Al Madani & Co. Law Firm & Legal Consultants

Starting a Construction Company in Saudi Arabia: Your Step-by-Step Guide to Success

The construction sector in Saudi Arabia represents a cornerstone of the Kingdom’s economy, leveraging the ambitious development projects of Vision 2030. If you are planning to establish a contracting company in Saudi Arabia, it could be a highly profitable venture. However, it requires careful adherence to precise steps to ensure compliance with legal and regulatory procedures. This article provides you with a comprehensive guide to start your company efficiently and seamlessly.

Preliminary Steps: Preparation

1. Determine the ISIC4 Code:
o We assist in identifying the appropriate International Standard Industrial Classification (ISIC4) code for your construction activity to ensure alignment with local regulations.
2. Choose the Type of License:
o We help you select the proper license based on the nature of your activity, ensuring compliance with:
o Saudization requirements: Implementing strategies to employ Saudi talent.
o Municipal requirements: Securing necessary approvals for land zoning and site operations.
o Capital requirements: Determining the required amount proportionate to your business scale.

Step 1: Registering the Company

1. Obtain the Ministry of Investment (MISA) License:
o We provide support to complete the procedures for obtaining this essential license.
2. Reserve a Trade Name:
o We assist in selecting a unique trade name and officially reserving it through the Ministry of Commerce.
3. Prepare the Articles of Association (AoA):
o We draft the Articles of Association to reflect your company’s management structure and governance rules.
4. Obtain the Commercial Registration (CR):
o We handle the registration of your company with the Ministry of Commerce and secure the Commercial Registration Certificate.
5. Register with the Ministry of Human Resources:
o We manage the registration process to facilitate lawful and smooth employment.

Work Permits and Residency

1. Issue a Work Visa for the General Manager:
o We assist in issuing the necessary work visa to ensure smooth company management.
2. Obtain a Work Permit:
o We prepare all required documents to secure the work permit.
3. Issue Residency (Iqama):
o We complete residency procedures for the General Manager efficiently.

Step 2: Registration with Government Authorities

1. Register with the Zakat, Tax, and Customs Authority:
o We provide registration services to obtain the Zakat and Tax Compliance Certificate.
2. Value Added Tax (VAT) Certificate:
o We assist in VAT registration for your company if revenues exceed the minimum threshold.
3. National Address Registration:
o We ensure your company is registered in the National Address System to receive official correspondence.
4. Register with the General Organization for Social Insurance (GOSI):
o We handle the registration process to provide social insurance for your employees.
5. Chamber of Commerce Registration:
o We register your company with the Chamber of Commerce to access its services and resources.

Exploring Digital Portals

We provide technical support for using essential digital portals, including:

• Qiwa Portal: For managing employment and Saudization.
• Mudad Portal: To streamline payroll management.
• Muqeem Portal: To oversee services for foreign employees.

Securing Final Permits

1. Civil Defense Approval:
o We ensure your company secures Civil Defense approval to comply with safety standards.
2. Municipal License:
o We assist in completing procedures to obtain the final operational license.

Required Documents to Establish a Contracting Company in Saudi Arabia

Establishing a contracting company for foreign investors in Saudi Arabia requires submitting various documents to ensure compliance with legal and regulatory procedures. These documents include:

1. A copy of the Commercial Registration and Articles of Association of the foreign entity, certified by relevant authorities in the home country and the Saudi Embassy.
2. A copy of the trade name reservation obtained from the Ministry of Commerce and Industry.
3. Draft Articles of Association for a limited liability company for those opting for this legal structure.
4. Draft Articles of Association and bylaws for joint-stock companies.
5. A resolution from the partners to invest in Saudi Arabia, detailing the names of the partners, capital, ownership percentages, headquarters, activity type, appointment of the General Manager, and their authorities, certified by relevant authorities and the Saudi Embassy.
6. A copy of the General Manager’s passport to verify their identity.
7. Documents for Saudi partners (if any):
o National ID and Family Record.
o Commercial Registration or a Civil Affairs extract.
8. Preliminary approval from relevant authorities if the activity requires ministerial or specialized approval.
9. A detailed business plan outlining:
o The project’s contribution to income growth.
o Number of jobs created for Saudis.
o The project’s impact on improving services and enhancing competition.
o Employment and training plans, specifying the percentage of Saudi hires.
o Estimated costs for launching operations and funding sources.
10. A three-year financial forecast for the business.
11. Proof of financial capability to invest, aligning with the project’s capital and submitted business plan.

Conclusion

Establishing a contracting company in Saudi Arabia involves multiple steps to ensure legal and regulatory compliance. By following this guide, you can overcome challenges effortlessly and position your company strongly in the growing Saudi construction market.