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What Are the Types of Companies in Saudi Arabia?
Companies are a crucial part of the economy in the Kingdom of Saudi Arabia. The country offers various types of companies to diversify economic activities, attract investments, and create job opportunities. These companies are eligible for benefits and facilitations, including the new Companies Law. This article explores the different types of companies in Saudi Arabia, highlighting their essential advantages and the roles played by natural and legal persons, such as institutions and associations, in their establishment.
General Partnership
A company established by two or more natural or legal persons is called a “general partnership.” In this company, the partner acquires the capacity of a “merchant .”Additionally, the company’s founders are personally liable for their funds, and they bear joint responsibility and solidarity concerning the company’s debts and obligations.
Limited Partnership
The limited partnership company is made up of two partner groups, organized as follows:
- The First Group includes at least one partner, whether a natural or legal person, who is personally accountable for their funds and, at the same time, bears shared responsibility for the company’s debts and commitments.
- The Second Group includes at least one natural or legal partner who solely contributes to the company’s capital (limited partner). This partner is liable for the company’s debts and obligations within the limits of their share in the company’s capital without acquiring the capacity of a merchant.
Joint-Stock Company
A group of individuals or entities, either natural or legal, come together to form this organization. The company’s capital is divided into shares that can be bought and sold. The joint-stock company is solely responsible for its debts and obligations. The shareholders’ liability in this company is limited to the subscribed value of their shares.
Simplified Joint-Stock Company
The Saudi Arabian Companies Law has introduced a new entity called the “simplified joint-stock company,” which can be formed by individuals or a group of individuals. This type of company offers several benefits, including:
- The company’s articles of association does not mandate a minimum capital amount.
- One manager, or more, or a board of directors to manage the company is possible.
- The company is capable of issuing shares of various types and categories. These shares may also have varied rights, obligations, and restrictions.
Limited Liability Company
This company is established by one or more natural and legal persons. The financial liability of the limited liability company is independent of those of the owner and partners. Regarding the debts and obligations arising from the company’s activities, the company bears them alone, and the owner or partner in the company is not responsible except according to their share in the capital.
Non-Profit Company
The non-profit company is dedicated to serving the community, with its partners and contributors refraining from pursuing profits and benefits from its activities. The new Companies Law introduces several advantages for this company, allowing it to engage in diverse activities to achieve its goals and empowering it to offer rewards and benefits to its employees. Non-profit Company forms include the following:
- Public Non-Profit Company: Established as a joint-stock company only and not founded in other forms of companies. Profits generated by the company from its activities are directed towards public, non-profit purposes aimed at serving the community in a general and exclusive manner. The Ministry of Commerce defines these expenditure areas in coordination with the National Center for Non-Profit Sector.
- Private Non-Profit Company: This refers to companies registered as private non-profit entities in the form of a limited liability company, a joint-stock company, or a simplified joint-stock company. The profits generated by these companies from their operations are dedicated to non-profit objectives.
Professional Company
A professional company is a business entity that has its own legal identity. It is established by licensed individuals who practice one or more independent professions, alone or in collaboration with others (such as law, medicine, engineering, accounting, and others). The main objective of a professional company is to engage in those professions. The new Companies Law in Saudi Arabia has several benefits for this type of company, including the ability to secure financing, allow non-professional investors to participate in it for expansion purposes, invest in commercial papers, and own real estate assets.
Holding Company and Subsidiary Company
As per Part 9 of the updated Companies Law, a holding company can be a joint-stock company, a simplified joint-stock company, or a limited liability company. The holding company creates new companies or acquires interests in existing ones, which it then turns into its subsidiaries, also referred to as “Subsidiary Companies.”
Should you have an interest in gaining insights into various types of companies in Saudi Arabia, along with their features and benefits, to establish a company in the Kingdom, we advise you to make use of our specialized services in the realms of company establishment, issuing licenses, offering consultations, and ensuring seamless government registrations on official platforms, among other services tailored to your preferences. Get in touch with a proficient specialist at MOLTAZIM platform by requesting a Session to know more about moltazim services in the field of GRC, or drop us a message on WhatsApp now!
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في مُلتزم، نحن شركائكم في التعامل مع مهام الالتزام في المملكة العربية السعودية. ومن خلال الفهم العميق للبيئة التنظيمية في المنطقة والالتزام باخر التطورات، فإننا نساعد الشركات على تحقيق أعلى معايير الالتزام والحفاظ عليها.