What is the share capital requirement for a KSA foreign company branch?
MISA generally requires foreign company branches to have a minimum of SAR 500,000 share capital.
In most cases, this does not need to be paid down, or deposited in a local bank, it appears on the balance sheet of the business and can we used as working capital.
For certain types of activity, MISA prescribes differing minimum capital:
Property investment projects – SAR30 million
Contracting – SAR500,000 (also have revenue/asset value requirements)
Commercial – SAR30 million and a commitment to invest a minimum of SAR200 million over the first 5 years (for 100% foreign ownership)
Certain activities require a Saudi partner/shareholder or are for Saudi nationals only – This list is issued by MISA and can be subject to amendments. Speak to your contact at PRO Partner Group for more information on specific activities, share capitals and local ownership requirements.
Branches must set aside minimum 10% net profits until the statutory reserve reaches 30% of the branch’s original capital.
What are the documents required to set up a KSA foreign company branch?
- Ministry of Commerce and Industry (MOCI) registration.
- MISA registration – foreign company branches must renew their foreign investment license with MISA, commercial registration certificate with MOCI and renew their chamber of commerce subscription annually.
- A local KSA bank account.
- Wasel registration - mandatory provision of local address to the government. Company branches require a local physical office lease and address – a virtual office is not sufficient.
- Commercial Registration or business license (CR) - CR certificate issued by MOCI to outline and enable the foreign company branch to conduct business activities in the KSA, allowing the same rights given to a citizen.
- Registration with Ministry of Labour and Social Development (MLSD) - The visa issuing authority to labour in-country.
- General Organisation of Social Insurance (GOSI) registration - a mandatory social insurance for processing salaries monthly and maintains government record for Saudization quota system.
- Additionally, certain types of activity require specific licensing from relevant government departments – e.g. pharmaceutical companies require a Saudi Food and Drug Association license.
The formation process for a branch is similar to that of a LLC, except there are no Articles of Association that need to be approved so the process can be expedited. However, it may take longer if the manager is not a Saudi national or resident because then the manager must obtain a residence permit as part of the formation process.