Branch Vs LLC in KSA
Establishing a business in the Kingdom of Saudi Arabia (KSA) demands a comprehensive understanding of the diverse legal and operational structures available to entrepreneurs and foreign investors. In this dynamic and burgeoning economic landscape, the choice between setting up a branch or forming a Limited Liability Company (LLC) holds crucial significance, shaping the trajectory and operational framework of the business in the pursuit of establishing a robust and compliant presence. While both options present distinct advantages and complexities, careful consideration of the unique benefits and limitations associated with each structure becomes imperative. Analysing the nuances of setting up a branch and an LLC in Saudi Arabia reveals not only the divergent regulatory requirements but also the varying levels of autonomy, liability, and market presence, fundamentally impacting the long-term strategic goals and sustainability of ventures in the region.
What are the requirements for registering a branch in Saudi Arabia?
- It is mandatory that the foreign company has existed for 3+ years and to provide proof.
- The paid-up capital required must be the same as a subsidiary.
- The paid-up capital must be deposited into a local Saudi corporate bank account for the branch.
- The parent company adopts full liability for the Saudi branch.
These prerequisites should be acknowledged before considering registering a company in Saudi Arabia.
What documents are required to set up a branch company in KSA?
The following documentation is necessary for branch office company registration in Saudi Arabia:
- Copies of the commercial registration/license and the parent company Memorandums and Articles of Association are to be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.
- The shareholders need to draft a document with the decision/request to open the branch in Saudi. This document must be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.
- A drafted document detailing the decision to appoint the Saudi branch general manager. This document must be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.
- A copy of the residence proof of the newly appointed KSA branch manager along with a copy of their passport and details of all partners.
- Company’s financial proof to display profit. This document is to be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.
Key differences between setting up a branch company in Saudi Arabia versus setting up an LLC company in Saudi Arabia
The below table highlights the key differences of these two company types for starting a business in Saudi Arabia:
These factors such as capital requirements and corporation tax, are to be considered in the cost of opening a company in Saudi Arabia.
What business activities are eligible to register a branch in Saudi Arabia?
For opening a company in Saudi Arabia, branch offices are permitted to register under the following business activities:
- Trading – with a condition of contributing an initial capital contribution of SAR30million.
It is also worth mentioning that foreign companies wishing to practice “professional” (Consulting services including, IT, Insurance, Real estate, Tax, Accounting, Architectural, engineering, etc.) activities in KSA must keep a minimum of 25% Saudi partner. Therefore, in this instance, a branch of a foreign entity would not own 100 percent shares of a “professional” company.
How can PRO Partner Group help?
PRO Partner Group has in-depth knowledge of the UAE business environment, company structures and jurisdictions. Our team on the ground have extensive expertise, knowledge of local regulations and procedures for efficient and effective business setup in Saudi Arabia. We will best assist your company to prepare for the legal requirements, coordinate with government authorities, and keep you updated on the progress of incorporation.
If you need assistance with setting up a branch office or LLC in Saudi Arabia, or any other related onshore or offshore company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +966 (0)535 377 578 for Saudi Arabia or +971 (0)4 456 1761 for Dubai, email us at email@example.com or complete the contact form below and we will be delighted to assist you.