Setting up a business venture in the Kingdom of Saudi Arabia (KSA) is a rewarding endeavor. For entrepreneurs eyeing the bustling market of Saudi Arabia, the process of registering a Free Zone Company and Special Economic Zone (SEZ) company comes with its own set of document requirements and procedures. This article serves as a comprehensive guide, outlining the essential documents and step-by-step procedures that pave the way for a successful establishment of a Free Zone Company in the KSA.
Understanding the Saudi Free Zone Concept
Before delving into the details of the company registration process, it’s important to know the concept of Free Zones in Saudi Arabia. These are designated areas within the KSA that offer various incentives and benefits to encourage foreign investment and boost economic growth. The Kingdom Free Zones policies provide companies with exemptions from certain taxes, streamlined regulations, and simplified administrative processes, making them an attractive option for international entrepreneurs.
Saudi Business Policy & Procedure Reforms to Attract Investment
Led by the government’s ambitious Vision 2030 initiative, Saudi Arabia is currently undergoing comprehensive economic and social transformations. The recent implementation of more than 600 reforms reflects a commitment to enhancing the business landscape and facilitating opportunities for foreign as well as domestic investors. These efforts aim to establish the Kingdom as a pivotal player in future global value chains.
Through a series of purposeful strategies and programs, Saudi Arabia is dedicated to realizing the Vision 2030 goals. Each strategy is tailored to bolster specific sectors within the business, industry, and environmental domains, thereby bolstering the Kingdom’s global competitiveness and stature.
The free zones including Special Economic Zones (SEZs) in KSA play a vital role in advancing these strategic objectives by attracting high-quality foreign direct investment and promoting economic diversification while also providing crucial support to strategic business sectors.
Required Documents to Register Free Zone Company in KSA
There are various notarized and legal documents required to register a free zone company in Saudi Arabia, such as:
Business Plan of Proposed Company: A well-structured business plan is fundamental to any successful venture for the Saudi free zone. It should outline the investor company’s objectives, strategies, market analysis, financial projections, and growth plans. This document provides a clear roadmap for your business and demonstrates its viability to authorities.
Application Form for Investment License: The official application form, provided by the relevant Free Zone Authority, is the starting point of your registration journey. It gathers essential information about the proposed company, its shareholders, and its intended activities.
Commercial Registration: A valid business commercial registration (CR) license document is required.
Lease Contract: A lease contract for company location in a specific free zone of KSA.
Articles of Association (AOA): The AOA or constitutional document outlines the company’s structure, shareholders’ roles, and the scope of its activities. It serves as a legal document that defines the company’s internal regulations.
Passport Copies and Photographs: Passport copies and photographs of foreign shareholders and directors are required for identification purposes. These documents establish the individuals’ identities and proof of address which are crucial for due diligence.
Certificate of Incorporation: If the proposed Free Zone Company is a subsidiary of an existing company, there will be a need to provide the Certificate of Incorporation of the parent company.
Proof of Company’s Address: Documentation proving the physical address of the company, such as utility bills or lease agreements, is typically required.
Bank Reference Letter: Some Free Zones may request a bank reference letter to verify your financial standing and credibility.
Other Documents
- Parent Company’s Memorandum of Association (if any)
- Business license
- Board resolution (notarised ) of the parent company with partners’ names and shares of each partner’s capital and approving the incorporation of the entity in KSA.
- Copy of the trade name confirmation.
- Financial audited statements for the last full year.
- ID and address proofs of directors and shareholders
- Attested copy of the power of attorney from all shareholders.
- Clearance certificate and good conduct certificate issued by the Ministry of Interior.
Procedures to Register a Free Zone Company in KSA
In recent years, Saudi Arabia has been actively promoting foreign investment and economic diversification through the creation of a Free Zone Company in the Kingdom. A comprehensive overview of the procedures to register a Free Zone Company in KSA is given below.
Step 1— Choose the Appropriate Free Zone: Before initiating the registration process, it’s essential to select the most suitable free zone for your business. Each free zone in Saudi Arabia caters to specific economic activities and industries, such as logistics, technology, manufacturing, and more. Conduct thorough research to identify the zone aligned with your business activities and goals.
Step 2 — Decide on the Legal Structure: When registering a Free Zone Company in Saudi Arabia, you can choose any primary legal structures: a Limited Liability Company (LLC), JSC, or a Branch of a Foreign Company. The LLC option is more independent and allows full ownership by foreign investors, while a branch is an extension of an existing foreign company.
Step 3 — Obtain Initial Approvals: Once the legal structure is determined, you must secure initial approvals from relevant authorities. This typically involves obtaining a preliminary approval from the respective free zone authority and the Ministry of Investment of Saudi Arabia (MISA) if required as per latest law. This step establishes your eligibility to operate within the chosen free zone.
Step 4 — Reserve the Company Name: Selecting a unique and appropriate company (trade) name is crucial. The proposed name needs to be checked for availability and then reserved through the free zone’s online portal or with the Unified Centre as per legal requirement. Ensure that the chosen name adheres to the naming conventions specified by the free zone authority. The name of the company should be approved before submitting AOA, deed of association, and registration form.
Step 5 — Drafting the Memorandum and Articles of Association: The Memorandum and Articles of Association outline the company’s internal regulations, ownership, structure, management procedures, and operational guidelines. These documents must be prepared in accordance with the free zone’s regulations and submitted to the Ministry of Commerce and Investment (MOCI) for approval.
Step 6 — Capital Investment and Bank Account Opening: Depending on the chosen legal structure and free zone, there might be minimum capital requirements. Once the capital amount is determined, it needs to be deposited into a corporate bank account in Saudi Arabia. For this the Company needs to open a local bank account for depositing the required paid up share capital. A bank certificate confirming the deposit is typically required during the registration process.
Step 7 — Application for Certificate of Registration: The required documents for certificate of registration (CR), including the approved Memorandum and Articles of Association, passport copies of shareholders and directors, bank certificates, and any other relevant certificates to be prepared. These documents must be submitted to either the free zone authority or to the Ministry of Commerce and Industry (MoCI) as per need along with the completed application form for certificate of registration (CR). The certificate of registration is generally issued within six weeks.
Step 8 — Application for Tax Registration: The company does tax registration after the issuance of certificate of registration (CR) by the Ministry of Commerce and Industry (MoCI) and gets a tax number.
Step 9 — Lease Office Space or Facility: One of the key requirements for registering a Free Zone Company is having a physical presence within the free zone. This involves leasing office space or a facility within the designated area. The lease agreement needs to be submitted as part of the application.
Step 10 — Company Seal Creation: The company seal is created with the CR number and company name. The seal is required for shareholders, management resolutions, contractual agreements, government documents, official notices and letters.
Step 11 — Company Registration at Chamber of Commerce: All business enterprises seeking company registration in Saudi Arabia need to submit the certificate of membership from the Chamber of Commerce and Industries (CCI).
Step 12 — Final Approval and Registration: After thorough review and verification of submitted documents, the Ministry of Investment of Saudi Arabia (MISA) or any other appropriate legal authority will issue the final approval and registration documents. In case of foreign direct investment the MISA issues foreign business investment licenses and allows the company to sign contracts, issue invoices and hire employees. This marks the completion of the registration process, and your Free Zone Company is now legally established and ready to operate.
Employment Visas for Saudi Arabia (Post-incorporation Process): Company needs approval for a Saudi employment visa to which foreign nationals need to be appointed as the workforce of the company.
Conclusion
Registering a Free Zone Company in Saudi Arabia presents a strategic opportunity for foreign investors seeking to tap into the country’s growing economy and regional trade. The process, though intricate, is streamlined to attract international businesses and foster economic development. By following the step-by-step procedures outlined in this guide, you can navigate the registration process with confidence and position your company for success within the Saudi Arabian market.
Contact our team of legal business consultants for any type of latest legal information related to required documents and procedures to register a Free Zone Company in KSA.