Establishment of a Limited Liability Company
The New Companies Law issued in 1443H provides that a limited liability company is one of the legal forms of companies that may be established in Saudi Arabia. Chapter Six of the Law sets out the legal requirements for establishing this type of company. In this article, Al-Salamah Law Firm and Legal Consultations explains the requirements for establishing a limited liability company in Saudi Arabia.
Table Of Content
Definition of a Limited Liability Company
Article (156) of the Companies Law (1443H) defines a limited liability company as a company established by one or more natural or legal persons, whose legal personality is independent from the financial liability of each partner or its owner. The company alone is liable for its debts and obligations arising from its activities, and neither the owner nor any partner shall be liable for such debts and obligations except to the extent of their share in the capital.
Requirements for Establishing a Limited Liability Company in Saudi Arabia
Article (158) of the Companies Law provides that the articles of association of a limited liability company must, in particular, include the following information:
- Names of the partners and their details.
- Company name.
- Principal place of business.
- Company purpose.
- Capital and its distribution among the partners.
- Partners’ acknowledgment of full payment of the value of their shares.
- Company term, if any.
- Management of the company.
- Transfer of shares.
- Method for serving notices issued by the company to the partners.
- Partners’ resolutions.
- Method of distributing profits and losses among the partners.
- Commencement and end of the financial year.
- Dissolution of the company.
- Any other provisions, conditions, or information agreed upon by the partners, provided they do not conflict with the Law.
The following documents must be attached to the articles of association when submitting the incorporation application:
- A declaration by the founders confirming compliance with all statutory requirements related to the incorporation of the company.
- A statement or report prepared by one or more accredited valuers specifying the fair value of any in-kind contributions, if any, together with an acknowledgment by the remaining founders approving the consideration determined therefor.
Fees for Establishing a Limited Liability Company in Saudi Arabia
The fees for establishing a limited liability company through the Ministry of Commerce platform are as follows:
- SAR 1,200 for the commercial registration.
- SAR 500 publication fee.
- 15% Value Added Tax (VAT).
Looking to establish a Limited Liability Company in Saudi Arabia?
Our law firm provides specialized legal advisory services for drafting the Articles of Association and completing all incorporation procedures in full compliance with Saudi regulations.
Contact us today to schedule a legal consultation.
Model Partners’ Resolution for Amending the Articles of Association of a Limited Liability Company
To obtain a model partners’ resolution for amending the articles of association of a limited liability company, a Word template of the articles of association, a liquidation template, a partner withdrawal template, or a governance template for a limited liability company, you may contact Al-Salamah Law Firm and Legal Consultations. We have a professional and experienced team specialized in drafting and preparing all types of partners’ resolutions and corporate templates required for limited liability companies.
Declaration of Bankruptcy of a Limited Liability Company
If a limited liability company is to be declared bankrupt, the bankruptcy procedures stipulated in the Bankruptcy Law and its implementing regulations must be followed. You may contact Al-Salamah Law Firm and Legal Consultations, as we have extensive experience in corporate bankruptcy legal regimes.
Deregistration of a Limited Liability Company
To deregister the commercial registration of a limited liability company, the statutory requirements for liquidation must first be fulfilled, after which the commercial registration may be cancelled through the Ministry of Commerce.
Questions & Answers
What is a limited liability company in Saudi Arabia?
It is the most suitable legal form for companies whose legal personality is independent from the financial liability of each partner or owner. The company alone is liable for its debts and obligations arising from its activities.
What are the requirements for establishing a limited liability company in Saudi Arabia?
A legal instrument authorizing establishment or participation in a company, if one of the partners is a government entity, non-profit institution, charitable association, or waqf.
A license or preliminary approval from the Saudi Central Bank if the activity so requires.
The commercial registration must not be cancelled or suspended if one of the partners is a legal person.
The partner must be at least 18 years old; if a partner is a minor, a guardianship deed must be provided.
Partners must not be government employees.
If the company is professional in nature: Valid professional licenses for the partners must be available.
The percentage of the licensed Saudi partner in a mixed company must not be less than 25%.
The percentage of licensed partners must not be less than 70%.
What documents are required to establish a limited liability company in Saudi Arabia?
A legal instrument authorizing establishment or participation, if one of the partners is a government entity, non-profit institution, charitable association, or waqf.
A license or preliminary approval from the Saudi Central Bank if the activity so requires.
Do not risk the start of your company or the incorporation steps. Contact us today to obtain an assessment of your legal needs, and we will assign you the most suitable lawyer to ensure your company is launched properly and in full compliance with Saudi law. [Book your consultation now]
