Setting up a company in Saudi Arabia means complying with specific requirements and regulations, especially as a foreign investor. This is why the simplest option is to acquire a company that is already registered and through which operations can be started sooner rather than later.
Known as shelf companies, such entities can be found in most countries around the world, which is why they can also be acquired in Saudi Arabia.
|Legal entities available for shelf company||
– private limited liability company,
– public limited liability company
Time required for purchasing the company
|A few days|
Types of features it includes (corporate bank account, VAT number, etc)
– company name,
– registered address,
– corporate bank account,
– Articles of Association,
– tax identification number
|The advantages of a shelf company||
– simple acquisition formalities,
– variety of legal entities available,
– multiple uses,
– possibility of entering partnerships with local companies,
– possibility of incorporating history of a foreign business in it
|Appointing new directors||
|Capital increase allowed||
|Certificate of no commercial activities||
|Modify the objects of activity||Yes|
|Participants in the purchase procedure||Buyer or local representative and seller|
|The cost of buying a shelf company||Costs depend on the age of company and amendments to be made.|
Below, our company formation specialists in Saudi Arabia explain how to buy a shelf company and its advantages. However, if you decide that registering a new company is the best option for you, we can help you with its incorporation.
The Saudi shelf company – its main characteristics
What differentiates a shelf company from a new company in Saudi Arabia is that the first one is already registered and can be bought as such. This means that it comes with:
- a trading name, which is essential for doing business in Saudi Arabia;
- a registered address, which is mandatory for any local enterprise;
- constitutive documents – Memorandum and Articles of Association;
- shareholders and directors, as requested by the Company Law;
- a bank account and tax identification number, which are mandatory for any company.
Recent changes in the legislation come with the introduction of the value added tax, which is why some of these entities may come with VAT numbers. These numbers must be obtained with the Tax Authority in Saudi Arabia.
So, the main advantage of buying a shelf company in Saudi Arabia is that it has all it takes to start any activity within the shortest time.
Even if they are an option, they are not quite popular in this country, as the purchase procedure is not that simple. This happens because, in the case of foreign investors, the SAGIA license requires different amounts of money as share capital. The procedure of obtaining such a license is lengthy.
No matter if you want to buy a ready-made company or start a new one, our Saudi company formation officers can advise on the most suitable options based on your objectives. We provide tailored counsel if you are a first-time investor here and need to understand how you can start your activities as soon as possible.
The advantage of a Saudi shelf company over a new entity
Perhaps the most important advantage of acquiring a ready-made company is that the buyer can choose between entities of different ages. This can impact the possibility of accessing financing with Saudi banks as well as generate increased confidence among potential clients and business partners.
On the other hand, the purchase procedure can be more difficult compared to the registration of a new entity.
No matter your choice, do not hesitate to get in touch with our company registration specialists in Saudi Arabia who can advise on suitable methods of starting a business here.
How to acquire a shelf company in Saudi Arabia
The steps to buying a Saudi aged company are not complicated, however, the entire process can prove lengthier than that of registering a company from scratch.
This is what foreign investors who want to own shelf companies here should do:
- search for service providers who have such entities for sale;
- choose the legal entity they consider fit for their needs and contact the seller for confirmation of the availability of the respective company;
- agree on a day to meet with the seller in order to sign the sale-purchase paperwork;
- take possession of the business and make the necessary changes and record them with the Trade Register.
Our local specialists can assist with the amendments to be made after buying a Saudi ready-made company and their registration with the Companies House.
Amendments to be made after buying a shelf company in Saudi Arabia
There are several changes that need to be made after acquiring a Saudi aged company, and the first and most important is the name of the shareholder and director. Then, the company’s legal address and name can also be changed. When changing the trading name, it should be noted that the company will need a new bank account created under the new name.
These alterations will attract the amendment of the company’s statutory documents and their reporting with the Companies Register.
Taxes to consider as a business owner in Saudi Arabia
Here are the main taxes to consider by companies in Saudi Arabia:
- the corporate tax which is levied at a rate of 20% for foreign investors;
- the capital gains tax is levied at the same rate of 20%;
- the value added tax which, starting with 2020, has a rate of 15%.
For guidance on buying a shelf company in Saudi Arabia, please contact our local representatives.