SAUDI ARABIA Law and Practice Contributed by: Dana Halwani and Leanne Farsi, Derayah LLPC
Examination Committee’s decision within five working days of receiving the decision. A foreign investor may, in the event that their application for approval to engage in a restricted activity is rejected, reapply, providing the reference num - ber of their first application, and any information or documents not submitted before which would warrant a re-evaluation of the application. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The new Companies Regulation (Royal Decree No M/132 of 1 Dhul Hijja 1443 Hejra correspond - ing to 30 June 2022) and its Implementing Rules came into effect in January 2023, replacing the Companies Regulation (Royal Decree No M/3 of 28 Muharram 1437 corresponding to 10 November 2015), the Professional Companies Regulation (Royal Decree No M/17 of 26 Muhar - ram 1441 Hejra corresponding to 25 September 2019) and the Implementing Rules of the Profes - sional Companies Regulation which were issued on 23 April 2020. Companies incorporated in Saudi Arabia are usually incorporated as limited liability compa - nies (LLCs) or joint stock companies (JSCs). An LLC can be owned by a single person, and there is no limit on the maximum number of sharehold - ers. There is no minimum share capital require - ment for LLCs, but the capital of a company must be sufficient for carrying out the company’s activities. A JSC can be incorporated by one or more per - sons, whether natural persons or corporate enti - ties. The JSC’s capital on establishment must be sufficient to achieve its object, and in any event must not be less than SAR500,000.
Under the 2022 Companies Regulation, a new form of entity called a “simplified joint stock company” can also be created. A simplified joint stock company can be incorporated by one or more persons, and there is no minimum share capital requirement for such companies. 3.2 Incorporation Process The first step towards incorporating an entity is obtaining an Investment Registration Certifi - cate from MISA, as further detailed under 2.2 Procedure and Sanctions in the Event of Non- Compliance . Once the Investment Registration Certificate has been obtained, the sharehold - ers must submit the company’s draft articles of association to the MOC for review and approv - al. Issuance of the articles of association and commercial registration certificate (which are electronic), and the publication of the articles of association take place in one step once the relevant invoice for this service has been paid. The timing for incorporating a company from the date of receiving the Investment Registration Certificate up to the issuance of the commer - cial registration certificate is usually five to ten business days, if the draft articles of association do not deviate too far from the standard arti- cles issued from time to time by the MOC. The duration of the commercial registration is one year and the commercial registration is renewed annually. Once the commercial registration certificate is issued, the company is incorporated and must complete the post-incorporation registrations with the following government authorities: • the Ministry of Municipal and Rural Affairs; • the Ministry of Human Resources and Social Development; • the General Organisation for Social Insurance;
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