How to Establish a Limited Liability Company in Saudi Arabia

Limited liability companies play a major role in the Saudi economy. Ministry of Commerce statistics for 2024 showed a 40% increase in LLC registrations, reaching 229,000 companies. The main reason is that liability is limited to the partners’ capital contributions, and a partner may be either a natural or a legal person. The new Companies Law (1443H) updated the legal provisions to make incorporation easier and more flexible. In this article we take you step by step through establishing your LLC simply and safely.

What Is a Limited Liability Company?

Article 156 of the Companies Law defines it as:

A company established by one or more natural or legal persons, whose financial liability is independent of that of each partner or its owner. The company alone is liable for the debts and obligations arising from it or from its activity, and neither its owner nor any partner is liable for those debts and obligations except to the extent of their share in the capital.

This means your personal assets are fully protected, and the company alone bears its debts.

Advantages of the Limited Liability Company

The LLC is ideal for small, medium and family businesses, especially for heirs who wish to continue the business left by the deceased. Its main advantages are:

Each partner’s liability is limited to their share in the capital and does not extend to their personal assets, giving the partners strong protection against the company’s debts.
The company may have one or more partners with no upper limit. The new law removed the cap of fifty partners that applied under the old law.
Because of the company’s personal character, shares are not freely tradable; the other partners have a right of pre-emption when a partner wishes to transfer their share, which preserves the personal character of the company.
The new Companies Law (1443H) allows the company, in accordance with the Capital Market Law, to issue negotiable debt instruments or financing sukuk with the partners’ approval, following the procedure for amending the articles of association.

The Capital of a Limited Liability Company

Article 174 of the Companies Law sets out the key rules on capital:

The partners specify the capital in the articles of association; the law imposes no minimum or maximum.
The capital is divided into shares of equal value, which makes it easy to calculate ownership percentages, voting rights and profits.
A share may not be divided among several persons so that each holds an independent part of it in dealings with the company. If two persons jointly acquire a share, they must appoint a single representative to be treated as the owner of the share.
If a share is owned by several persons, the company may suspend the rights attached to it (such as voting or distributions) until the co-owners choose one of them to be treated as the sole owner vis-à-vis the company. This protects the company from conflicting representatives.
The company may set a deadline for the co-owners to choose a single owner; if they fail to do so, the company may sell the share for their account after the deadline. This prevents the share from being frozen indefinitely and ensures the continuity of the company’s business.

Steps to Establish a Limited Liability Company

Incorporation is completed fully electronically through the Ministry of Commerce’s Saudi Business Center platform. The main conditions are:

A legal instrument authorizing the partner to establish or participate in a company, where a partner is a government entity, private institution, charity or waqf.
A license or initial approval from the Saudi Central Bank where the activity requires it.
Where a partner is a legal person, its Commercial Registration must not be cancelled or suspended.
Partners must be at least 18 years old; for a minor partner, the guardianship deed must be submitted.
Partners must not be government employees.
For a professional company: a valid professional license for the partners; the licensed Saudi partner must hold at least 25% in a mixed company; and licensed partners must hold at least 70%.

Required documents:

A legal instrument for government entities, private institutions, charities or waqfs.
A license or initial approval from the Central Bank (if required).
The founders’ declaration of compliance with all incorporation requirements under the Law.
A statement or report by an accredited valuer setting out the fair value of any in-kind contributions, with the other founders’ approval of the consideration assigned to them.

The incorporation service automatically includes:

Issuing the Commercial Registration and registering the articles of association
Publishing the articles in the “A’mali” gazette
Opening an establishment file with the Ministry of Human Resources and Social Development
Registration with ZATCA
Registration with GOSI
Subscription to the accredited business address with Saudi Post (SPL)
Electronic chamber of commerce membership without any visit

How Can Shehab Alsaleh Law Firm Help You Establish Your LLC?

Establishing an LLC requires a specialized corporate lawyer to secure the continuity of your business. Shehab Alsaleh Law Firm offers the following services:

We explain all company forms, identify the most suitable one for your activity and how it will be managed, and clarify regulatory restrictions on activities, such as those requiring licenses or approvals from the Capital Market Authority or the Ministry of Investment.
We draft the incorporation documents and then authenticate them electronically through the Ministry of Commerce platform or an electronic notary.
We submit the official applications to government authorities and deal with the various government platforms to obtain the required licenses.
We represent the company in correspondence with the Ministry of Commerce where there are observations on the documents or data, correct any regulatory or formal errors, and obtain the final electronic Commercial Registration.
We provide post-incorporation services such as zakat and tax registration, preparing internal bylaws and governance regulations, organizing and recording the first shareholders’ meeting, preparing initial contracts (such as the general manager’s contract or opening a bank account in the company’s name), and ensuring annual regulatory compliance (filing financial statements, assembly minutes and ZATCA compliance).

For more official information:
Ministry of Commerce –
Saudi Business Center

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