Commerce in the Kingdom of Saudi Arabia

Commerce

The Kingdom of Saudi Arabia is considered one of the forward-looking economies, with its untapped and unique investment opportunities. Besides, Saudi Arabia has different potentials and opportunities for investors. It is characterized by its abundance of natural resources and strategic location, which holds a strategic position in the heart of the leading trade routes between the three continents. Within the framework of Saudi Vision 2030, many economic reforms succeeded in creating new business opportunities, increasing the main strategic assets of the Kingdom of Saudi Arabia, and accelerating economic growth and diversification. Reforms resulting from Saudi Arabia are opening up worldwide, opening up economic opportunities.

Commerce in Saudi Arabia

The Kingdom of Saudi is undergoing a revolutionary change in the commercial fields and is a global leader ranked top among countries towards ranking the index of international commerce as it is one of the essential assets in Saudi Arabia. These transformation actions in commerce aligned with the global trends attracting sustained private and international investment. The Kingdom also possesses the necessary capabilities that qualify it to establish an integrated economic focus aligned with Vision 2030. These actions lead to promising prospects in all economic, social, and political fields between the Kingdom and developing countries. The Kingdom's economy is witnessing a strong recovery after the pandemic. These wide ranges of economic reforms contributed to achieving vision 2030.

Therefore, we find that the index and the volume of commerce in the Kingdom reached a record level, in addition to the steadily increasing commerce exchange, which accelerates the development and facilitates economic cooperation, as well as maintains the concept for economic and commerce integration.

Click here to know the Saudi Index in DOING BUSINESS.

Besides, the Ministry of Commerce said establishments can now enter as partners in all commercial entities to facilitate business and support establishments and companies.

Today, the world is witnessing transformative opportunities in commerce, which the Kingdom has facilitated all procedures to start with. Moreover, the Kingdom has facilitated all the procedures required to start any commercial field in the Kingdom, and the Ministry of Commerce has linked all relevant authorities to your facility electronically in, as the commercial register is issued in easy steps with all government platforms, such as Balady, the General Organization for Social Insurance among other platforms related to your commerce. Besides, the Kingdom demonstrates the Kingdom's role in commerce and is consistently ranked the top in investment and making it a distinct icon in its development goals. The Kingdom facilitated to begin of your business journey. The types of companies and institutions and their requirements vary according to size and activity.

New Companies Law

The Ministry of Commerce (MC) and the Capital Market Authority (CMA) announced that the New Companies Law and its implementing regulations would go into effect on January 19th, 2023.

The MC and the CMA emphasized that the New Companies Law will enable companies to grow, expand, address challenges, and keep on top of economic trends in the Kingdom at all levels. This is essential for realizing the goals and implementing the plans laid forth in the Vision 2030 programs.

According to the MC and the CMA, the new law will regulate the provisions of companies of all forms because it applies one single law to all organizations. This is a result of the joint efforts exerted by both government entities to revise and modernize the Kingdom's trade and investment legislation and laws.

The Companies Law will aid in fortifying the corporate regulatory environment by easing the implementation of systemic procedures and requirements designed to stimulate the business environment and support investment, striking a balance between the interests of various stakeholders, and providing an efficient and equitable framework for corporate governance and institutional work.

The law will actively contribute to enhancing the sustainability of economic entities, attracting domestic and foreign investment, providing sustainable sources of finance, supporting the demands and requirements of the entrepreneurship sector, and boosting SME growth.

The New Companies Law and its implementing regulations have made it easier for small and microenterprises to meet all their expansion and growth needs. The law has streamlined the incorporation process and given businesses more freedom to include special provisions and conditions in their articles of association or bylaws that take into account recent history, size, and facilities for entrepreneurs.

The law created a new business that had never existed before, called the "simplified shareholding company," to address the needs and requirements of entrepreneurship. A single shareholder can form a company without a board of directors and run it as a manager. No general assemblies are required. Besides, the bylaws determine the procedures for holding meetings and issuing decisions.

The law exempted micro and small businesses from appointing auditors and established three criteria, two of which are exempt from the need to appoint auditors. They are: Annual income should not exceed 10 million riyals, its assets should not exceed 10 million riyals, and the company's size of the workforce should not exceed 49 employees.

Start your journey in business

To improve the business environment and facilitate your business's start-up journey, the Kingdom of Saudi Arabia has humiliated all business start-up procedures and facilitated the start-up procedures of a comprehensive practice.

The Kingdom established the “Saudi Business Center”; to facilitate the start and practice of business And increase competitiveness in the Kingdom towards improving the quality of government requirements; By reducing the time and cost of government services and licenses required from the private sector.

The services provided by the Saudi Business Center vary, including:

Start your Business

This service enables the investor to start practicing commercial activity, it allows you to:

Issuance of a commercial register for an establishment.

Issuance of an instant commercial license (optional).

Creating an establishment profile with the Ministry of Human Resources and Social Development.

Registering the establishment with the General Organization for Social Insurance.

Registration at the national address at the Saudi Post (SPL).

Registration in Chambers of Commerce.

Requirements:

The age shall not be less than 18 years.

Not be a government employee.

The capital shall not be less than 5000 Riyals.

The primary commercial register should be valid in case of opening a sub-establishment.

To start using this service, click here.

Establishing a General Partnership Company

This service enables the investor to start practicing commercial activity and establish a joint venture company, which is established by two or more persons of natural or legal capacity; In which they are personally responsible for all their money and jointly for the company’s debts and obligations, and the partner in it acquires the status of a merchant, and through the service, the following is done:

Steps

Issuance of the commercial register and articles of incorporation.

Issuing an instant trade license (optional).

Creating an establishment profile in the Ministry of Human Resources and Social Development.

Registering the establishment with the General Organization for Social Insurance.

Registration at the national address at the Saudi Post “SPL”.

Registration in Chambers of Commerce.

Requirements:

Legal document if one of the partners is a government agency, a civil institution, a charitable association, or an endowment; to grant him the right to establish or participate in a company.

A license from the Central Bank of Saudi Arabia if the activity requires it.

The age shall not be less than 18 years.

The partners should not be government employees.

The commercial registration shall not be canceled, suspended or terminated if one of the partners is a legal partner.

The following must be verified if the company's capacity is (professional):

A valid professional license for the partners.

The partnership percentage of the licensed Saudi partner shall not be less than 25% if the company is a mixed company.

The percentage of licensed partners shall not be less than 70%.

To start using this service, click here.

Establishing a Limited partnership Company

This service enables the investor to start practicing commercial activity and establish a limited partnership company consisting of two parties (the General partner) who is responsible for the debts and obligations of the company, and (the Limited Partner) who is responsible only within the limits of their share in the capital. The service allows you to:

Issuing the commercial register and articles of incorporation.

Issuing an instant trade license (optional).

Creating an establishment profile in the Ministry of Human Resources and Social Development.

Registering the establishment with the General Organization for Social Insurance.

Registration at the national address at the Saudi Post “SPL”.

Registration in Chambers of Commerce.

Requirements:

A legal document if one of the partners is a government agency, a civil institution, a charitable association, or an endowment; to give him the right to establish or participate in a company.

The existence of a license from the Central Bank of Saudi Arabia if the activity requires it.

The age shall not be under 18 years, and the guardianship deed shall be submitted if the applicant is a minor under puberty.

The partners should not be government employees.

The commercial registration shall not be canceled, suspended, or terminated if one of the partners is a legal partner.

The following must be verified if the company's capacity is (professional).):

The presence of a valid professional license for the partners.

The proportion of the licensed Saudi partner shall not be less than 25% if the company is a mixed company.

The percentage of licensed partners shall not be less than 70%.

To start using this service, click here.

Establishing a limited liability company

This service enables the investor to start practicing commercial activity and establish a limited liability company, which is established by one or more persons of natural or legal capacity, and its liability is independent of the financial liability of each partner or owner, and the company is solely responsible for the debts and obligations. Neither the owner nor the partner in it is responsible for these debts and obligations except to the extent of their share in the capital. The service allows you to:

Issuance of the commercial register and articles of incorporation/articles of association.

Issuing an instant commercial license (optional).

Creating an establishment profile in the Ministry of Human Resources and Social Development.

Registering the establishment with the General Organization for Social Insurance.

Registration at the national address at the Saudi Post is ways.

Registration in Chambers of Commerce.

To start using this service, click here.

The Small and Medium Enterprises

Small and medium-sized enterprises are an important component of global economic development. The Kingdom recognizes the importance of SMEs in solidifying and diversifying its economy, ensuring sustainable development, creating job opportunities, and serving as an incubator for creativity and innovation. As a result, the kingdom provided SMEs with technical assistance, as well as consultation and assistance in acknowledging their development potential. The establishment of the small and medium enterprises General Authority, as well as the support of its revenues, reflects the government's eagerness and diligence.

The Small and Medium Enterprises General Authority (Monsha'at)

The Small and Medium Enterprises General Authority (Monsha'at) was established in 2016 with the aim of regulating, supporting, developing, and sponsoring the SME sector in the Kingdom in accordance with global best practices, in order to increase the productivity of SMEs and their contribution to GDP from 20% to 35% by 2030. Monsha'at is mandated with developing, implementing, and supporting programs and projects that foster a culture of self-employment, entrepreneurship, and innovation. It strives to diversify the funding sources provided to enterprises, support the initiatives within the venture capital sector, develop policies and standards to funding small and medium projects. Such measures will uncover a realm of endless possibilities for SMEs to unlock their full potential as they grow their administrative, technical, financial, marketing, human resources capabilities.

illustrations of governmental support and regulation of the SMEs sector

The Kingdom supported small and medium enterprises in a variety of ways, which include providing consultations to entrepreneurs and broadening their entrepreneurship culture in the right way, empowering businesses by providing them with a suitable services, providing management and marketing training programs and information on how to achieve business professionalism, providing financial loans to business owners through licensed financing companies as well as setting policies and standards for financing projects classified as small and medium enterprises.

Small and Medium Enterprise Bank

The Small and Medium Enterprises Bank was established by Cabinet Resolution No. 376, dated 04/07/1442 AH, as one of the development funds and banks affiliated with the National Development Fund, which aims to increase financing provided to the small and medium enterprises sector, bridge the financing gap, and enhance the contributions of financial institutions in providing Innovative financing solutions, and achieving financial stability for this vital and important sector to be a mainstay for economic development in the Kingdom of Saudi Arabia and an enabler to achieve Vision 2030.

Statistics of small and medium enterprises in Saudi Arabia

The total number of small and medium enterprises in the Kingdom: 892,063

Facilities provided to micro, small, and medium enterprises: 221 billion SAR.

Percentage of facilities provided to establishments out of total facilities: 8.2%.

Regulations and regulations for small and medium enterprises

Amended business incubators regulation for the year 1442 AH:

The document included: definitions, objectives, validity, business incubators register, license application, the study of the license application, initial approval and licensing, headquarters conditions, essential services, optional services, business incubator obligations, beneficiary obligations, inspection and control, the Authority’s relationship with business incubators, violations, Classification and evaluation, grievances, decisions, and instructions, publication, and enforcement.

To read the full document, click here.

Legal regulation for the Small and Medium Enterprises General Authority:

The Authority aims to regulate the establishment's sector in the Kingdom, and the Council represents the supreme Authority of the Authority. Its meetings are held at the Authority’s headquarters under the chairmanship of the Chairman of the Council. The Authority has a governor appointed and designated by a decision of the Council. The Authority also has an independent annual budget and resources, and the Authority submits to the Council of Ministers its final yearly account.

To read the full document, click here.

Government Tenders and Procurement Law and its Implementing Regulations:

This regulation replaced the Government Tenders and Procurement Law of 1427 AH. It included: definitions, objectives, basic principles, the scope, planning and organization, the portal, conditions for dealing with and qualification of competitors, tender documents, requirements and specifications, estimated cost, criteria for evaluating bids, retail, collaborative tendering, Public and private competition, two-phase tenders, direct purchase, framework agreement, electronic reverse bidding, industry localization, and knowledge exchange, competition, bids and awarding, initial guarantee, bid examination, suspension period, contract conclusion and implementation, contract drafting, absolute guarantee, price adjustment, Assignment and subcontracting, fines, extension, partial pullout and implementation at the expense of the contractor, termination of contracts, performance evaluation and sale of movables, complaints, and violations final provisions publication and enforcement.