Saudi-Arabien Wirtschaftshandbuch Saudi Arabia Business ... - Ghorfa

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ment are recorded in the commercial register. In addition,
the General Meeting can appoint a Board of Supervision.
The registered capital for limited companies completely
owned by Saudis is defined by the partners in the
company articles. In the case of limited companies that
also have some foreign capital, the registered capital is
at least 500,000 SR, insofar as the limited company does
not require more registered capital due to a higher investment
volume and/or the purpose of the company.
A core area of the contractual regulations are the articles
of association that are registered in the company register
at the Ministry of Trade and Industry. The content of
the articles and numerous formulations are stipulated in
laws and/or by requirements set by the Saudi Ministry
of Trade and Industry. For this reason it is common that
partners also conclude a further company agreement,
namely the Shareholders Agreement, in order to be able
to define further more detailed regulations. Some explosive
issues here relate to the general management, the
transfer of partner shares and the design of the mandatory
prescribed sales law. One important economic issue
is the obligatory regulation that states that 10% of the
recorded profit needs to be put back every year until a reserve
of 50% of the registered capital has been achieved.
The registered capital itself can be provided as money,
payable during the foundation process into a foundation
account of the company in Saudi Arabia, also, it may
be provided as assets in kind. In this case, there must be
contractual agreement about the valuation of the assets
in kind, if necessary in correspondence with a valuation
performed by an auditing office licensed to operate in
Saudi Arabia. It is common for the Saudi partner to provide
the buildings and machines.
After the limited company has been registered at the
Ministry of Trade and the commercial registration has
been issued, the company legally exists. In this connection,
membership of the responsible Chambers of Industry
and Commerce must be applied for. After this, the
company can register with the customs authorities, the
tax office, the labour office and the immigration office.
the dependent branch office
The dependent branch office is a type of presence that
compensates the lack of a second partner as required for
the limited company. However, the branch office is dependent,
i.e. it does not have its own legal entity and is
therefore directly connected to the foreign parent company.
In contrast to the limited company, it has no own
registered capital, but it does have a minimum amount
of capital as demanded by the SAGIA licence now and
again. This needs to be paid into a bank account before
the foundation phase has been completed. This capital
is not tied down here, but is freely available to the
branch office after the formal foundation process has
been completed.
The branch office has no limitation of liability. Whilst
it may not have the suitable legal form for local production
or the provision of services, in some cases this form is
appropriate for realising government orders or privately
commissioned projects. This is especially the case if the
contracting authority or company is looking for a direct
legal relationship to a foreign company. A limited company
based on Saudi law cannot do this as it has its own
legal entity and cannot be owned to 100% by a foreign
company due to the need for a second partner.
Foreign banks can select to choose the branch office as
the legal form instead of the limited company or public
company if they receive a bank licence from the Saudi
central bank which is always possible now that the Saudi
bank sector has been opened. The German Bank received
a licence for a branch office in April 2004 and BNP Paribas
in October 2005. Operative banks set up operations
as public companies. The same now applies for foreign
insurance companies. Here the insurance control law and
its introduction regulations state that insurers may only
set up operations in the country as public companies. In
this connection, a minimum requirement of freely tradable
shares of up to 40% is defined. As an alternative, the
branch office legal form was also introduced for foreign
insurers in April 2005 (Royal Decree No. 3120/MB
dated 13.4.2005); however the financial requirements
are similar to the public companies of the insurers and
reinsurers, i.e. 100 million SR for insurers and 200 million
SR for reinsurers.
the professional partnership
The professional partnership is the legal form for freelance
professions such as engineers, lawyers, auditors, tax advisors
and doctors. These professions may open up practices
or offices together with Saudi colleagues or theoretically
on their own, after authorization has been obtained by
the authorities responsible for the respective profession.
The creation of these kinds of professional partnerships
have been blocked by now due to tax reasons. In practice,
this legal form is replaced by cooperation agreements on
the basis of which personnel is sent from abroad to Saudi
Arabia to the local partner.