Business structure in Saudi Arabia
Representation and agency
Commercial distribution is reserved only for companies which are 100% Saudi Arabian and for local citizens. Foreign companies that work in these activities must use Saudi Arabian distributors or agents.
These have to register any distribution agreements in the Agencies Registry of the Ministry of Commerce. Both arbitration and the Board of Claims consider Sharia (Quranic case law) as the only applicable law.
There has been a major liberalisation of imports, thanks to the reduction of customs duties.
Types of companies
The Corporations Law is the main regulation that governs companies in Saudi Arabia. Foreign investors may set up offices and run businesses under the following forms:
Limited liability company, branch and franchise.
Public limited companies or corporations are seldom found. At present the average time needed to incorporate a company in Saudi Arabia is roughly 30 days.
Joint ventures, local partners
Foreign private investors can own 100% of the capital in most economic sectors, but this one continues to be the most usual option, because of the knowledge of the local partner.
It must have from 2 to 50 shareholders and be managed and represented by one or more directors. There is no board of directors, and; shareholders generally specify a governing body in the Articles of Association. They require an auditor and a control board (if there are more than 20 shareholders).