Open a Company in Saudi Arabia as a Foreigner: Steps and Rules

A Jordanian engineer who has lived in Jeddah for years wants to set up a limited liability company for maintenance work with a Saudi partner. One friend tells him he needs an “investment licence” that may take months; another says it has become much easier.

The direct answer: since the new Investment Law came into force in early 2025, there is no longer an “investment licence” in the old sense. A foreign investor, and a non-Saudi resident counts as a foreign investor, must register with the Ministry of Investment (MISA) before making any investment (Article 7). If the activity is open, the Ministry confirms the registration within ten working days at most from completing the requirements. The company is then entered in the Commercial Register and the activity licences are obtained.

Is a foreign investment licence still required in Saudi Arabia?

Many people still search for the “investment licence”. That term comes from the old Foreign Investment Law of 1421H. Today the reference is the Investment Law issued by Royal Decree M/19 dated 16/1/1446H and published in the official gazette on 7/2/1446H. Article 16 provides that it comes into force 180 days after publication and repeals the old law.

The core idea of the new law is in Article 7: a foreign investor must register with the Ministry of Investment before making any investment, except investment in securities. The Ministry records investors' details in a national register that it manages and updates.

If you obtained a licence before the law came into force, the Royal Decree that issued the law provides that it does not affect rights acquired before it came into force, including licences and incentives granted, until their terms end.

Is your business activity open to foreign investors?

Article 3 provides that an investor may invest in any open sector or activity, subject to the list of excluded activities and the requirements of other laws. This list is issued and updated by the competent authority and published by the Ministry, under Article 8. The Royal Decree names the competent authority as the Permanent Ministerial Committee for Examining Foreign Investments.

The list has two kinds: prohibited activities and restricted activities. If your activity is on it, registration is not enough; you need the Ministry's approval before investing, and also approval before any change in the ownership of your investment in a restricted activity.

What are the steps to set up a company as a non-Saudi, in order?

1. Define the activity precisely, and check its status on the list of excluded activities published by the Ministry.
2. Choose the legal form of company that suits you (such as a limited liability company or a joint stock company) under the Companies Law, and prepare the articles of association or bylaws.
3. File the registration request with the Ministry with the details required by Article 11 of the Implementing Regulations: for an individual, his name, residence, nationality, the activity and the amount of capital; for a legal entity, the name of the establishment, its place of incorporation, its activity, its capital, the details of its owners or shareholders and the ultimate beneficial owner, together with a declaration of undertakings, including that the information is correct.
4. If the activity is open, the Ministry confirms your registration within ten working days at most from meeting the requirements (Article 12 of the Regulations).
5. If the activity is excluded, file an approval request. The Ministry refers it to the examination committee, which may ask for more information, and then the Ministry informs you of the decision (Articles 16 to 18 of the Regulations).
6. Complete the company's entry in the Commercial Register and obtain the licences for your activity from the relevant authorities.
7. Update your details every year on the date set by the Regulations so that your registration does not stop.

Pay attention to completing the request. If an approval request for an excluded activity is incomplete, the Ministry tells you what is missing, and Article 17 of the Regulations gives you fifteen working days to complete it; otherwise the request is treated as if it was never filed. After the examination committee issues its decision, the Ministry informs you of it within five working days (Article 18 of the Regulations).

To make these procedures easier, Article 21 of the Regulations created a One-Stop Service Center. Its role is to be the link between you and the Ministry for registration, updates, cancellation and approval requests, and to coordinate with other authorities to help you obtain the legal approvals your activity needs.

If an approval request for an excluded activity is refused, Article 19 of the Regulations allows you to file it again, provided you state the reference number of the first request and add information or documents you did not file before that justify reconsideration.

Does the registration need an annual update?

Registration is not something you do once and forget. Article 13 of the Regulations requires an annual update covering any changes to your details in the National Investors Register, which you may file within the sixty working days before the update date. If you miss the date, the Ministry gives you a grace period of no more than thirty working days; if it ends without an update, you may ask to reactivate the registration within three years, and after that you must register again.

Cancellation of registration is governed by Article 14 of the Regulations. It happens at your request, if all your investments have ended, if a decision is issued to stop the investment to protect national security, or if the violations committee decides to cancel the registration as a penalty.

What if you start the business before registering?

Article 30 of the Regulations treats the following as serious violations: investing without registration; carrying on an excluded activity without approval, after the approval has ended or been cancelled, or in breach of its conditions; changing the ownership of a restricted activity without prior approval; giving misleading or wrong information; and preventing or obstructing the enforcement officer. For a serious violation, no correction period is given as there is for a non-serious one, so it exposes you directly to the penalties in Article 11 of the law: a warning, a fine of up to SAR 300,000 that may be doubled for repetition, or cancellation of the registration.

A foreign investor started supplying goods and signing contracts with clients through a sister company before registering with the Ministry.

This is investing without registration, which is a serious violation under Article 30 of the Regulations.

The penalty may be a warning, a fine of up to SAR 300,000, or cancellation of the registration, and it may be challenged before the competent court within thirty days (Article 12).

Registration fees, Commercial Register fees and sector licence fees are not set by the Investment Law. Ask the competent authority about them before you set your setup budget.

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

Practical solutions for the foreign investor and the Saudi partner

If you are a foreign investor:

• Decide the activity and the legal form before registering.
• Make sure your activity is not excluded from foreign investment.
• Draft the articles of association and the partners' agreement clearly from the start.
• Do not start any contract or supply before you receive the registration confirmation.
• Put the annual update date in your calendar so your registration does not stop.

If you are the Saudi partner:

• Write each party's rights in the articles of association and the partners' agreement.
• Do not enter an arrangement that lets the foreigner run an unregistered activity in your name, because it may be commercial concealment (tasattur).
• Make sure your partner is registered with the Ministry before signing the articles of association.

A correct start prevents big problems later. Send us on WhatsApp the activity you plan to carry on and the partner structure, and we will review the registration and setup steps with you.