If you are planning to do business in Saudi Arabia, this guide outlines best practices to accelerate the business setup process and common pitfalls that may disrupt your endeavors.
For global enterprises and multinationals (MNCs), Saudi Arabia has become a priority market for international expansion. So far in 2024, at least 148 companies have established a regional headquarters (HQ) in Saudi Arabia, taking the total number of RHQs in the Kingdom to 540, surpassing Vision 2030’s original objective of attracting 500 HQs.
Key Steps to Do Business in Saudi Arabia in 2025
With careful preparation and consideration – along with a great deal of agility – common market expansion challenges are quite insurmountable. Here are the most effective strategies that companies can utilize to do business in Saudi Arabia successfully.
- Complete Checklist of Company Registration Documents
A crucial first step in the business setup process is gathering all required documents, starting with the MISA license. Other foundational documents include the Commercial Registration (CR) and (AoA) of the parent entity, along with a certificate of incorporation.
Established companies must also provide an audited financial statement. For startups, additional supporting documents are necessary, such as a letter of intent and an endorsement letter from a reputable venture capital (VC) firm.
Business setup firms like AstroLabs can assist in validating these documents and guiding businesses through the incorporation requirements, leveraging their extensive experience in helping over 700 companies expand into Saudi Arabia.
A breakdown of the required documents from startups and established companies to set up a business in Saudi
For Startups:
- Commercial Registration (Attested by MOFA and the Saudi Embassy)
- Memorandum of Association (MoA) & Articles of Association (Attested by MOFA and the Saudi Embassy)
- A letter of intent, a startup brief, and a pitch deck
- A support letter from a VC company or a licensed incubator
For Established Businesses:
- Commercial Registration (Attested by MOFA and the Saudi Embassy)
- Memorandum of Association (MoA) & Articles of Association (Attested by MOFA and the Saudi Embassy)
- An Audited Financial Statement
Related read: Business Setup in Saudi Arabia for Foreigners: Understanding the 20-Step Roadmap
- Ensure Ongoing Compliance to Support Sustained Business Growth
At the core of successful expansion in Saudi Arabia is addressing compliance requirements throughout various stages of incorporation.
By doing so, companies can enhance their global competitiveness, opening the door for strategic partnerships, joint ventures, and opportunities that can propel business growth to new levels.
No more often than not, seeking the help of a local, on-the-ground partner—who possesses deep expertise and robust industry networks—is vital. This allows foreign businesses to be in sync with the fast-paced changes in the business and regulatory landscape in Saudi Arabia.
As Alex Nicholls, director of expansion at AstroLabs, observes, “There are a lot of changes happening in Saudi Arabia. What we used to do a year ago is no longer applicable, even with the same ministries and systems.”
The critical support offered by AstroLabs helps companies mitigate the risk of fines and delays in establishing business operations during both the setup and post-setup phases.
Important areas of compliance are Saudization, license renewals, and managing government portals, some of which are often inaccessible outside the Kingdom.
Learn how we can help with your post-incorporation needs; talk to us now.
Best Practices to Expedite Your Business Setup In Saudi Arabia
From initial consideration to establishing operations in Saudi, global companies might contend with some common issues that can arise during the business setup process. Below is a detailed overview of these challenges and how to avoid them to achieve successful, profitable market expansion.
Situation: Delayed General Manager’s Visit to Saudi Arabia
Obtaining the general manager visa is a crucial part of the second stage of the Saudi market expansion.
After this, the general manager is required to sign the paperwork for Iqama in person in Saudi to complete the establishment process. However, they may not act on this step promptly due to time constraints and busy schedules.
Impact: The implications are profound for the entire business setup journey and the company’s growth potential in Saudi.
For one, the general manager won’t be able to open a business bank account until an Iqama ID is issued.
The lack of a bank account can directly hinder the company’s ability to sign contracts or participate in bidding opportunities, causing a dent in the company’s growth prospects.
Solution: It is recommended that general managers schedule a visit to Saudi Arabia for four to five days right after their visa is stamped.
Considering that travel times to Saudi Arabia vary by country, it’s best to plan for about two weeks between receiving your visa and your departure. This way, general managers know in advance when to prepare for the trip.
Situation: Defining GM Powers in the Articles of Association
After deciding on the structure for the new Saudi entity, the next step includes drafting a company’s Articles of Association (AoA).
This document will include essential information such as the entity’s name, lease ID, and activity codes. The general manager’s responsibilities and powers are a crucial component of the AoA.
The challenge arises when businesses expanding into Saudi Arabia encounter restrictions on their GM powers.
Impact: This can trigger a chain reaction, affecting critical business operations, including the company’s ability to open a bank account, thereby hindering the overall effectiveness of the setup process.
Solution: It is advisable to establish GM powers before reaching this stage of the Saudi market expansion. It is vital that the parent company’s AoA explicitly grants the authority to open a subsidiary in another country.
Large enterprises with stringent internal regulations can consult with business expansion experts to clearly define the powers of general managers, ensuring alignment with the company’s long-term growth objectives.
Fast-track your business setup in Saudi Arabia in 2025 with AstroLabs