Incorporation of a Foreign Commercial Trading Company

  • We would like to brief about the incorporation of a Foreign Trading Company that our firm handled and successfully incorporated under the Saudi Arabian General Investment Authority (SAGIA) and Ministry of Commerce and Industry (MOCI). SAGIA is the governing body for foreign investments. Any foreign entity willing to invest in Saudi Arabia should get approval and a foreign investment license from SAGIA. Our client is one of the leading frozen food manufacturers and a well-known brand having its presence in Asia, Gulf and Southeast countries. They already hold a foreign investment license from SAGIA for manufacturing activity of frozen food, and they wanted to enter the trading sector. As such, we advised and guided them about trading practices in Saudi Arabia and got them incorporated smoothly.

    The client instructed us to form the structure of the company as Limited Liability Company (LLC) with a Saudi individual partner in the proposed LLC. As such, the LLC was formed with 75% ownership of a foreign company and 25% ownership of Saudi individual partner. To initiate the registration of the client, issue a power of attorney in our favor

    Registering the name of the company

    An application was submitted to the MOCI department located inside the SAGIA, we provided four different names for the new company. Later the department selected one out of four. Later, the name was registered, and we were provided with a certificate. The process will take 3 to 4 working days.

    Approval and getting license from SAGIA

    We created a new account with SAGIA for the client, and we submitted the application with the following documents that SAGIA requested:

    1. A copy of the Power of Attorney executed in our favor by the client.
    2. Certificate of new company name
    3. The Business Plan
    4. Copy of the investment license
    5. Copy of Commercial Registration Certificate
    6. Copy of Articles of Association
    7. A copy of financial statements of the company subject to previous years, was prepared by a certified auditor.
    8. Company’s comprehensive profile.
    9. Identification documents of Saudi partners.
    10. Letter of interest from both partners.

    After submission, the file went through the multilevel department of SAGIA, and they requested for a formal meeting. They inquired about the background of the client, and they were satisfied to issue the license. The whole process took 2 weeks to get the license from SAGIA.

    Obtaining the Commercial Registration Certificate (CR)

    After we received the investment license, we drafted the articles of association (AOA) for the new company. This was reviewed by MOCI, and they approved it for notarization and it was notarized by the Notary Public. After the notarization, the MOCI issued a temporary CR and instructed us to publish the AOA in the online publication of Ministry within 30 days from the date of issue of temporary CR.

    Since the activity of the new company is retail trading, it is a mandatory requirement that the company should have 27 million Saudi Riyal (SAR) as its capital as cash provided the foreign partner capital must be less than 20 Million SAR. As such, the CR will only be activated only after 27 million SAR is deposited in the recognized bank. The company gave us POA to open an account in the name of the company, we managed to open the account and the capital of 27 million SAR was deposited. After the deposit, the Bank sent the confirmation of balance to the MOCI and the CR was activated. This process took around 2 to 3 weeks