees, they depend on the type of company and its capital. Contact us to
learn more about the requirements for establishing companies in Saudi Arabia

You can contact Abdulaziz Al-Shanwani Law Firm and Legal Consultations to obtain information and
legal advice that will help you in choosing the correct type of company that suits your requirements.
Then, on your behalf, we complete the procedures for establishing companies and preparing,
reviewing and amending the partners’ decisions.

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